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Texas regulators to solicit feedback on proposed ERCOT reform

Texas regulators on Aug. 9 voted to solicit feedback on a proposed reform to the state's wholesale power market. Supporters said reform is sorely needed, but others believe that would be ineffective.

The proposed change, called real-time co-optimization, would find the most efficient way to procure energy and ancillary services every five minutes in the Electric Reliability Council of Texas' real-time market. Currently, only energy trades in real time, while ancillary services — including responsive reserves, regulating reserves and offline nonspinning reserves — are procured in the day-ahead market.

Proponents of the reform said ancillary services should be accessible not just in emergency situations but whenever needed to support constant, reliable operation of the transmission system. That real-time availability would also prove to be more economical in certain instances, a benefit previously noted by ERCOT's independent market monitor as well as in a report co-authored by a Harvard power market expert and a business consultant.

But others believe that the change is designed to benefit the narrow interest of generators such as Calpine Corp. and NRG Energy Inc. Another power generator and retailer, Vistra Energy Corp., contends that real-time co-optimization would not address existing issues such as low natural gas prices, increasing renewable resources and high reserve margins.

The Public Utility Commission of Texas at its Aug. 9 meeting voted to pose 16 questions for stakeholders to answer during a public comment period. Areas under consideration include near- and long-term impacts to grid reliability, generation resources, companies' operations and the broader market.

Commissioner Arthur D'Andrea said he and his fellow regulators are grappling with the proposed reform just like everyone else. "We still really are just trying to learn some of this."

"I think [the questions] need to be asked," Chairman DeAnn Walker said.

The PUCT could review public comment at its Sept. 27 meeting, but that date was not finalized as commission staffers were tasked with possibly extending the feedback period and rescheduling the meeting to allow more time to review and address questions.