News Release

June 01, 2012

PUC and ERCOT responses to The Brattle Group report

The Brattle Group report on resource adequacy in the ERCOT region is now available on ERCOT’s website.

The Brattle Group’s news release is available here. Following are responses from the Public Utility Commission of Texas (PUC) and Electric Reliability Council of Texas (ERCOT).

Statement from PUC Chairman Donna Nelson
The Brattle Group’s report confirms that we are moving in the right direction. I look forward to reviewing the report fully and discussing next steps with my fellow Commissioners in the coming months. This is an important issue for all Texans, and I encourage anyone with comments to file them with the PUC.

Statement from ERCOT Board Chair Craven Crowell
Resource adequacy has been and will continue to be the ERCOT board’s most important strategic priority.  As board chair, I’m pleased that the Brattle Group has provided us with a thorough study and report.  This report will be an important resource for us as we continue discussions among the ERCOT board, the PUC, market participants and other stakeholders on what actions are necessary to provide a reliable electric supply for our region.  Electric reliability matters to all of us and we must remain focused on the central question of whether we are doing enough to guarantee an adequate power supply.

Statement from ERCOT CEO Trip Doggett
The Public Utility Commission of Texas (PUC) and ERCOT have considered resource adequacy their highest priority for the past year and have taken several steps to help maintain a reliable balance between electric generation and the growing demand for electric power. However, this report highlights that there is more work to be done. ERCOT will work closely with the PUC to do what is necessary and prudent to continue providing reliable electric power in the ERCOT region.

The Brattle Group looked carefully at all the electric market components that affect reliability, from both the supply and demand sides. They have also solicited input from a variety of market participants and stakeholders and offered an honest, independent look at the issues that affect investment in electric generation within ERCOT. Among the report’s many findings and recommended options are some proposals related to market design and operational practice, from how we call on units and price power during peak periods to how we reduce demand on the grid when needed.

Among the steps already taken by the PUC and ERCOT to address resource adequacy concerns:

  • We have changed how we deploy and price non-spin reserves — those units that commit to be on standby in case of emergency — so they do not artificially reduce market prices when resources are scarce.
  • Under new PUC rules, we are expanding the previous Emergency Interruptible Load Service (EILS) to Emergency Response Service (ERS) that now includes distributed generation. The new ERS program went into effect today.
  • The ERCOT Board this month will consider approving a pilot program that would allow some participants in the ERS program more time to go off-line if needed to help ensure the stability of the grid. Specifically, these facilities would have 30 minutes to drop their demand rather than the 10 minutes required under the current program.
  • This month, ERCOT also will roll out a program that provides nonbinding forward-looking prices to help those entities that make operational decisions based on energy prices determine when it is most economically beneficial for them to plan to reduce their loads.
  • We are working closely with the PUC to foster conservation efforts during periods of peak electric demand.

While we have already started these and other steps, there clearly is more work to be done to help address the tightening reserve margins we anticipate in the next few years and for the long term. This document will provide policymakers a framework of options to take the next steps.

The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power to more than 25 million Texas customers -- representing about 90 percent of the state’s electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects more than 46,500 miles of transmission lines and 650+ generation units. It also performs financial settlement for the competitive wholesale bulk-power market and administers retail switching for nearly 8 million premises in competitive choice areas.

ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. Its members include consumers, cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities, transmission and distribution providers and municipally owned electric utilities.