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Texas PUC Approves Changes To ORDC For Summer 2019

January 17, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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Note: This story was first published on Jan. 17 with an alert to our email subscribers

The Texas PUC at its meeting today approved changes to the operating reserve demand curve (ORDC), including for the summer of 2019

Specifically, the PUC will use a phased-process to implement changes to the ORDC.

"This will allow a modest adjustment for the summer 2019 with a second phase in 2020 to allow retail electric providers and customers a time period to adjust," PUC Chairman DeAnn Walker said in a memo

Specifically, the PUC directed ERCOT to implement a .25 standard deviation shift in the loss of load probability (LOLP) calculation using a single blended ORDC curve as soon as practicable, with a second step of .25 in the spring of 2020.

The ORDC changes are to be brought before the ERCOT board at its Feb. 12 meeting, with implementation two to four weeks from such date

"I believe that if the Commission implements these changes to the ORDC, there should be various responses from the entire market, such as the following: increased development of demand response, distributed generation, self-generation by customers, increased investment in generation maintenance, delays in pending generator retirements, expedited return to service of certain generating units, and additional investment in newer generation technologies that are quicker to build and more operationally flexible. I believe that some of these responses can be realized before summer of 2019 with Commission action at this time," Walker wrote

The PUC is also prepared to move forward with real time co-optimization in ERCOT, though the Commission is to address certain policy questions at a future open meeting, as well as provide a final vote on funding for the project at such time

Walker in a memo wrote that, "I believe real time co-optimization brings not only economic benefits that exceed its costs, but operational benefits for ERCOT as well. These benefits and costs were discussed in detail by ERCOT and the IMM in filings made on June 29, 2018. After consideration of the information provided by ERCOT, the IMM, and the many parties that commented on the issue, I propose that the Commission instruct ERCOT to proceed with the implementation of real time co-optimization."

Walker proposed that real time co-optimization implementation be funded through the favorable variance in the ERCOT revenues that occurred in 2018 and will likely occur in 2019. Pending a final directive from the PUC, the Commission instructed ERCOT that such funds should be set aside for future use for this project and should not be used elsewhere

Walker did not want to implement a surcharge in the ERCOT market to fund real time co-optimization implementation

Walker also wrote that she does not believe that the incremental benefit of applying marginal losses in the ERCOT market is worth the implementation cost and market disruption. No Commissioners disagreed during the open meeting discussion on this issue, and the PUC did not adopt implementation of marginal losses in SCED.

Commissioners also discussed with ERCOT representatives the outlook for the summer

During the meeting, a representative from ERCOT said that the 2019 projected reserve margin does likely mean ERCOT will need to utilize the additional resources it has available for emergencies, such as ERS, voltage reductions, and releasing reserves, on a number of occasions

A representative from ERCOT said there was "no indication" at this time that ERCOT would have to implement rotating outages, but the reserve margin does mean there is an increased likelihood of such action, due to extreme weather, low wind days, or forced outages

Walker stressed that she had "full confidence" in ERCOT's ability to manage and run the system

Walker said that while the Gibbons Creek mothballing does raise her concern, she didn't want to "scare" people and reiterated that she thinks the state can manage this summer with the adopted changes

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