Texas regulators seek feedback on generation, wires weatherization standards

The Public Utility Commission of Texas is seeking comment on a draft set of weatherization standards for the Electric Reliability Council of Texas. Industry observers have expressed doubt about meeting those standards, but agree upgrading reliability is necessary.

The proposal for new rules in the Texas Administrative Code Section 25.55, PUC Project No. 51840, contains language requiring ERCOT and the Texas State Climatologist to calculate the statistical probabilities of a range of weather scenarios for ERCOT weather zones, the first of which must be filed by the end of 2021.

The new rules would establish three weatherization standards, with different compensation mechanisms for "basic," "enhanced" and "black start service" generation resources, capable of meeting commitments under the 95th percentile, 98th percentile and 99.7th percentiles, respectively, of extreme weather scenarios established in the ERCOT/State Climatologist study.

Giuliano Bordignon, a power market analyst at S&P Global Platts, cited the weather scenario calculation as "an important point."

"Depending on those extremes, the 95th percentile for basic weather reliability standard -- applicable to all resources – might be already ambitious," Bordignon said in an email. "For example, if the most extreme scenarios were set to mimic the conditions of the February event, the black-start reliability standard at the 99.7% percentile might still have failed. This is to say that the most extreme scenario should exceed the conditions seen in February."

The "enhanced weather reliability standard," Bordignon said, "looks very similar to a capacity service, although the frequency of events it is supposed ot address might be different from those of capacity markets."

Compliance deadlines vary

The new rules would also do the following:

• Set varying deadlines for generation meeting the basic standard based on the size of the facility, with larger plants required to meet the standard by Nov. 30, 2022, and smaller units required to meet the standard at later dates
• Let ERCOT itself set deadlines for generation meeting the "enhanced weather reliability service standard" for generation
• Require black start service generation facilities to meet the applicable weather reliability standard by Nov. 30, 2023
• Require each generation entity to submit a study by a non-employee qualified professional engineer confirming compliance with the relevant reliability standard
• Require an annual report on each generation entity's efforts to meet the relevant reliability standard, accompanied by a notarized affidavit from the entity's CEO affirming compliance
• Require transmission service providers "to maintain weather preparation measures that reasonably ensure" service under the 98th percentile of extreme weather scenarios by Nov. 30, 2023, with an exception for facilities outside a substation "designed in conformance with good utility practice but "insufficient to meet the standard
• Require ERCOT to implement an inspection program that "reasonably determines" whether generation and transmission entities have complied with the new rules, and to report about inspections to the PUC
• Penalize generation and transmission entities for noncompliance if violations are not cured "within a reasonable period of time"
• Require generator and transmission entities that have frequent weather-related service interruptions to contract with a non-employee professional engineer evaluate the weatherization efforts and report assessments to the PUC and ERCOT

Cost recovery remains at issue

The PUC has set 3 pm CT on July 30 as the deadline to submit written comments on the draft standards and responses to these questions posed by PUC staff:

• Where is statistically reliable weather information available for the ERCOT power region?
• Do existing mechanisms provide sufficient cost recovery for the proposed weatherization standards?
• If not, what cost recovery mechanisms should be established?

Jonathan Jacobs an energy and utilities expert at PA Consulting said that "it is clear that the Texas PUC needs enhanced weather reliability when they have high – record or near-record – loads."

"If they are trying to line up sufficient capacity with enhanced reliability they will have to either have enough to cover extra-high [loads] – in which case, why do other resources need 95th percentile reliability? – or they will be explicitly planning to shed load at such times," Jacobs said in an email. "It is likely that this past winter they learned that they don't have a good load shedding plan, and that such a plan is much harder sell politically than any amount of payment for reliability."