Dive Brief:

• The Electric Reliability Council of Texas (ERCOT) is still debating what to do about a reliability must-run agreement it inked this summer with NRG Texas Power, paying top dollar to ensure the power will be there when it is needed when demand spikes.
• Platts reports stakeholders met this week to examine the contract, with some debate taking place over whether the very existence of RMR contracts indicates a market failure.
• In June, ERCOT entered into a contract with NRG to keep the Greens Bayou Unit 5 available to support transmission system reliability in the Houston area. ERCOT must pay $3,185 per hour year-round, to reserve the summer capacity.

Dive Insight:

While there is some question about whether RMR contracts indicate a market failure or a delay in bringing on transmission, there's little debate that ERCOT's deal with NRG isn't great for ratepayers.  

The deal with NRG Texas Power aims to specifically support one high-voltage circuit that could be subject to overloads when power demand spikes. A transmission enhancement, the Houston Import Project, is expected to address the situation by summer of 2018. But until then, the deal with NRG means the generation unit must be available during summer months, beginning in July 2016 and continuing through June 2018.

In July, the grid operator said it was seeking "lower-cost, effective alternatives to an agreement it recently entered to keep a power generating unit in the Houston area operating to help maintain reliability of the electric grid."

While ERCOT continues to harden transmission to access more wind power, it is expected to have sufficient generation. In September, the operator released its final fall Seasonal Assessment of Resource Adequacy report showing the grid with more than 82,000 MW of total generation capacity and a peak demand forecast of about 54,400 MW.