Citing Need For "Clean Up", Texas PUC Opens Up "More Broadly" Resource Adequacy Rule

During yesterday's open meeting, Commissioners of the Texas PUC agreed to "more broadly" open a rulemaking concerning 16 TAC § 25.505, relating to resource adequacy in the energy-only market design, to "clean up" the rules in addition to addressing two issues identified by Staff

As more fully discussed in our prior story, Staff has suggested that the Commission consider modifying the rule to address a potential for day-ahead and real-time scarcity pricing to diverge. Under the rule, if peaker net margin threshold were exceeded in some year, the system-wide offer cap for day-ahead and real-time would be reduced from $9,000/MWh to $2,000/MWh (or 50 times the Houston Ship Channel gas price index for the previous day). However, prices in the Real-Time Market would still be able to rise to $9,000/MWh in periods of resource scarcity, as the ORDC adder would continue to be applied in real-time. However, as the ORDC does not apply in the Day-Ahead Market, prices in the day-ahead market would be limited to the LCAP, a maximum of $2,000/MWh or 50 times the Houston Ship Channel gas price index for the previous day

Staff also suggested that the Commission may wish to open a project to consider replacing references to the Houston Ship Channel in the rules with a broader, more general reference that would accommodate a recent evolution in natural gas trading patterns.

The PUC agreed to open the rule to address these two issues

However, Commissioners also agreed with Chairman DeAnn Walker to "more broadly" open the rule, with Walker citing a need for a, "clean up."

"I want to open it up more broadly," Walker stated, citing numerous "old" provisions still in the rule. Walker noted that the rule still references the zonal market, for example.

"I would like to open it up broadly and clean it up," Walker said, noting her emphasis on cleaning up the Commission's rules