Texas PCM Guardrails Bill Passed To Third Reading In House With $1 Billion Cap, Retail Market Protections

May 22, 2023

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Copyright 2010-23 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Texas house today voted to pass to third reading SB 7, a bill, which among other things, places certain guardrails on the performance credit mechanism (PCM)

Among other things, the bill as it stands provides that the PUC shall ensure that the net cost imposed on the ERCOT market for the credits under the PCM does not exceed $1 billion annually, less the cost of any interim or bridge solutions that are lawfully implemented, except that the commission may adjust the limit: (1) proportionally according to the highest net peak demand year-over-year with a base year of 2026; and (2) for inflation with a base year of 2026.

SB7 provides that the PCM may not be implemented until, among other things:

• the independent organization certified under Section 39.151 for the ERCOT power region begins implementing real time co-optimization of energy and ancillary services in the ERCOT wholesale market.

• an assessment is completed by the PUC that includes an evaluation of the cost of new entry and the effects of the proposed reliability program on consumer costs and the competitive retail market

SB7 requires that the PCM procure the credits, "centrally in a manner designed to prevent market manipulation by affiliated generation and retail companies[.]"

SB7 requires that the PCM, "not assign costs, credit, or collateral for the program in a manner that provides a cost advantage to load-serving entities who own, or whose affiliates own, generation facilities[.]"

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