Dive Brief:

• As part of the state’s overhaul of its electricity market, the Public Utility Commission of Texas will consider public comments on the development of a reliability standard to improve grid performance through both operational and economic changes.
• The Electric Reliability Council of Texas held a March 15 technical workshop with stakeholders and found general agreement on a framework focused on limiting the duration, frequency and magnitude of grid outages. The grid operator will work with a consultant to analyze a value of lost load factor, known as VOLL,  to inform the standard.
• Utilities, system operators and regulators commonly rely on a 1-in-10 reliability standard that requires planning margins sufficient to ensure load shedding occurs only once in a decade. But power experts say this standard no longer recognizes the reality of today’s constrained electric grids, and requiring greater reliability means higher prices.

Dive Insight:

Texas does not have a reliability standard in place, but lawmakers in the wake of Winter Storm Uri in 2021 directed the commission to develop one to improve ERCOT reliability.

Uri resulted in widespread blackouts and led to the death of almost 250 people in the state. 

A 2013 Brattle assessment found most North American systems set planning reserve margins using some variation of a 1-in-10 standard. But PUCT Chairman Peter Lake said at the commission’s open meeting Thursday that “everybody's in agreement. .. The 1-in-10 standard needs to be improved.”

Commissioner Jimmy Glotfelty said he had reached out to Jim Robb, the CEO of the North American Electric Reliability Corp.,  who in an email advised against the 1-in-10 standard. Glotfelty read the email aloud during the commission meeting.

“Not only does it not reflect the increased value of electricity since it was established by PJM in the 50s, reserve margin analysis doesn't recognize the energy constraints that the fleet increasingly has to operate with — i.e., it doesn't take into account expanded uncertainties related to fuel supply, weather, renewables or natural gas,” according to Robb’s email.

ERCOT’s independent market monitor, Potomac Economics, declined to comment on the topic but in 2021 recommended that regulators “should not mandate a 1-in-10 reliability standard because it is unjustified based on any reasonable VOLL.” The firm said it would imply a $200,000/MWh VOLL.

“Dictating such a standard creates a capacity market — although it may be decentralized through bilateral contracts in some proposals,” Potomac Economics said in its 2021 comment.

Initial comments on work to develop a reliability standard are due to the PUCT on March 29 and will be filed in the development project 54584 docket. Reply comments are due April 5.