The Public Utility Commission of Texas (PUCT) approved a plan last week to improve short- and long-term electric grid reliability for Texas.
The plan includes significant reforms to the state’s wholesale electricity market, where power generators and other companies sell electricity that eventually ends up being sold to end-use customers.
Among the key changes approved by PUCT, there will be earlier price signals to bring additional generation online and for large consumers to adjust their demand. Also, the plan will increase the market incentives for large consumers to decrease electricity usage in response to prices and grid conditions.
Also, the Emergency Response Service (ERS) – a tool for large customers to decrease their electricity demand when the grid needs additional power during an emergency — can now be used to avoid emergency conditions. Further, the commission approved new or revamped ancillary services that include paying generators for onsite fuel storage, responding quickly to changes in the frequency of the grid, and the capacity to react to abrupt swings in electricity supply and demand.
“In prior years, any single one of these changes would have been considered significant. Taken together, they are a generational shift in the Texas electricity market,” PUCT Chairman Peter Lake said. “This a move away from the crisis-based business model we have operated under for the past two decades. This new model centers on reliability.”
Some changes will be in place this winter, while other changes will provide long-term incentives for investment in reliable power generation infrastructure to ensure Texas will have the power the state needs for decades.
These improvements are part of Phase 1 of the commission’s work to improve grid reliability and the wholesale electricity market. Phase 2 will include a review of a backstop reliability service and a load side reliability mechanism. ERCOT staff will develop Phase 2 policies over the coming week.
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