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Texas PUC's Review of Potential Energy-Only Market Improvements Will Be "Deliberative"

Commission, "Not In a Hurry", "There's No Fire"

June 8, 2017

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Copyright 2010-17
Reporting by Paul Ring •

The Public Utility Commission of Texas's review of the efficiency of the energy-only market and potential improvements (including in the area of price formation) will be, "very deliberative," and, "thoughtful," Commissioner Brandy Marty Marquez said during yesterday's open meeting, as Marquez said that the PUC is, "not in a hurry."

"There's plenty of time for us to discuss these things; there's no fire," Marquez said

Commissioner Kenneth Anderson agreed with that assessment

Commissioners agreed to hold an initial technical workshop for the project, with an intention to schedule the workshop for August. The workshop will provide an opportunity to examine a paper by William Hogan and Susan Pope, filed by Calpine and NRG, reviewing various price formation issues and which offers several recommendations. The workshop may also include a review of the experience in other RTOs with certain market designs (such as marginal losses)

The PUC will not seek stakeholder comments on the project until after such workshop.

ERCOT will file certain information in July in advance of the workshop. This will include a status update on recent changes, if any, made to:

a. ERCOT's transmission planning methodology and assumptions;

b. Assumptions and procedures used to determine the need to issue a RUC instruction or commit an RMR resource to support local reliability or for system-wide capacity; and

c. Out-of-market operator actions and associated pricing rules.

Additionally, ERCOT will provide preliminary contextual information, to the extent available, addressing the issues below, but said that commenting on the "need" for the policies below would take more time to review the experience in other markets and other issues:

• The need and/or cost of introducing a local reserve product or local operating reserve demand curves in conjunction with real-time co-optimization.

• Providing an estimate of the implementation time and cost of incorporating marginal losses into dispatch and pricing.

Anderson also asked ERCOT to provide information on unaccounted for energy (UFE) uplifted to load since the introduction of the nodal market, to help inform decision-making.

At the open meeting, Phillip Oldham, for the Texas Industrial Energy Consumers, asked that the Commission keep in mind the unique nature of Texas' retail market when considering any changes to the wholesale market.

"No other market in the country has the retail market that this market has, and a lot of the design choices that were made originally are fundamental to the success of that," Oldham said

Anderson reiterated, as he did at the previous open meeting, that, "whatever the Commission does, if anything, it would need to be mindful to allow for the market to digest the changes before implementation," as Anderson noted the prevalence of bilateral contracts reflecting current market design.

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