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Texas Bills Would Allow Customers To Directly Contract With Demand Response Providers (No REP Intermediary)
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Several Texas bills have been introduced which would allow a customer to provide demand response in ERCOT by contracting directly with a demand response provider, rather than through a retail electric provider
H.B. No. 2687 provides that the PUC shall, "ensure that customers in all customer classes have
the option to contract for participation in demand response either
directly with one or more demand response providers, including
retail electric providers, with scheduling entities qualified by
the independent system operator, or with a combination of entities
consisting of the independent system operator and one or more
demand response providers."
Under H.B. No. 2687, "demand response provider" means, "a competitive
energy services provider that aggregates customer load reduction
capabilities, including reliability demand response capability,
and offers those capabilities into an electricity market or
program."
While there is no statutory prohibition on customers directly contracting with a demand response provider currently, because ERCOT QSEs generally represent either load (LSE) or a resource entity, any demand response provider would need to assume additional obligations (such as being the entity responsible for serving the customer's entire load). While H.B. No. 2687's language is not explicit, the intent appears to be to allow a mechanism similar to how demand response is treated in other RTOs, where a demand response provider is not responsible for a customer's entire load, only a certain reduction.
H.B. No. 2820 contains the same language described above as H.B. No. 2687 but also would add the requirement that, "A customer is entitled ... to
participation in demand response programs through demand response
providers."
H.B. No. 2687 further provides that the PUC shall, "provide opportunities for demand response
providers and customers to participate in wholesale energy markets
and ancillary services markets on a comparable basis with other
resources, while accommodating differences in operational
capabilities of various customer loads among customer classes,
including differences related to availability, dispatch
notification timelines, curtailment response times, ramp rates,
curtailment duration, and times required to return to service
following an outage."
H.B. No. 2687 also directs the PUC to, "promote development of demand response
participation by customers in all customer classes," and "remove barriers to demand response participation
for demand response providers and for customers in all customer
classes."
H.B. No. 2687 would also allow the PUC to increase the amount of ancillary services required to be procured by LSEs, and also authorize the PUC to obtain emergency response services in addition to ancillary
services as appropriate to prevent rolling blackout conditions
Specifically, H.B. No. 2687 would provide, "If the commission or independent organization certified
under Section 39.151 for the ERCOT power region determines that
changes in the amounts of existing ancillary service obligations
required by load serving entities are needed:
(1) the commission by rule may address the imbalance;
and
(2) the independent organization may make changes to
its ancillary service obligations through a stakeholder process to
address the imbalance."
Furthermore, under H.B. No. 2687, "The commission by rule shall establish a process for
obtaining emergency response services in addition to ancillary
services as appropriate to prevent rolling blackout conditions
caused by shortages of supply in the ERCOT power region."
H.B. No. 2687 provides that such rules
must include:
(1) parameters for estimating the amount of emergency
response service capacity necessary to prevent blackout
conditions; and
(2) mechanisms for equitably sharing the costs of:
(A) contracting for reserve capacity to be
available; and
(B) power provided to prevent blackout
conditions.
H.B. No. 2687 provides that the total cost for
ensuring the emergency response services does not exceed $100
million annually.
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March 5, 2021
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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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