Texas PUC Commissioner Seeks Study On VOLL, Also Says PUC Must Consider Deliverability And Regionality

Texas PUC Commissioner Will McAdams filed a memo concerning consideration of establishing a reliability standard for ERCOT, and, among other things, said that a study should be conducted concerning Value of Lost Load (VOLL)

McAdams noted prior reviews undertaken by the PUC on metrics including a 2013 VOLL study, as well as LOLE and Economically Optimal Reserve Margin

"While this is strong groundwork for us to stand on, I believe that VOLL needs to be studied and updated and a new set of reliability metrics are needed. Both steps will ultimately inform a new target reliability standard for the ERCOT market," McAdams wrote

"As a first step in this process, I would propose we direct ERCOT to engage a consultant for the purpose of initiating a report that would analyze the value of lost load. I believe this study should look at the value both in aggregate and by customer class and utilize analysis of VOLL in other jurisdictions, macroeconomic analysis, and, importantly, surveys. As the last attempt at a VOLL study was undertaken 10 years ago, we need updated analytics and lessons learned to be incorporated into this new iteration. The report and data will help inform the Commission and the ERCOT Board of Directors on what the range of VOLLs may be considered," McAdams wrote

"As a second step, and concurrent to the VOLL study, I believe we should direct ERCOT to undertake analysis and identify scenarios for reliability metrics. While our ultimate decision on VOLL could impact these analyses, we will need some working information to guide policy decisions before the VOLL study is likely complete. The produced outcomes from these scenarios could be the subject of technical workshops and stakeholder engagement administered by Commission Staff and ERCOT," McAdams wrote

"Finally, we also need to direct ERCOT to look at the questions of deliverability and regionality in the context of these reliability studies. Recent deliverability events in Winter Storm Mara in ERCOT and Winter Storm Elliott in MISO have highlighted how the transmission and distribution systems are keenly interrelated. To better understand the reliability needs in ERCOT we must recognize the threats and opportunities presented by how effectively generation is getting to where it is needed," McAdams wrote

"I do not expect that we take any action on the reliability standard at our upcoming February 16 open meeting, but simply elicit consideration and deliberation, so that we may ultimately formulate a plan and a process to move forward on such an important task. Before the March 9, 2023 open meeting, I would ask ERCOT staff to file any questions or concerns they would need addressed to go forward with these steps. Additionally, I would ask Commission Staff to bring any thoughts they may have as well," McAdams wrote