Texas Senate Business & Commerce Chair, Vice Chair & 7 Senators Tell PUC Not To Implement PCM, Or Other Holistic Market Re-designs, Without Further Legislative Consultation -- EnergyChoiceMatters.com

Texas Senate Business & Commerce Chair, Vice Chair & 7 Senators Tell PUC Not To Implement PCM, Or Other Holistic Market Re-designs, Without Further Legislative Consultation

December 2, 2022

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Reporting by Paul Ring • ring@energychoicematters.com

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Nine Texas state Senators, including Charles Schwertner and Robert Nichols, Chair and Vice Chair (respectively) of the Senate Committee on Business & Commerce, sent a letter to the PUC Chair and Commissioners informing the PUC that any holistic market design change, including the Performance Credit Mechanism, that goes beyond SB 3 should not be adopted by the Commission without further consultation with the Legislature

The Senators requested that the Commission first take action to define the reliability goals for the ERCOT region prior to moving forward with any significant market redesign. "In addition, the Commission should, as directed by law, evaluate the impact of creating a new market-based ancillary or reliability service to meet this reliability standard," the letter stated

Schwertner said separately that, "Texas desperately needs to build new dispatchable energy resources that we can call upon when the grid is stressed due to extreme weather conditions or periods of higher than normal energy use. Unfortunately, the current market design proposal from the PUC falls short of this fundamental goal."

The Senators' letter stated, "The Commission's recently released Assessment of Market Reform Options to Enhance Reliability of the ERCOT System report offers different mechanisms to remake the competitive market, but it does not include any evaluation of the dispatchable ancillary or reliability service product directed by SB 3. As was discussed during the November 17th Senate Business and Commerce Committee hearing, there is significant concern the proposals being considered by the Commission, including the Forward Reliability Market (FRM) and Performance Credit Mechanism (PCM) options, not only fail to meet the directives clearly stated in SB 3, but more importantly, will not guarantee new dispatchable generation in a timely and cost-effective manner."

"We also heard testimony that implementing an administratively complex and novel concept could in fact deter new investments in the ERCOT market until it is fully in place, which by the Commission's own admission could be several years down the road. It is not in the best interest of our constituents to support any proposal that further delays investments in new dispatchable generation, and the Commission should carefully consider the unintended consequences of any type of proposal that creates more uncertainty for market participants," the letter stated

"To address these concerns, we request the Commission first take action to define the reliability goals for the ERCOT region prior to moving forward with any significant market redesign. In addition, the Commission should, as directed by law, evaluate the impact of creating a new market-based ancillary or reliability service to meet this reliability standard. Any market proposal considered by the Commission should also include clear performance requirements, including strong penalties for nonperformance. Further, any other holistic market design change, including the PCM, that goes beyond the scope of SB 3 should not be adopted by the Commission without further consultation with the Legislature," the letter stated

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