Texas State Rep. Says LSE Obligation Is Wrong Route, Urges PUC To Consider DEC Proposal

January 27, 2022

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Texas State Rep. Jared Patterson has in a letter to the Public Utility Commission of Texas said that an LSE obligation is the "wrong route" for assuring ERCOT reliability and urged the PUC to consider a proposed Dispatchable Energy Credit (DEC) program

As previously reported, all of the PUC commissioners have agreed to commit to studying and developing a "load-side reliability mechanism" in some form or fashion, though some commissioners have significant concerns and have not committed to adoption

As an alternative, Texas PUC Commissioner Will McAdams has proposed that the PUC adopt a Dispatchable Portfolio Standard to address (along with other market reforms) reliability in ERCOT, as an alternative to the LSE obligation (which is essentially a three-year forward "capacity" obligation).

See more background on the DEC proposal here

"It appears the primary questions before the commission are how to further incentivize new dispatchable power generation, and just as important, who is going to pay for it. I understand one option is the Load Serving Entity (LSE) Obligation, which brings our energy-only market toward a capacity market. Forcing additional costs onto consumers to address the lack of dispatchable resources is the wrong route. Consumers, through their taxes, are already paying heavily in subsidies to those causing the issue: wind power generation companies. Further, consumers, through their transmission and delivery companies, are paying heavily for CREZ lines (billions over budget) to bring wind power from west Texas to load centers. Through the LSE, consumers would be forced to pay even more to back up the failed wind experiment with reliable, dispatchable power, through a line item charge on their electricity bill," Patterson wrote

"One other option before the commission seems to work toward the root of the issue. The Dispatchable Energy Credit (DECs) is a unique tool agnostic to the source of power generation. Simply put, you can either dispatch power when called upon, or pay into the system to ensure there is power available when you are not. Similar to Demand Response for end use customers, who are paid to be available to curtail, DECs are payments to be available to generate power. Rather than a specific line item charge on the customer’s bill, this would simply add cost to any generator who cannot perform when needed," Patterson wrote

"If there is one thing we’ve learned in recent years, it’s that a lack of power generation, when needed, can cost our economy and, more importantly, the lives of Texans. Regardless of the fuel type, power generators should be forced to be available to provide power in moments of crisis. If they cannot, they should find alternate means of doing so. As I understand it, the DEC would accomplish this goal without raising costs to the average consumer – and as important – it would place the costs where they belong, with non-dispatchable power generators," Patterson wrote

Patterson concluded, "As you continue to discuss options for improving [the] Texas electricity market, I urge you to consider who is shouldering the burden of the redesign. Is it the customer who is supposed to receive the power, or the entity that is supposed to provide it?"

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