Thread by @douglewinenergy

This work session at the @PUCTX is starting now. I will tweet about the discussions throughout the day on this thread.

#energytwitter #txlege #txenergy

https://twitter.com/douglewinenergy/status/1456012880403435522

They begin by delaying a decision on HCAP, the $9000MWh price cap until they've decided on ORDC (Operating Reserve Demand Curve) as the two are related. Their analysis of ORDC change impacts is not ready so they will hold off on any decisions on either.

Long discussion here of ORDC. Cmsr. Glotfelty asks What is ORDC for? What problem are we trying to solve? Cmsr. McAdams makes the point that ORDC can incent distributed generation and demand response like at @HEB and @bucees. Talks about varying cooling load for freezers

McAdams says we need all of that responsive behavior, load, and generation.

Cmsr. Cobos makes the point that changing ORDC is not easy or "low hanging fruit," These are big changes that will drive demand response. She wants it in place by Jan 1.

Cmsrs seems to agree that ORDC will drive increased reliability but probably not new generation.

They call up @BillBarnesATX of @nrgenergy to see if he agrees with that.

Barnes says ORDC drives "some new investment" including #demandresponse but he does not think it will drive enough to replace power plant retirements. He also says ORDC depends on scarcity and needs to be changed to provide payments during more time periods.

Cmsr McAdams says the headlines from COP26 are worth paying attention to. Talks about this (or something just like it)
#climatetwitter #txenergy #txlege

reuters.com/business/cop/w…

"Texas is going to be a very enticing destination for a lot of that capital" says Cmsr. McAdams.

He believes we will reach 20-30GW of solar and we need to develop tools to meet that scenario and if we do so that will help meet other reliability scenarios.

Wow. #txlege #txenergy

The solution to the ramps that come with 20-30GW appears to be combination of ORDC, non-spin reserves, and the soon to come ECRS: ERCOT Contingency Reserve Service but that will take 2-3 years to get in place.

They're talking about McAdams memo, linked below)

Cmsr Glotfelty thanks McAdams for the memo but says it's an "incomplete picture... doesn't show any resources used to reduce the duck curve... there may be 10% of this we have to solve or 50%"

interchange.puc.texas.gov/Documents/5237…

Lake asks what those resources are.

Glotfelty says combined cycle, simple cycle plants, storage, demand response. This presentation and memo don't show any of those. We need to see an analysis with all of those storage, DR, and peaking plants in here.

#txlege #txenergy

Glotfelty says we won't have a 20-30GW duck curve problem, it will be less than that. Cobos agrees and says they need an updated analysis. McAdams says we need to understand which resources can meet these ramps and how much we need.

This is an important discussion here.

They now call up Woody Rickerson from @ERCOT_ISO. They're looking at a March 5 day when there are large amounts of thermal plants out for maintenance. He's asked what resources do we need. Says smaller, fast responding resources.

Sounds to me like #storage and #demandresponse.

Lots of discussion about how to handle solar ramps featured in the ERCOT presentation.

McAdams we need to figure out a way to integrate the cheap zero carbon solar into the system because it benefits consumers.

Clearly, @ERCOT_ISO needs to update this showing storage, DR, etc

Chair Lake says "demand response can get lost" in the discussion. Wants to know what kind of upper limit there is on #demandresponse.

They really need to increase DR immediately and commission a study to determine that upper limit. We're nowhere even close to it right now.

Rickerson says they need 2-hour, 4hr, and 6hr products. Asked why ECRS is limited to 6 hours. He says they need different kinds of ancillary services.

Cmsr Cobos notes that #SB3 requires a study of ancillary services. She says we need do that quickly "so we're not guessing"...

She says it's not only an operational issue, it's a consumer issue, a cost issue.

Lake says we're in our review of ancillary services right now.

Cobos says I mean a technical review. Says PUCT needs a more robust analysis.

Rickerson says the 2022 A/S analysis they're doing is robust but where they might fall short is looking beyond that.

I think what Rickerson and Cmsr Cobos are talking about are two very different things, one specific/targeted, one much more comprehensive

Cmsr Glotfelty says part of the issue is we're moving from a system where we rely on 1GW large plant for these services and now we're looking at hundreds of small batteries or other resrouces. Wants to know if ERCOT is looking at that.

Woody Rickerson from ERCOT says they are updating interconnection of Disributed Generation Resources and making it easier for them to compete with the large power plants.

Lake says he wants to talk about cost allocation. McAdams says "we're going there?" Lake says yes and says ECRS costs should be allocated to renewables.

McAdams reads from #sb3: costs should be assigned "consistent w/ cost-causation principles and on a nondiscriminatory basis."

Cmsr Glotfelty disagrees with assigning ECRS costs to renewables, stresses the language in #SB3 which says "nondiscriminatory." Says we've never done it this way. Says biggest loser under this would be gas plants and it could be the end of gas on the system.

He says if a gas plant were to trip offline during scarcity, causing additional costs, they'd have to pay for it and these costs could be significant.

Cmsr Cobos says we need to think about cost allocation more. Also cites the word "non-discriminatory." Says they need to better understand how ERCOT meets swings in generation & load.

Important to note that large loads & big power plants drive ancillary service procurements, too

Good points by Cmsr. McAdams about his vision for "the grid of the future." Says curtailing wind and solar is not good for generators or consumers. Need to "architect a system" to take advantage of these as much as possible.
#energytwitter #txenergy

Conversation shifts to Emergency Response Service (ERS). ERCOT says they have showed increases of $5m, $10m, and $20m (from base of $21m for this winter period).

Cmsrs also discussing how the value of ERS will change if it is to be deployed earlier.

This is a key point. If it's to deployed earlier, presumably it will cost more to procure as those who sign up will have to shot down more often.

Cobos makes this point, too. Prices for procurment will go up bc of earlier deployment and bc utilities have started new commercial DR programs.

Commissioners agree to increase Emergency Response Service only $5m. That's a 25% increase. Seems extremely small given ERS delivered 1GW of reduction in February. This seems like an opportunity missed to procure more #demandresponse in advance of the winter. #txlege #txenergy

Chair Lake says we're solving two problems: one is February outages and the other is "blue sky" problems like those in April, June, and October. He says we have 110GW of capacity and peak was 76GW but much is not firmed up and it can disappear...

...leaving us with 75GW, the dispatchable, says Lake. No acknowledgement that 20+ GW of "dispatchable" gen is not available on those blue sky days. (28GW yesterday)

He also invokes the Governor's letter which btw instructed them to better spread out planned maintenance.

I have yet to hear any, and I've listened I think to every minutes of these proceedings, discussion of better scheduling of planned maintenance as directed by the Governor

Did I miss it?

#txlege #txenergy

Conversation now shifts to LSERO, proposed by @nrgenergy. Chair Lake says this the "heaviest handed" approach would be central accreditation of resource adequacy and requires "big time implementation" efforts. On the other hand, lightest touch would be some requirement to show...

adequacy. He offers those "as bookends" of the different approach of LSERO. Says we won't adopt this by December but need to continue to analyze.

He says he favors this approach bc market figures it out instead of central administered procurement.

Cmsr Cobos is first to respond, says SB3 gives us authority but does not explicitly call out firming requirement but rather "reliability needs"

Notes we don't have feedback on reliability standards yet.

I'm looking forward to digging into this in coming weeks which lots of folks have told me is a much improved approach to resource adequacy over 1-in-10 standards which are anachronistic at best.

esig.energy/wp-content/upl…

Cobos thinks LSERO moves away from SB7, the bill that restructured the market in 1999 bc it moves risk away from generators and investment community back to consumers. Doesn't think SB3 points in that direction. Wants PUC to look at different options

Cmsr Cobos says needs a "phased approach" with deliberative consideration of long term proposals which need to be "fully evaluated and vetted" to understand "the long lasting impacts on the market and state."
#txlege #txenergy

Chair Lake disagrees that LSERO moves the risk to consumers and away from generators/investors. He says risk would be on the retail electric providers (REPs), which are sometimes also generators.

Lake says that some REPs told him all they do is sell, they don't generate. He seems upset about this, thinks they need to do more.

Cobos tells him that they don't have to own generation and McAdams says they *can't* own generation.

Note: of course, lots of REPs are actually gentailers meaning they do generate and sell. I think the LSERO would, for all intents and purposes, end independent retailers and force everyone into a gentailer model.

@lpandl up now. They put in the comments below. They note that even with the reliability constructs in SPP, there are a lot of retirements up there, too. It's a national phenomenon. Says SPP was importing 6GW from other RTOs which stopped deeper outages

interchange.puc.texas.gov/Documents/5237…

ERCOT, of course, has very limited ties to other regional transmission operators. @lpandl rep says part of the reason ERCOT ouages were so long lasting and deep was bc of this lack of transmission ties.

They're not really talking about this but worth noting that @lpandl in its comments opposed the LSEO. Said there are simpler options and LSEO would "negatively impact customer choice." They said they left SPP to get away from exactly this kind of construct.

@lpandl estimated that LSERO system proposed by NRG would add $19m-$38m in costs for Lubbock residents per year.
#txlege #txenergy
interchange.puc.texas.gov/Documents/5237…

Bill Barnes of NRG correctly points out Texas is not an "energy only market" but rather an "energy mostly market."

This whole discussion is about where we set the dial between energy only and capacity. I think NRG is turning it strongly toward capacity market.

Barnes acknowledges that LSERO "is not a small change" and would take a long time to set up and implement.

Cmsr Cobos says we need to address the operational reliability issues quickly.

Barnes agrees and says do those things and analyze the longer term solutions like LSERO.

There's been a long back and forth with Barnes of NRG. Seems to me like everyone is reinforcing their priors. Chair Lake thinks LSE Obligation is absolutely necessary. Other three seem unconvinced.
#txenergy #txlege

Lake says adding ancillary services is a "band-aid." McAdams seems to disagree and says if you have add lots of smaller resources (peakers, batteries) they're not band-aids, they're "a suit of armor."

Cmsr Glotfelty says retail segment was "the crown jewel" of restructuring.

Says NRG has bought 5 of the 8 largest retailers and that they now own 45% of the residential market.

"That disturbs me," says Commissioner Glotfelty.
#txlege #txenergy #energytwitter

Cmsr Glotfelty says "y'all are pushing something that you can achieve but no one else can and that concerns me."

Barnes says that's something we've got work on. Says they'd have to go purchase more power under this proposal.

True, but their generation assets would gain value

The LSEO proposal would likely increase the value of the supposedly dispatchable Parish coal & gas plants which didn't operate during much of the Feb outages, including the black start units, the last line of defense to bring the grid back after failure

fortbendstar.com/countynews/cou…

Long discussion now with Independent Market Monitor about the LSE Obligation. The IMM, Carrie Bivens says she shares Cmsr Glotfelty's concerns on market power. Why would a gentailer offer generation to competitors? Could force them to pay penalties which are costly.

After break, Cmsr Cobos says we need to get away from concepts of "firming requirements." She's expressed concern about cost and whether that would address the problems at hand.

Cmsr McAdams suggests a different mechanism (cont.)

Cmsr McAdams brings up statute that says we have to have min. 50% gas installed after 2001 *but* the statute says: "This section does not apply to generating capacity for renewable energy..." PUC staff said this year we're at 88.9%. #txenergy
interchange.puc.texas.gov/Documents/2107…

An interesting exchange between Steve Madden, who has been part of building two REPs which were sold. Chair Lake argued quite a bit with him and accused him, basically, of not caring about his customers (compared him to a coaster salesman). Kind of a bizarre exchange honestly

He also seemed to accuse Cathy Webking, lawyer representing independent REPs, of "hating gentailers." She, of course, rebutted that and said she didn't hate them but the market needs to allow new innovative retailers into the market. Chair Lake agreed with that.

Also Cmsrs heard from representative of a steel mill. They are very concerned with added costs from LSE obligation proposal. Say they closed a mill in CA bc of resource adequacy costs which added up to 20% of their costs. Comments here interchange.puc.texas.gov/Documents/5237…

Cmsrs call up Randa Stephenson of @LCRA. Their proposal for a Dispatchable Reliability Service could not be implemented until ERCOT system upgrades happen, pushing it back 2-3 years.

Certainly gives some time for more analysis of costs and benefits.
#txlege #txenergy

She says this service will likely not drive new investment. She says it will add $1b-$1.5b but mostly to help existing generation stay online.

Cmsr Glotfelty says "no way" this would make investment in new generation financeable.