Texas Staff Propose Process, Questions for Examining Reliability Standard

Staff of the Public Utility Commission of Texas have filed a memo in advance of the Commission's June 20 open meeting concerning next steps in the Commission's review of the reliability standard.

Staff's memo includes

• A recommended Commission process decision list;

• Staff summary of research into reliability planning in other jurisdictions

• Recommended questions for a proposed workshop

Staff recommends that the Commission should direct ERCOT to pursue one of the following analytical approaches in calculating the LOLE associated with the Commission's chosen reliability standards. The alternative approaches can be characterized as follows:

1) LOLE Study Option 1 (Older LOLE Study, Accelerated Project Completion): Direct ERCOT to work with Brattle and Commission Staff to update the existing Loss of Load Study, calculating required reserve margins for duration-specific reliability standards. While this study would not incorporate data consistent with the most recent Capacity, Demand, and Reserves (CDR) Report, results would be available in a shorter timeframe than Option 2, Staff said.

2) LOLE Study Option 2 (Newer LOLE Study, Delayed Completion): Direct ERCOT to proceed with a new Loss of Load Study, calculating required reserve margins for several alternative reliability standards. A non-exhaustive list of possible reliability criteria to examine includes a) Expected Unserved Energy (EUE), b) duration-specific, and c) economically-optimal standards. This option would have the advantage of incorporating ERCOT's updated demand growth forecast, and would also include updated weather, wind production, and forced plant outage data. While results might not be available until near the end of 2014 or early 2015, this option would provide a more accurate reflection of current system conditions and assumptions, Staff said.

Staff proposed conducting a workshop on August 27, and proposed issuing the following questions in advance of the workshop:

• What is the comparative value of modifying the 0.1 LOLE reliability standard currently employed by ERCOT in favor of an alternative standard? Explain the advantages and disadvantages of your preferred method. Alternative standards may include:

a. An expected unserved energy-based standard

b. A duration-specific LOLE standard (i.e. a 3-hour LOLE)

c. A risk-neutral economically-optimal reliability standard

d. A risk-averse economically-optimal reliability standard

• What are the arguments for or against implementing a physical reliability standard versus an economic reliability standard in ERCOT?

• What level of risk-aversion is appropriate for an economically-optimal standard? Why? How would this particular level of reliability be achieved in an energy-only market?

• If ERCOT maintains a 0.1 LOLE standard, should an "event" be defined strictly as instances of firm load shed, or should a broader definition be adopted? Please explain your rationale.

See Staff memo in Project 42302