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Winter 2020 Regulatory Update

Winter 2020 Regulatory Update

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By Mark Dreyfus, MD Energy Consulting, TPPA Consultant

 

Solar Additions Expand Future Summer Reserve Margins

In December, ERCOT released its highly anticipated Capacity, Demand and Reserves Report (CDR).  The semi-annual report presents ERCOT’s most recent forecast of the planning reserve margin for both winter and summer 2021 through 2025.  The report forecasts peak summer operating reserves of 15.5 percent for 2021, rising to around 27 percent thereafter, well above the target of 13.75 percent.  If these levels of operating reserves are sustained, conditions in the market going forward may be very different than in the past few years, with much less stress anticipated at summer peak and less likelihood of extreme pricing events. The winter reserve margin for 2021/2022 is forecast at over 43 percent above forecasted 2020/2021 winter peak. 

The dramatic rise in forecasted reserves is due largely to the rapid market expansion of utility-scale solar resources.  Based on an expectation of 80 percent of solar capacity available at summer peak, all solar resources combined are forecast to be seven percent of the market at peak (6,108 MW) in 2021, rising to 16 percent for 2022 (15,380 MW). 

ERCOT’s Summer Summary for 2021 through 2025 is reproduced below.

 

TPPA Adopts Statement of Principles on Electric Vehicle Fueling Infrastructure Policy

In its recent Report to the 87th Texas Legislature, the Public Utility Commission recommends that the Legislature clarify that the use of an electric vehicle charging station does not constitute a sale of electric energy to a retail customer, and that an electric vehicle charging station is not an electric utility or retail electric provider.  The Commission believes that these changes will provide regulatory certainty, are consistent with the principles of competition, and will facilitate deployment of electric vehicle charging stations across Texas.

TPPA submitted comments to the PUC in August as part of the PUC’s development of this legislative recommendation.  During that process, TPPA adopted a set of policy principles as the basis for its input to the Commission.  The principles were developed in collaboration with TPPA’s Government Relations & Legal Committee, the Engineering & Operations Committee, and the Board of Directors.  The principles emphasize that the members of the MOU community may take different approaches to extending vehicle fueling services in their service territories.  As submitted to the PUC in TPPA’s comments, the principles are listed below: 

Electric Vehicle Fueling Infrastructure Statement of Principles of TPPA
  • TPPA and its members recognize the ongoing expansion of electric vehicles and are preparing for the likely infrastructure investments required to accommodate electric vehicle ownership growth.
  • The regulatory framework supporting electric vehicle fueling in the State should promote innovation and accommodate multiple models.
  • An electric vehicle charging station may be owned and operated by an MOU or a third party.
  • An electric vehicle charging station may be installed behind the meter of a commercial establishment.
  • An electric vehicle charging station, or a set of multiple charging stations at a single point of interconnection, may be established as a separately metered customer.
  • In an area served by an MOU, the transaction between the MOU and an owner/operator of a public charging station is a retail sale of electricity. The transaction between an owner/operator of a public charging station and an EV driver is a fueling service. 
  • A separately metered electric vehicle charging station located in the service territory of a MOU must purchase electricity at retail from the MOU.
  • Extension of electric infrastructure to serve an electric vehicle charging station within a MOU service territory can be provided through a MOU’s line extension policy or facilities extension policy as contributions in aid of construction for costs of materials and labor associated with the connection and energization.
  • An MOU may establish a tariff for provision of retail electric service to owners/operators of separately metered electric vehicle charging stations.
  • Terms for the provision of electric vehicle fueling services to an electric vehicle driver or fleet operator may be set by the owner/operator of the electric vehicle charging station providing fueling services.

The Commission’s recommendation to the Legislature for clarification is in full alignment with these principles.  TPPA looks forward to working with the Public Utility Commission and the 87th Texas Legislature on clarifying electric vehicle charging policy in the State consistent with TPPA’s Statement of Principles. 

Voluntary Policy on Outage Reporting to the PUC

The Public Utility Commission has requested that municipal utilities provide the Commission with improved situational awareness in the event of significant interruptions on a utility’s system.  Under current PUC rules, Investor-Owned Utilities are required to report to the Commission in cases of significant system interruptions.  The Commission is requesting that municipal utilities voluntarily provide similar reporting.   Situational awareness of instances when customers experience electric utility service interruptions will allow State authorities to assess the need for and deploy emergency resources to communities served by Public Power. 

In response to the PUC’s request, TPPA’s Board of Directors adopted a resolution “strongly encouraging [that] each of its members acknowledge the public benefit that can be achieved by a comprehensive outage reporting program and report voluntarily to the PUC in the event of a significant interruption of electric service…”  Both TPPA and the PUC recognize that a municipal utility should follow the utility’s internal outage communication guidelines and processes in determining when to report a significant interruption to the Commission.

The Commission has set up an email address for receiving reports of significant interruptions.  Reports should be sent to outages@puc.texas.gov.  In many cases, a utility may already be reporting to local government officials, first responders, and local media in the event of a significant interruption.  Notice to the PUC can simply be added to your existing contact list.

For more information to assist a municipal utility in establishing a voluntary compliance program on reporting significant interruptions, please review our publication “To the Point” on this subject, which may be found on the TPPA website.

ERCOT’s Latest Modernizations Combined into the Passport Program

ERCOT is in the midst of several interrelated market and operations projects that will lead to substantial modification of ERCOT’s systems with go-live scheduled for 2024.  These modifications include the implementation of Real-time Co-optimization of energy and Ancillary Services, ordered by the PUC in January 2019, modernization of the Protocols to accommodate Energy Storage Resources and Distributed Generation Resources, and a refresh of the ERCOT Energy Management System (EMS), which was last overhauled nearly 10 years ago as part of the nodal market implementation.  Each of these projects will require a great deal of resource commitment from ERCOT and entail risks related to systems integration and transition. 

The Passport Program treats these initiatives as one implementation effort.  Combining the individual projects into a single program will allow ERCOT to better manage its internal and contract resources.  The Passport Program will also be a focus for reporting—to ERCOT management, stakeholders, the PUC and the Legislature—on all aspects of the project.  The Passport Program approach recognizes the greater maturity of the ERCOT organization to manage its internal project resources and to engage with critical audiences as it moves through implementation. 

 

For additional information on regulatory matters, please contact Taylor Kilroy, TPPA Regulatory Counsel, at tkilroy@tppa.com.