Enrolled Version Of Texas Winter Weather Event Omnibus Bill Drops Provision Allowing Wholesale Index Plans To Continue, Bill Sent To Governor

The Texas House and Senate have both passed a conference committee version of SB 3, and the bill has been enrolled and is being sent to the governor

SB 3 as enrolled does not address, at all, wholesale indexed products for residential and small commercial electricity customers. As previously reported, a House version of the bill would have allowed wholesale indexed products to continue, subject to a price cap and notice requirements

As such, barring a provision having been tucked into another bill, or the issue being addressed in special session, the recently passed HB 16, which has become law, will control, which bans wholesale indexed products for residential and small commercial electricity customers. See our story here on HB 16 being signed by the governor and becoming law

ERCOT Price Cap Circuit Breaker

Enrolled SB 3 provides that PUC by rule shall establish an emergency pricing program for the wholesale electric market.

Under the enrolled bill, the emergency pricing program must take effect if the high system-wide offer cap has been in effect for 12 hours in a 24-hour period after initially reaching the high system-wide offer cap. The PUC by rule shall determine the criteria for the emergency pricing program to cease.

Under enrolled SB 3, the emergency pricing program may not allow an emergency pricing program cap to exceed any nonemergency high system-wide offer cap.

Under the enrolled bill, the PUC by rule shall establish an ancillary services cap to be in effect during the period an emergency pricing program is in effect.

Under the enrolled SB 3, any wholesale pricing procedure that has a low system-wide offer cap may not allow the low system-wide offer cap to exceed the high system-wide offer cap.

Per the enrolled bill, the emergency pricing program must allow generators to be reimbursed for reasonable, verifiable operating costs that exceed the emergency cap.

REP Obligation To Inform Customers Of Critical Care, Load Shed Information

The enrolled SB 3 provides that an electric utility providing electric delivery service for a retail electric provider shall provide to the retail electric provider, and the retail electric provider shall periodically provide to the retail electric provider's retail customers together with bills sent to the customers, information about:

(1) the electric utility's procedures for implementing involuntary load shedding initiated by the independent organization certified under Section 39.151 for the ERCOT power region;

(2) the types of customers who may be considered critical care residential customers, critical load industrial customers, or critical load according to commission rules adopted under Section 38.076;

(3) the procedure for a customer to apply to be considered a critical care residential customer, a critical load industrial customer, or critical load according to commission rules adopted under Section 38.076; and

(4) reducing electricity use at times when involuntary load shedding events may be implemented.

Evaluation Of New Ancillary Services

Enrolled SB 3 requires that the PUC shall:

(1) review the type, volume, and cost of ancillary services to determine whether those services will continue to meet the needs of the electricity market in the ERCOT power region; and

(2) evaluate whether additional services are needed for reliability in the ERCOT power region while providing adequate incentives for dispatchable generation.

Enrolled SB 3 provides that the PUC shall require the independent organization certified under Section 39.151 for the ERCOT power region, "to modify the design, procurement, and cost allocation of ancillary services for the region in a manner consistent with cost-causation principles and on a nondiscriminatory basis."

Dispatchable Generation; Ancillary Services For Extreme Weather

Enrolled SB 3 provides that the PUC shall ensure that the independent organization certified under Section 39.151 for the ERCOT power region (the provisions below are hereafter referred to as Subsection (b)):

(1) establishes requirements to meet the reliability needs of the power region;

(2) periodically, but at least annually, determines the quantity and characteristics of ancillary or reliability services necessary to ensure appropriate reliability during extreme heat and extreme cold weather conditions and during times of low non-dispatchable power production in the power region;

(3) procures ancillary or reliability services on a competitive basis to ensure appropriate reliability during extreme heat and extreme cold weather conditions and during times of low non-dispatchable power production in the power region;

(4) develops appropriate qualification and performance requirements for providing services under Subdivision (3), including appropriate penalties for failure to provide the services; and

(5) sizes the services procured under Subdivision (3) to prevent prolonged rotating outages due to net load variability in high demand and low supply scenarios.

Enrolled SB 3 provides that the PUC shall ensure that:

(1) resources that provide services under Subsection (b) are dispatchable and able to meet continuous operating requirements for the season in which the service is procured;

(2) winter resource capability qualifications for a service described by Subsection (b) include on-site fuel storage, dual fuel capability, or fuel supply arrangements to ensure winter performance for several days; and

(3) summer resource capability qualifications for a service described by Subsection (b) include facilities or procedures to ensure operation under drought conditions.