PUCT to Restart Work on Resource and Reserve Adequacy, Shortage Pricing Project

The PUCT has directed Staff to restart work on Project 37897, which was originally opened as a proceeding relating to resource and reserve adequacy and shortage pricing (see 1/20/10).

The Commission will also expand the project to include a comprehensive list of issues related to reserve margins and reserve adequacy, and what these concepts mean in extreme cold and extreme heat.

In particular, the Commission will examine whether the current scarcity pricing mechanism works in periods of extreme cold weather when, regardless of the revenue opportunity, resource owners can't get units online.

The Commission will also consider how ERCOT addresses forced outages in January and February, and whether the procurement of additional responsive reserves in such circumstances is appropriate. Such procurements depress energy market prices, Commissioners noted.

Chairman Barry Smitherman, citing pending EPA regulations as well as the current natural gas price environment, said he was concerned with whether the Commission has in place the right mechanisms for getting new generation built, in light of these obstacles, to meet growing demand in the 2014-16 time frame.

Smitherman also said that the project will consider whether several reliability issues previously delegated to ERCOT, including issues relating to responsive reserves, spinning and non-spinning resources, and Load Acting as a Resource, should be addressed by the Commission in a rule, rather than leaving such issues to the ERCOT protocols.

The Commission directed Staff to begin taking comments and hold a workshop.