PUCT's Pablos: Energy-Only Market "Has Not Failed," and "Is Not Broken"

"For the benefit of the public, please allow me to remind us all that our energy-only market design has not failed us to date and is not broken," Commissioner Rolando Pablos of the Public Utility Commission of Texas said in a memo regarding resource adequacy in advance of today's open meeting.

"Our market has been doing exactly what it was designed to do -- to provide ample, reliable, and affordable electricity to our citizens. Our energy-only market has produced a reliable electric grid that has consistently answered the call of our ever-growing consumer base," Pablos said.

"That being said, however, legitimate concerns are being raised as to the ability of this current market construct to withstand the long-term future demands of our growing consumer base. I share these concerns," Pablos said.

"I agree that swift action is required, but I disagree that instant action is needed. We are not in crisis mode," Pablos added.

"We must heed the distant early warning, but cannot allow ourselves to fall into the trap of making hurried decisions today that could later prove to be lamentable. I strongly believe that a thoughtful, deliberate, and well-founded Commission decision on a long-term solution will do more to create the regulatory certainty needed to stimulate further generation investment than a hasty and ill-informed decision carrying potential unforeseen and unintended consequences," Pablos said.

Consistent with his earlier stated desire for a measured approach, Pablos suggested that the current long-term rulemaking (40268) containing proposed increases in the ERCOT offer cap be allowed to expire so that policy issues in the rule can be harmonized with whatever additional policies the Commission adopts for resource adequacy (the rule is set to expire on the 27th, with an open meeting/workshop set to address the rulemaking on October 25).

"I believe that adopting further SWOC [system wide offer cap] increases at this time is premature because the appropriate SWOC levels will depend on the type of market framework that the Commission ultimately adopts as part of its overall long-term solution," Pablos said.

Pablos also noted that the Commission has not yet had prepared a Value of Lost Load study to inform the SWOC decision.