Texas Utility Regulators Approve Reforms To Wholesale Electricity Market

The Public Utility Commission of Texas (PUCT) on Dec. 16 voted to enact major reforms to the state’s wholesale electricity market.

Some changes will take effect very quickly to be in place this winter, the PUCT said, while other changes “will provide long-term incentives for investment in reliable power generation infrastructure to ensure Texas will have the power the state needs for decades.”

Key Changes

The changes approved by the PUCT will provide earlier price signals to bring additional generation online and for large consumers to adjust their demand, it said.

The PUCT said its approved reforms increase the market incentives for large consumers to decrease electricity usage in response to prices and grid conditions. This includes virtual power plants where groups of customers can come together into a single resource for the grid.

Emergency Response Service (ERS) is an existing program for large customers to register with ERCOT to decrease their electricity demand when the grid needs additional power. Previously, this tool was only available during an emergency. Now ERS can be used to avoid emergency conditions.

The commission also approved new or revamped ancillary services that include paying generators for having onsite fuel storage, for the ability to respond quickly to changes in the frequency of the grid, and for the capacity to react to abrupt swings in electricity supply and demand.

These improvements are part of Phase 1 of the Commission’s work to improve grid reliability and the wholesale electricity market. Phase 2 will include a review of a backstop reliability service and a load-side reliability mechanism.

These will provide further market signals for reliable generation, the PUCT said.

PUCT staff and Electric Reliability Council of Texas staff will develop phase 2 policies over the coming weeks and report back to the commissioners.