Thread by @douglewinenergy

The House State Affairs Committee is underway. @PUCTX Chair Peter Lake has made opening comment & now the questions have begun. Phil King is asking about a major market change called the Load Serving Entity Obligation which would add more costs. (cont.)
#energytwitter #txlege

https://twitter.com/douglewinenergy/status/1538874640231284740

King wants to know if #txlege will be able to weigh in before the LSEO is implemented. The design of the LSEO is being done by E3 to "independently" analyze the proposal even though they proposed it for a big generator (NRG) last year.
houstonchronicle.com/business/energ…

@PhilKingTX expresses concerns about potential conflicts of interest from E3. He's right to be concerned.

@toddahunter says higher bills are coming and reminds the PUC Chair that the P in PUC stands for Public. Wants transparency for the public. cc: @DaveLieber
#txlege

@toddahunter wants to know how much the consulant project will cost. Chair Lake doesn't know.

It's $364k with a max of ~$750/hr.
#txlege

@DonnaHowardTX asked about new costs. Chair Lake keeps saying that the actions they have taken are $1/month. I'd like to see the math. Would be a good question to ask the Independent Market Monitor but there's no way $685m over 5 months is $1/month #txlege
statesman.com/story/business…

@RepRaymondTX asks about local outages. They're diff than bulk grid outages but they're a big problem in Texas. ERCOT CEO says these local outages are reported and tracked. Yes, for duration & frequency of power outages we're among the worst *before Uri*
citizensutilityboard.org/wp-content/upl…

There's now a discussion of how the LSEO forward capacity market would work. @ERCOT_ISO would certify and provide "tokens" as CEO Brad Jones describes them to each generator based on what ERCOT determines the generation asset is worth at peak. (cont)

What Jones described is an administered market where the most important variable is what the administrator has the power. The LSEO moves the focus from market fundamentals & performance to the administator, to the ability of market players to "work the refs."

@toddahunter again says he's worried about costs; he asks if 2 companies control 80% of the retail market. Jones says he's not sure but it sounds right. Q: who are they? A: @nrgenergy & @VistraCorp (they own @reliantenergy & @txuenergy, among many others)
houstonchronicle.com/business/energ…

By the way, a 12 month retail contract in Corpus Christi is currently ~18c/kWH. It was ~11c/kWh 6 months ago.
powertochoose.com
#txlege #txenergy

There were several discussions of how much generation we have relative to demand and how much we need. This is typically called the reserve margin which usually defines resource adequcy.

This is a great paper as to why this is an anachronistic metric.
esig.energy/resource-adequ…

@DonnaHowardTX asks about Real Time Cooptimization. This is desperately needed. The IMM highlighted this as one of her top recommendations. It's been delayed a few times and need so to be prioritized.
Howard rightly points out that it would increase efficiency and reliability

@PhilKingTX asks about #SB1281 which deals with transmission. Chair Lake says Cmsr Glotfelty is leading the process to implement that bill.

Now up are Cathy Webking representing retailers, Julia Harvey representing co-ops, & Carrie Bivens, the Independent Market Monitor

Bivens is first. Her presentation to ERCOT the other day is in the thread below

https://twitter.com/douglewinenergy/status/1538874640231284740?s=20&t=urTa_SptQJiXt_nQI9rEmQ

Cathy Webking points out a big problem w/ the LSEO: a new retailer would have to buy power 3 yrs out for customers they don't yet have. The LSEO would likely reduce competition in the market and further centralize power with big "gentailers" (retailers who own generation) #txlege

Julia Harvey representing electric co-ops criticizes the "conservative operational posture" of the PUC and ERCOT. Understands why they did it but would like an "end date" for these out-of-market actions like RUCs and to be replaced with longer term solutions.

Harvey continues with concerns co-ops have about LSEO. They are load serving entities and would be required to procure generation 3 years forward in a "market for capacity." She's also concerned that the contract w/ E3 by the PUC only covered the competitive market and not co-ops

King asks IMM Bivens how to avoid a slippery slope to a capacity market.

Bivens says with LSEO there are market power concerns bc of the bilateral nature of the proposal and those concerns would likely lead to a centralized procurement of capacity.

Bivens is asked why we aren't getting more generation on the system. She says "market uncertainty" because "we're in this liminal state." Also points out not much gas gettting built (tho there was some last year) w/ ~$8 gas prices
#txlege

IMM Bivens says #wind and/or #solar paired with batteries can compete well against gas.

King says but only with the subsidies.

Independent Market Monitor says no, even without them.
#energytwitter

King asks if ESG concerns/limitations from investors are stopping thermal plants from being built. She says she doesn't know and there are many factors but says mostly gas/coal/nuke plants aren't being built due to economic reasons.
#txlege #txenergy

@toddahunter asks about @bob_sechler's article and reads: "the agency's price tag for buying more reserves through May 31 this year at $210 million to $385m, and the impact of the policy-induced changes to wholesale prices at about $475m over that time."
statesman.com/story/business…

Rep. Hunter asks how much it will be by end of the year. Independent Market Monitor says likely somewhere around $1.5 billion.

He wants to know who pays, is it Texas customers?
She says, she imagines those costs do make it to Texas customers.
#txlege #txenergy

IMM is asked by @AnaHdzTx about the $1/month estimate of PUC Chair lake. She says, she thinks that refers only to non-spin but would not include RUCs and impacts on ORDC which would be much more. She continues...

#ERCOT IMM: "The concern we have w/ RUC is how it interferes w/ normal market signals" coming online in "hours when it's not needed." Running "more frequently then they need to..." which raises costs and potentially harms their performance later in the summer.
#energytwitter

Next panel starts w/ Chris Ekoh interim CEO @OPUCTX, an office tasked with representing residential & small commercial customers. They filed comments at the PUC saying the LSEO "will increase costs to consumers w/out guaranteeing a corresponding benefit."
interchange.puc.texas.gov/Documents/5237…

@OPUCTX comments cont: LSEO "offers little guarantee to improve physical operational reliability in the real time market. It will, however, offer the potential to extract even more dollars out of existing generation, at the expense of consumers, w/out ensuring future investment"

Katie Coleman, representing the Texas Assoc of Manufacturers, describes their opposition to LSEO as a "line in the sand." The big question she says is "how much risk should be born by consumers instead of investors." Wants it to the latter not the former.

Coleman says just the non-spin and ORDC increases so far are about $3-$3.5m per year for an average sized manufacturer. Would likely be higher under an LSEO.
#txlege #txenergy

Next up is Thomas Bracato of @tcaptx & a coalition of cities. He echoes Coleman says consumers should not bear the risk and that principle seems to be thrown out in the proposed @PUCTX changes.

Notes that February outages were operational failures not capacity failures. #txlege

Bracato of @tcaptx says Phase 1 changes including weatherization were positive steps to ensure no repeat of failures of Feb 2021.

But says Phase 2 changes "would not have prevented the blackouts we experienced." They would "funnel money to generators" but not solve the problems.

Notes that changes made so far are $685 - $810 million through May 31. Wants to know what "reliability benefit we're getting" for these dollars. The additional costs will be borne by customers. Says cities is his coalition are opposed to capacity market like the LSEO.

Bracato says a deeper more detailed and holistic analysis needs to be completed of the LSEO and other proposals.

He doesn't say this explicitly but presumably not by the same consultant that proposed it.
houstonchronicle.com/business/energ…

@PhilKingTX: "I don't like the idea of a capacity market, I think competition is better." But says we need more gas plants, says "gas'll get cheap again." Huh.

Coleman says you can't guarantee revenue goes to new gas plants. The only way you can guarantee is direct procurement.

And that would kill investment in the competitive market bc everyone would go to that procurement which is why manufacturersm "don't prefer it."

My 2 cents: picking winners isn't a good idea. This is why you want to define the system need and NOT pick the technology.
#txlege

Coleman mentioned that ORDC (added payments in scarcity) benefits #solar. Some legislators were upset by that but to quote TAM's Katie Coleman: "Solar tends to match peak." Yep. Solar is quite reliable at summer peak. We'll have more gas/coal outages in Texas summers than clouds.

Michelle Richmond of @TXCompPower told the Cmte that owners of gas plants have no insight into intrastate gas transportation or storage prices. They can see pricing info for interstate trading, that's required today, but within Texas no info is available for buyers of gas.

Rep Howard wants to know if we need a gas market monitor like we have for power.

Vincent DiCosimo of Texas Pipeline Assoc doesn't answer that question but agrees w/ Richmond. The shipper has the info but buyer doesn't have any tranparency into intrastate transportation pricing.

TXOGA says ERCOT has "stopped talking about" an Independent Market Monitor for gas. Sounds like TXOGA is opposed, though she doesn't say that specifically. Now she's indicating they might be opposed to even having a gas desk at ERCOT.
#txlege
dallasnews.com/news/politics/…

Finally a mention of #enegyefficiency by @cyrustx, the first one after 4+ hours of discussions. Notes that when
@PhilKingTX was chair of Regulated Industries in 2007 (the predecessor of State Affairs) they increased the goals but they haven't been increased in the 15 yrs since.

Reed of @TexasSierraClub also commends the @PUCTX for the docket on distributed energy resources (local soures of power and demand response). says we need action to bring more DERs into the market. Comments were due June 15
#txlege #energytwitter interchange.puc.texas.gov/search/filings…

@TimMorstad of @AARPTX points out the hundreds of Texans who died during the February outages. He says we need more transparency in the market, and more public participation.

Couldn't agree more. Very limited opportunities for general public to weigh in on these changes.

Morstad says we now finally have good estimates of what all the changes have cost (>$1b) "pancaked" on top of securitization charges that are coming in the next few months. Says these changes have particular impact to @AARP members w/fixed incomes and should be transparent.

@AARPTX would like the @PUCTX's consultant's analysis of changes to have publicly accessible "plain language" explanations of those changes.

Great suggestion. This should happen.
#txlege #txenergy