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Texas PUC Staff: "Some" Form Of Dynamic Ancillary Services Procurement Should Occur As Soon As Practicable
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"Some" form of dynamic ancillary services (A/S or AS) procurement should be implemented, "as soon as practicable," Texas PUC Staff said in a recommendation on a review of ancillary services in ERCOT
For REPs, the most notable policy of the PUC's ancillary services review is whether the amount of ancillary services to be procured should be calculated on a dynamic basis (with to-be procured amounts set closer to the operating day), or whether the A/S amount should be set in advance as a known quantity (currently, the minimum required A/S quantities are set in advance annually)
Various stakeholders have raised concern that hedging difficulties may result from dynamically determined A/S procurement quantities, impacting the ability of REPs to offer fixed retail rates, or requiring retail rate risk premiums, (see our prior story here for a full discussion)
In Staff's review, Staff recommends that, "some form of dynamic AS procurement be implemented as soon as practicable due to the potential efficiency gains that could be achieved by this change."
Staff recommended a phased approach for dynamic A/S procurements, to start no later than with the 2028 A/S Methodology.
Staff specifically suggested developing dynamic procurements of ECRS and Non-Spin under this phased approach
Staff said that dynamically procured A/S will have greater certainty about the needed A/S quantities, lowering the costs for customers versus quantities which are set annually
"This recommendation is particularly relevant for certain types of AS (e.g., ECRS, Non-Spin), but even other AS (e.g., Reg, RRS), for which quantities are more constrained, may be dynamically adjustable to some extent," Staff said
Staff agreed that the current practice of establishing A/S procurements annually does provide clarity to REPs, making hedging easier
Staff suggested measures to reduce any negative impact to REPs' ability to hedge which may result from dynamic A/S procurement
Dynamic procurement, Staff suggested, could still include an annual "assessment" that, "establishes both minimum and expected quantities, with actual quantities determined closer to the operating day."
"Minimum quantities could, for example, be set as a fixed percentage of the expected quantities. Or, in the event a probabilistic AS methodology is adopted at a future date, minimum quantities could be set annually based on a less conservative criterion (e.g., avoiding load shed, avoiding emergency operations), while expected and actual quantities are set, closer to the operating day, based on a more conservative criterion," Staff said
With respect to other A/S matters, Staff recommends that Dispatchable Reliability Reserve Service should be designed to mitigate operational risks in real time and to reduce the use of RUC
DRRS, Staff said, should, "not be specially designated as a tool for resource adequacy
apart from other AS."
Staff said that DRRS should be initially "targeted" to dispatchable generation
Project 55845
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November 15, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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