Dive Brief:

• The Texas electric grid set a new peak demand record this week as a sweltering heat wave has maintained triple-digit temperatures across the state. The grid has remained reliable despite a spike in thermal generation outages, as renewable production also logged new records.
• Regulators are working to improve the state’s electricity market. At the June 29 open meeting of the Public Utility Commission of Texas, they reviewed efforts to develop a new dispatchable reliability reserve service, or DRRS, that state lawmakers mandated they put in place by December 2024. That is a “relatively tight timeframe” that limits how the new service can be implemented, said officials from the Electric Reliability Council of Texas.
• The PUCT also approved an 83% base pay raise for board members of the state’s grid operator. Compensation levels had not changed in more than a decade and are out of step with other regional transmission organizations and independent service operators, the regulators said.

Dive Insight:

The Texas grid has remained reliable so far this summer, even as it set new demand records.

Preliminary data shows ERCOT set a new peak demand record of 80,828 MW on Tuesday, besting the previous peak of 80,148 MW in July 2022. Many observers credit the contribution of renewables, in particular solar, in avoiding rolling blackouts. 

ERCOT saw about 31,468 MW of combined solar and wind generation on Wednesday, passing the previous record of 31,267 MW set in April, according to gridstatus.io.

Texas regulators continue to develop new products to aid grid reliability. House Bill 1500, passed by lawmakers in May, directed the PUCT to develop a dispatchable reliability reserve service and to develop firming requirements for new generators.

The DRRS is required by statute to be in place by Dec. 1, 2024, limiting options for how it can be implemented, Kenan Ögelman, ERCOT vice president of commercial operations, told regulators at the open meeting.

“That puts us on a relatively tight time frame and helps define some of the feasible options,” Ögelman said. 

The new DRRS could be implemented by substituting it for the current non-spin reserve product or by augmenting non-spin reserve requirements.

“Completely vacating non-spin and putting DRRS in its place will require us to lean more on the ERCOT contingency reserve service. And that's a very new service, and the markets are still kind of adjusting to our procurement,” he said. “Adding another segment means that there are almost three products within non-spin, but it would have to price out at one price. So there's some real inefficiencies in terms of market design, going down that path.”

ERCOT should work with stakeholders this summer on the best way to meet the DRRS requirements, PUCT interim Chair Kathleen Jackson said, “including developing protocol changes that meet the statutory requirements of HB 1500. It will be important to have decisions made before the end of the year so that system changes can be timely implemented.”

ERCOT officials will be back in front of the PUCT at the July 20 open meeting to discuss progress on the new reliability service. Jackson said she wants to see “a road map for accomplishing the remaining market design work that is in front of us.”

ERCOT board gets a pay raise

As Texas bakes under a persistent heat dome, one utility regulator questioned the timing of the ERCOT pay raise.

“I find it hard that in this summer, and this week that we're breaking records yet again ... that this is the most important thing that we're considering,” Commissioner Jimmy Glotfelty said at the June 29 open meeting. “I accept the fact that their their current compensation is lower than the other RTOs and ISOs around the country. ... I just struggle with this. We have to protect ratepayers.”

Compensation levels were last updated in July 2012, according to ERCOT’s petition. The change means base director compensation will rise to $160,000 annually, up from $87,000. Stipends for the board chair and other positions were also raised.

“This can't be a spiraling issue where costs go unchecked for the consumers,” Glotfelty said.

Despite the concerns, the three members of the PUCT present yesterday approved the pay raise. Former chair Peter Lake resigned earlier this month, and Commissioner Lori Cobos was not at the June 29 meeting.