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USA Market: Texas regulators order power market reforms

Electricity Pylon

The Public Utility Commission of Texas (PUCT) has voted to significantly improve short- and long-term electric grid reliability for Texas by enacting major reforms to the state’s wholesale electricity market.

Unveiled on December 16 the Phase I reforms, which are to be implemented as soon as possible, include the following:

  • Lowering the high systemwide offer cap to $5,000/MWh from $9,000/MWh, with effect from January 1
  • Raising the minimum contingency level – the minimum amount of reserves considered necessary to avoid a cascading blackout – from 2,300MW to 3,000MW
  • Making changes to the Operating Reserve Demand Curve to ensure market prices reach the cap before an Energy Emergency Alert requires an appeal for public power conservation
  • Changing the market to improve price signals for load-managed resources
  • Setting higher energy efficiency program standards
  • Working to facilitate the aggregation of load resources
  • Allowing the deployment of Emergency Response Service (ERS) before an EEA is declared
  • Considering changing ERS procurement process to a physical capacity based on a $50M annual spending cap
  • Implementing a fast frequency response ancillary service
  • Facilitating the inclusion of loads in the non-spinning reserve ancillary service
  • Developing a firm fuel-based reliability service similar to ERCOT’s Black Start ancillary service
  • Compensating resources, such as conventional generators, that provide voltage support
  • Accelerating implementation of the ERCOT Contingency Reserve Service, a type of ramping ancillary service, and allocate its costs “consistent with cost-causation principals, in a non-discriminatory manner”

Phase 2 policies will be developed over the coming weeks.

Wayne Muncaster, VP for North America at GridBeyond, commented:

“The energy crunch is not a fleeting issue that will go away in the near future. It’s crucial that we take action now to preserve our grid, the engine of the Texas economy, over the long-term. The solutions are out there.

“The focus so far from the Governor and Legislature has been on ERCOT’s supply-side. It is reassuring that now that investment in demand response, energy storage and energy efficiency is being rightfully considered as a cost-effective means to manage pressure on the supply-side.”

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