Texas Lt. Governor says there may be a move to make ERCOT a state agency

by Paul Ciampoli
APPA News Director
March 9, 2021

In the wake of rotating outages implemented by the Electric Reliability Council of Texas (ERCOT) in February after an arctic blast hit the state, there may be a move to turn ERCOT into a state agency, Texas Lt. Gov. Dan Patrick recently said.

In an interview with a local Texas television show, Patrick was asked whether he thinks ERCOT should be “brought back into the fold” as a state agency. ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature.

“I don’t have that answer today,” Patrick said. “I’m starting with a clean sheet of paper. I’m starting from scratch and if that needs to happen then it should happen.”

ERCOT is a “private company that was basically hired by the PUC to” run the grid, he said. “But we as elected officials are held responsible for those actions. I don’t like being held responsible to a company that I have little to no control over,” Patrick said.

 “I think that we may see a move to bring ERCOT back in as a state agency or if it’s still a private  company, we’ll have many more controls including who sits on the board because we want to know who those people are,” he said.

Patrick calls for correction to $16 billion error

Meanwhile, Patrick on March 8 called on the Public Utilities Commission of Texas (PUCT) and ERCOT to correct the emergency pricing error that continued after the power shortage had ended and the major threat to the Texas grid had passed.

Patrick noted that in response to grid wide power shortages starting February 15, the PUC ordered ERCOT to institute the $9,000 per megawatt hour cost cap, which is designed to encourage increased power generation during an extreme shortage.

However, according to ERCOT’s Independent Market Monitor (IMM), Potomac Economics, ERCOT incorrectly extended that pricing intervention after the power shortage had ended. The $9,000 price should have ended at 11:55 PM on February 17. Instead, it continued throughout the entire day of February 18 into February 19th — 32 hours total ­– which resulted in an additional $16 billion in charges, Patrick said.

“The IMM identified a second significant error that also must be corrected immediately. ERCOT failed to cap ancillary service prices at $9,000 which resulted in prices rising as high as $24,000 a megawatt hour at intervals during the storm. Pricing should never have exceeded the $9,000 cap at any time,” he said in a news release.

The IMM has recommended that the PUCT exercise their authority to direct ERCOT to correct both these pricing errors, but the PUCT has declined to do so, Patrick noted.

The PUCT on March 5 declined to take action in response to a report from the IMM for ERCOT that a decision by ERCOT resulted in $16 billion in additional costs to ERCOT’s market, of which roughly $1.5 billion was billed to load-serving entities (LSEs) to provide make-whole payments to generators for energy that was not needed or produced.

Patrick also said that ERCOT has a procedure for correcting pricing errors, but has also declined to act so far.

“According to the ERCOT Nodal Protocol Section 6.3 (6) (a), ERCOT has 30 days from the event to correct errors in pricing. Today I am calling on both the PUC and ERCOT to follow the recommendations of the IMM and correct these mistakes,” he said. “Correcting this $16 billion error will require an adjustment, but it is the right thing to do. It will ultimately benefit consumers and is one important step we can take now to begin to fix what went wrong in the storm.”

PUC Commissioner resigns

In other news, PUC Commissioner Shelly Botkinhas resigned her role with the PUCT, effective immediately, the Commission said on March 8.

DeAnn Walker on March 1 resigned as chairwoman of the PUCT, days after she faced questions from state lawmakers at a hearing that examined the rotating outages implemented by ERCOT in the wake of an arctic blast.