Level Of ERCOT Admin. Fee Implicated By Texas PUC Consideration Of Potential Changes To Reliability Monitor

Consideration of potential changes to the entity which serves as the state's reliability monitor for the ERCOT region could potentially implicate the ERCOT Administrative Fee, per a discussion at today's meeting of the Public Utility Commission of Texas

The PUC currently has an open rulemaking (Project 50602) concerning the Texas reliability monitor and associated rules at 16 TAC 25.503

Currently, the Texas Reliability Entity (TRE) serves as the Texas reliability monitor for the ERCOT region and, among other responsibilities, fulfills oversight functions which are required to be undertaken by the PUC, or its delegate, under PURA. Among other things, PURA provides for adoption and enforcement of rules relating to the reliability of the regional electrical network and accounting for the production and delivery of electricity among generators and all other market participants

PUC Chairman DeAnn T. Walker expressed concern that the current use of the Texas Reliability Entity as the region's reliability monitor does not comply with the PURA requirements that, in order for the Commission to delegate responsibility for reliability oversight, such delegation must be to an "independent organization" under which, "The commission has complete authority to oversee and investigate the organization's finances, budget, and operations as necessary to ensure the organization's accountability." Walker said that TRE does not meet such provisions, and noted that the PUC has no oversight over TRE's budget and operations

Walker also expressed concerns with various aspects of the current contract and budget for the TRE

Potential alternatives for reliability oversight under PURA include taking functions in-house at the PUC (though there is currently no general revenue funding from the legislature for such internal operations) or using another contractor (ERCOT and Potomac Economics being among the potential entities cited)

Of note to the state's competitive markets is that funding for the PURA reliability monitor (TRE) is currently recovered through the ERCOT Administrative Fee

However, even if another contractor is used for reliability oversight, Walker questioned whether the use of the ERCOT Administrative Fee as a cost recovery mechanism is transparent and appropriate, given that the costs are a function that the legislature assigned to the Commission