TEN News Flash

TEN News Flash

March 11, 2014
PUCT to Discuss ERCOT Reliability Standard at its Next Meeting

Copyright 2014 by Competitive Assets, LLC.  All rights reserved

At its 4/17/14 open meeting (OM), the Commission is scheduled to discuss questions related to “what reliability standard to use in the ERCOT region.” For the OM, the PUCT staff have filed a memo in related Project No. 42302, presenting the “scope of work on this matter, including a research plan and project schedule for investigation of relevant aspects of ERCOT’s reliability standard.” The staff’s plan includes researching reliability standards in other jurisdictions, collecting updated ERCOT calculations, gathering stakeholder input, and presenting findings and potential ranges of options for moving forward to the Commission. These efforts will be coordinated with ERCOT, and staff also expect to conduct a workshop and receive stakeholder comments.

PUCT Staff File an Amendment to Certification Criteria Rule
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For the 4/17/14 OM, the PUCT staff filed a Proposal for Adoption (PFA) in Project No. 41904, Rulemaking Proceeding to Amend P.U.C. Subst. R. 25.101, Relating to Certification Criteria. The PFA “clarifies the definition of a generating unit, without changes to the proposed text, as published in the January 3, 2014 issue of the Texas Register (39 TexReg 23). Currently, the certification criteria do not apply to any generating unit that is less than 10MW, is built for experimental purposes only, and not for purposes of commercial operation. Deleting the reference to commercial operation in § 25.101(a)(2) will clarify that an electric utility need not apply for a Certificate of Convenience and Necessity (CCN) even if the experimental unit has some effect on commerce.”

March 10, 2014
Setting the Record Straight about “Demand Response” Report to ERCOT Board

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On 4/9/14, TexasElectricNews summarized an article from Digital Journal about a report to the ERCOT Board on the 1/6/14 Demand Response (DR) performance. We have now confirmed with ERCOT staff that there was no such a report to the Board, nor was it discussed at its most recent meeting. This erroneous information was widely reported. We did find that some of the information cited in the article (also, here) was posted as a background document on Emergency Response Service (ERS) for the 3/27/14 meeting of the Technical Advisory Committee (TAC).  We have learned that the 2013 ERS Annual Report will be filed at the PUCT in Project No. 27706 later this month. We note here that at ERCOT, there have been recently several developments for ERS, including approval of a revision to the ERS procurement methodology; the rejection of NPRR582, Refinements to Testing ERS; and the filing of NPRR603, ERS Settlement and Service Types. In addition, on 4/9/14, ERCOT held a workshop on requirements to provide retail DR data to ERCOT, and the Wholesale Market Subcommittee (WMS) addressed a couple of items related to Load Resource participation in the ERCOT markets.

FERC Reviewing Internal Controls after Leaks
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On 4/9/14, FERC issued a Management Alert on the “review of internal controls for protecting non-public information.” The review started in March “in response to requests from the Senate Energy Natural Resources Committee and also the Commission regarding an alleged leak of non-public information exposing certain electric grid vulnerabilities, and details surrounding the April 2013 attack on the Pacific Gas and Electric Company’s Metcalf substation.” Preliminary results show that FERC might not have adequate controls.

Northwest Electricity Prepayment Study Indicates High Customer Satisfaction and Energy Savings
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The Distributed Energy Financial Group (DEFG) announced results of its study on pre-paid electric service, noting that “greater awareness and more real-time information about energy use results in reduced electricity use by prepay service customers in the Pacific Northwest.” Three out of four customers, who were part of the study, indicated they had changed their behavior to lower their electric bill since switching to prepay service. In addition, the study showed that customers had high levels of satisfaction with their prepay service: 92% indicated they were “very satisfied” or “somewhat satisfied.” The study included two cooperatives, which offer prepay electric service in the Pacific Northwest and was undertaken for a better understanding of the potential conservation impacts that can result from prepay electric service.  

March 9, 2014
Demand Response Exceeds Expectations in Texas During January Grid Emergency

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Digital Journal states that in a report to the ERCOT Board, ERCOT staff reported that “demand response providers performed better than expected – and in excess of their contracted commitments – during a powerful winter storm, known as the Polar Vortex. The storm caused outages at several power plants on 1/6/14.”  A total of 496MW of capacity were provided to the grid within 46 minutes of being called. This exceeded expectations and delivered 127% of the power ERCOT had contracted.

DOE Releases its 2014 Strategic Plan
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On 4/7/14, the Department of Energy (DOE) released its 2014 Strategic Plan, “a comprehensive blueprint to guide the agency’s core mission of ensuring America’s security and prosperity by addressing its energy, environmental, and nuclear challenges, through transformative science and technology solutions. The plan is organized into 12 strategic objectives, aimed at three distinct goals: Science and Energy, Nuclear Security and Management, and Performance. These objectives represent the broad cross-cutting and collaborative efforts taking place across the Department’s headquarters, site offices, and national laboratories.” In other DOE news, “Lieutenant General Frank G. Klotz, USAF (Ret), has been confirmed as DOE’s Under Secretary for Nuclear Security and Administrator for the National Nuclear Security Administration.”

March 8, 2014
Credit Concerns at ERCOT Find No Easy Answers

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At its 4/7/14 meeting, the ERCOT Board’s Finance and Audit Committee (F&A) heard an update from the Credit Work Group (CWG) on several issues, including: (a) ERCOT staff’s analysis of price spike predictability (no seasonal pattern and no useful correlation to outages found); and (b) possible options for addressing credit concerns. The concerns about whether the market is sufficiently collateralized have been raised because of the rising offer caps (up to $9,000kWh in June 2015) and implementation of the Operating Reserve Demand Curve (ORDC), which is designed to increase the likelihood of higher prices. As there is little agreement on whether or how to raise collateral requirements, CWG looked at the possibility of an insurance fund in cases of default. A credit sub-group met last week to look into this possibility but, according to reports, did not get too far. The CWG Chair concluded that this is shaping up as a difficult question to resolve, although the work will continue. Several Board members acknowledged the significance of the credit concerns.  

CenterPoint to Receive Higher Bonus for Energy Efficiency Efforts
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The calculation of Centerpoint’s (CNP’s) Energy Efficiency Bonus has been remanded to the PUCT in a recent decision by the Court of Appeals that will result in a higher bonus for CNP’s efforts.  A bonus is mandated by PURA and codified into a PUCT rule, if a utility exceeds the Energy Efficiency Goals set out in the statute.  In a previous decision in Docket No. 36952 about CNP’s recovery of its energy efficiency costs and related bonus, the PUCT did not include in the base for the calculation of the bonus those program costs that had been agreed to in the settlement of a prior docket.  The bonus is a percentage of those costs, and capped at a certain level.  The court reversed this decision and has remanded the inclusion of those costs, and recalculation also of the related carrying costs.  Related abatements of administrative appeals were lifted and remanded to the PUCT in Docket Nos. 38213, 39363, and 40356.  There have been several new control numbers established related to the remand:  Docket Nos. 42359, 42360, 42361 and 42362.

March 7, 2014
Texas A&M to Lead Major Offshore Wind Project

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Governor Rick Perry has announced that researchers at Texas A&M have received a $2.2 million state grant from the Texas Emerging Technology Fund to develop and increase the capacity of offshore wind energy technology, and help bring it to market.  The collaborative project brings together researchers from across the state.  “TAMU is working with the Texas Tech University National Wind Resource Center, a national leader in the wind energy industry, as well as the University of Texas at Austin Center for Electromechanics and Department of Civil, Architectural and Environmental Engineering, TAMU-Corpus Christi Conrad Blucher Institute and University of Texas at Brownsville School of Business and Department of Chemistry and Environmental Sciences.” The funds are to be matched with $50 million from DOE, $13.2 million from industry members of the Go Wind consortium, and $1 million from participating universities.  The Texas Energy Report notes that the project “will support the development of offshore wind farms, turbine and platform technologies in a joint effort with DOE’s Offshore Wind Advanced Technology Demonstration Project.

U.S. Wind Power Blows New Records. Again. And Again
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Bloomberg.com writes about wind power records around the country: “Wind was responsible for 4.8% of America’s electricity used in January. That’s the highest January total ever, breaking the record from last January, which broke the record for the January before that, and so on. The article concludes that “America’s rising wind power feels unstoppable. That’s because in many areas of the country wind has reached an important tipping point: becoming cheaper than coal and natural gas. In fact, states getting the most electricity from wind include gas-rich Texas, Oklahoma, and Colorado.” The report acknowledges, however, that “…competition between wind and gas is fierce,” since fracking “brought America some of the cheapest natural gas prices in the world.” ERCOT recently registered its own all-time record for wind power, when on 3/28/14, it topped 10GW. And on 4/4/14, a U.S. Senate committee approved the two-year extension of the Production Tax Credit for the wind power industry.

March 4, 2014
FERC Explores Implications of Polar Vortex

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At the recent Gulf Coast Power Association’s spring conference in Houston, one panel discussed the effects of the “polar vortex” on Independent System Operators (ISOs) around the country. Among the resulting issues for ISOs were the need for greater coordination between the natural gas producers and electric power generators, improvements to market efficiency, and the continuing need for some, even older, coal units. On 4/1/14, FERC held a technical conference “to explore the impacts of recent cold weather events on the Regional Transmission Organizations/ISOs, and discuss actions taken to respond to those impacts.” The staff’s presentation has been posted and a free live webcast is available for three months after the meeting. More on “winter 2013-14 by the numbers” at today’s RTO Insider.

March 3, 2014
Energy Future Talks Pit Billionaires Against Billionaires

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In a 4/2/14 article, Bloomberg.com describes the anticipated EFH’s bankruptcy filing as a “billionaire-against-billionaire” struggle: “In the largest buyout of their lives, Roberts and Kravis of KKR & Co., Bonderman of TPG Capital and Goldman Sachs Group Inc.’s Blankfein – billionaire cousins, a private-equity giant and a titan of Wall Street – may salvage just 1% of the original equity investment of about $8.3 billion, according to people with knowledge of the negotiations. And they’re about to lose control of most of the company to a pair of other billionaires, Leon Black and Howard Marks.” “Black’s Apollo Global Management LLC and Marks’s Oaktree Capital Management LP, along with Centerbridge Partners LP, are among the largest creditors. Because the firms are working together to take over a piece of the company, and control similar slices of debt, some negotiators have nicknamed them the Three Amigos. The Three Amigos want to split off EFH’s different businesses in a way that would favor them while leaving the bankrupt carcass of EFH with an estimated $7 billion-plus IRS bill, too large for it to pay, according to people with knowledge of the plan who asked not be identified because discussions are ongoing. Other stakeholders are opposed and vow to fight the plan or even push tax officials to change the rules, they said.”

April 2, 2014
Critical Infrastructure Protection Standards Under Development 

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At its 3/27/14 meeting, the Technical Advisory Committee (TAC) got an update on the development of Critical Infrastructure Protection (CIP) v5 standards at NERC.  The effort is based on four directives from FERC Order No. 791, and includes requirements to identify potential threats and vulnerabilities to certain facilities and develop a security plan, without dictating the specifics steps to protect those facilities.  This provides flexibility to the asset owners to address a range of physical security conditions in a responsive and cost-effective manner.  ERCOT staff urged market participants to get involved in the process, since these new standards – with staggered compliance dates – may apply to entities not previously subject to CIP standards.  Once registered, MPs would be able to file comments, as the standards are developed/proposed.  In addition, in mid-March, NERC posted its GridEx II Report Highlights Recommendations and Lessons Learned from Grid Security Exercise.  The exercise was held in the fall of 2013.

April 1, 2014
PUC Punts Capacity Market Decision To The Texas Legislature In 2015
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An article in the Dallas Business Journal notes that the legislature in 2015 may consider the structure of the Texas electricity market.  At the recent Open Meeting of the PUCT, a workshop on resource adequacy was postponed indefinitely.  In an interview, PUCT spokesman Terry Hadley noted this delay and also stated that a decision was made to not make changes to the energy only market until they can get input from the Texas Legislature.  The article also notes that “fears that Texas will run short of electricity have subsided considerably in recent months since the state started using a new forecasting method to project future demand.”  The Legislature convenes in January.  A review of interim charges to date for the Texas legislature has not shown any topic that would include consideration of the electric market structure.

Senate Leaders Call for Investigation into FERC Leaks Regarding Grid Security
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On March 27, 2014, two members of the US Senate Committee on Energy and Natural Resources called for an investigation into the possible leaking of sensitive information about the power grid.  A letter from Chair Mary Landrieu and Ranking Member Lisa Murkowski cited recent reports in the Wall Street Journal about grid security and documents that were not widely distributed that may have pinpointed grid vulnerabilities.  Stating that, while FERC is conducting its own investigation, they are aware that it can be difficult for an agency to investigate its own actions, and therefore their request has been sent to the DOE’s Office of Inspector General.  Refusing to specify further the issues that this raises, they further requested that the response not be made public.  They submitted specific questions that were also not made public.

March 31, 2014
FERC Issues Pilot License For Tidal Project in Puget Sound
 
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FERC recently issued a 10-year license to Public Utility District No.1 of Snohomish County for the proposed 600kW Admiralty Inlet Pilot Tidal Project to be located at Puget Sound, Washington. The endeavor is an experimental project designed to study and evaluate the environmental, economic, and cultural effects of the previously untapped hydrokinetic energy. The project’s OpenHydro System will convert the kinetic energy of water flowing in current from 0.7 meters per second to 3.3 meters per second into rotational motion and deliver the energy through rotors into the generators. The turbines are seen to rotate about 70% of the time. “The Admiralty Inlet Project is an innovative attempt to harness previously untapped energy resources,” Acting FERC Chairman Cheryl LaFleur said. “I look forward to the results of the experimental project and congratulate Snohomish for undertaking it.”

March 28, 2014
NRG Going Into Rooftop Solar Business
 
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NRG Energy is expanding into the rooftop solar business. On 3/27/14, the company said that it has bought New Jersey-based Roof Diagnostics Solar for an undisclosed amount. Forbes reports that “[t]he acquisition followed its 2011 purchase of Solar Power Partners, which gave NRG an entry point into rooftop solar project development and operation. Before that, NRG had mostly put money into giant solar power plant projects, such as the 392MW solar field by BrightSource Energy, which came online earlier this year.  The vast majority of NRG’s power plants in North America burn fossil fuels – renewable energy generation makes up only 4% – but it’s been more aggressive than its fellow power producers in making investments across different segments of the solar market.  NRG said in its press release that Roof Diagnostics, which has thrived mostly in the northeast, is now “expanding into California.” That means it’s coming after the largest solar energy market in the country and the home turf of a cluster of solar companies that are largely responsible for the growth of the rooftop solar market. Those companies include SolarCity, Sungevity, SunPower, REC and Verengo.” This highlights the competition of the booming the U.S. rooftop solar market. The residential segment, in particular, grew 60% in 2013, by adding 792MW and will likely outpace the commercial and utility market growth again this year, said GTM Research.

March 27, 2014
New Projects Opened at PUCT

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Recently, the PUCT opened two new projects to deal with emerging issues, including:

  • Project No. 42302, Review of the Reliability Standard in the ERCOT Region – this will address issues raised in Commissioner Anderson’s 2/5/14 memo, in which he suggested refocusing from resource adequacy and market redesign toward an evaluation of the “one-in-ten-year loss of load event as the most appropriate reliability standard.” The issues include looking at the “normalized expected unserved energy” as a possible new reliability standard;” and
  • Project No. 42330, Rulemaking Proceeding to Propose New Procedural Rule 22.146, Relating to Limitations on Discovery in Rate Proceedings – when discussing the recently approved Proposal for Publication in Project No. 41622, on recovery of rate case expenses, the PUCT Chair suggested opening a new rulemaking on “discovery limits” for cases dealing with rate case expenses.

Automated Demand Response Proposed at CPS  
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On 3/26/14, Honeywell announced “a two- year program with CPS Energy in San Antonio, Texas. The utility will use automated demand response (ADR) technology and services from Honeywell to connect and collaborate with commercial and industrial customers, and adjust electricity consumption when the demand for energy peaks. As a result, CPS Energy will have additional tools to enhance the stability of the Texas electrical grid, especially on hot summer days when air conditioners and other cooling equipment are often running at capacity.”

March 26, 2014
ERCOT’s Proposed Houston Import Transmission Project Lacks Consensus

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At its 3/27/14 meeting, the Technical Advisory Committee (TAC) will consider a proposal by ERCOT for the Houston Import Project. This was originally scheduled in February, but NRG asked for a delay. ERCOT staff clarified that, in July/Aug. 2013, CenterPoint Energy, City of Garland/Cross Texas Transmission, and Lone Star Transmission separately identified a reliability need to increase import capability into the Houston area by 2018. After an extensive review, ERCOT staff concurred, and are proposing to build a 345kV double-circuit line (130 miles) and several upgrades. The cost is estimated at $590 million. NRG, however, disagrees and filed its concerns with the HIP’s assumptions in time for the upcoming TAC meeting. NRG asserts that the staff’s assumptions are flawed and the proposal would not solve the “perceived reliability problem.” While the TAC members often review new transmission proposals, their approval is not necessary for the projects to proceed. The HIP may be considered by the ERCOT Board in April.

Stakeholders Seek PUCT Opinion on ERCOT’s Non-Spin Service Changes  
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On 3/24/14, CPS Energy filed comments in Project No. 40000, related to resource adequacy. The comments inform the PUCT about NPRR576, Changing Non-Spin Service to Be Dispatched by ERCOT, which is now being considered by stakeholders at ERCOT. The revision request proposes to continue allowing On-Line Non-Spin, but also places it behind the High Ancillary Service Limit (HASL). Additionally, the minimum offer floor for On-Line Non-Spin would be reinstated, with the value to be determined by TAC. Previously, the Commission had approved offer floors for some Ancillary Services (AS), but eliminated them as part of the decision to approve the Operating Reserve Demand Curve (ORDC). The CPS comments, filed at the request of stakeholders, seek the PUCT’s feedback “on whether this proposed change is consistent with prior Commission decisions on offer floors for AS.”

March 25, 2014
PUCT Considering Rule for Cease and Desist Orders
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On 3/24/14 the Public Utility Commission of Texas staff filed a revised Proposal for Adoption in Project No. 41659 Rulemaking to Implement Cease and Desist Authority under PURA Chapter 15 as Required by HB1600 (83rd Regular Legislative Session.  The Proposal is to be considered at the 3/27/14 Open Meeting and reflects the changes discussed by the Commissioners at the 3/6/14 Open Meeting.  The rule gives the Commission the authority to get a party to stop doing something immediately – akin to a Temporary Restraining Order (TRO) (with a potential for a hearing later).  The Proposal states that “[t]he commission must provide notice and opportunity for a hearing before issuing a cease and desist order if such notice is practicable. If such notice is not practicable, the commission may issue a cease and desist order without providing notice and opportunity for a hearing.”  Further, “[t]he notice shall include a description of the violation(s) of PURA or this chapter that the market participant’s conduct is alleged to violate and specific facts that support each allegation as reasonably believed by commission staff and a proposed order that contains a statement of the charges.  Notice of a proposed order shall be given not later than the l0th day before the date set for a hearing.”

FERC Publishes 2013 State of the Markets Report  
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On 3/20/14, FERC published the 2013 State of the Markets report.  The report identifies the following highlights: 

  • Spot natural gas (NG) and wholesale power prices rose across the U.S. in 2013
  • Electricity spot prices rose across the country in 2013, despite a slight decline in demand (the decline has been for a third consecutive year)
  • Rising NG demand set new record
  • Shale gas production drove NG supply to record levels
  • Regional Transmission Organizations (RTOs) and utilities adjusted to changing resource mixes
  • Shale NG displaced traditional supplies
  • Renewables and NG are replacing nuclear and coal capacity
  • Trading volumes of NG products on the Intercontinental Exchange (ICE) fell, while electric trading volumes increased
  • Demand Response has started to grow, and
  • Extreme weather pushed NG and power prices to historic highs in early 2014.

 

On the same day, FERC proposed “further steps to improve the coordination and scheduling of natural gas pipeline capacity with electricity markets, in light of increased reliance on natural gas by electric generators. The Commission issued a Notice of Proposed Rulemaking (NOPR) to gather public comments on its proposals to revise the natural gas operating day and scheduling practices used by interstate pipelines to schedule natural gas transportation service. The proposed revisions include starting the natural gas operating day earlier, moving the Timely Nomination Cycle later, and increasing the number of intra-day nomination opportunities to help shippers adjust their scheduling to reflect changes in demand.”

March 24, 2014
Texas Smart Thermostat Sales Heat Up
 
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 An article originally from the Dallas Morning News reports that “competition to get smart thermostats in homes is fierce. In Texas, for example, Honeywell and Nest have signed exclusive deals with electricity retailers Direct Energy and Reliant, respectively, to give consumers free devices in exchange for signing two-year power contracts.” Five years after their introduction, “manufacturers are reporting triple-digit sales increases. The thermostats are pictured as the next “it” device and a revolutionary step in getting households to better manage their electricity use.” Parks Associates, a Dallas market research firm, estimates about 1 in 10 U.S. homes, with a broadband connection, now owns a smart thermostat, and Navigant Research estimated that this market may grow to $1.4 billion by 2020.

March 21, 2014
Luminant Wins Top National and State Awards for A Mine Reclamation Program
 
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Energy Central reported that Luminant won top national and state awards for a mine reclamation program: “With 90 awards for reclamation excellence over the past 40 years, Luminant is keeping the streak alive. The company was notified recently it won both the Interstate Mining Compact Commission’s 2014 National Mine Reclamation Award in the coal category and the Railroad Commission of Texas’ 2014 Coal Mining Reclamation Award. The award submittals featured Luminant’s unique approach to reclaiming the B Mining Area, located in the southern portion of the company’s Big Brown Mine in Freestone County. As part of the reclamation project, Luminant transformed the final 1.6-mile-long mining pit into a 112 surface-acre lake, which provides a rare opportunity for genetic research of large-mouth bass through a partnership with Texas Parks and Wildlife Department.”

San Antonio Ranks Among Top 10 Cities For Solar Power
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Fast Company reported that the Alamo City is the only Texas metropolitan area among the nation’s leaders for solar power. One Block off the Grid (1BOG), a firm that helps homeowners find suppliers and installers for solar panels, last month wanted to find out which cities had the most installed solar capacity per capita. It looked at data compiled by the National Renewable Energy Laboratory (NREL) and ranked San Antonio at 10th place for its capacity of 35.4W/person. In California, Fresno topped the list with 182.92W/person, though 1BOG and Fast Company noted that the Fresno area’s relatively small population skewed that figure. Although no other Texas metro placed on the list, the NREL statistics show Travis County beats Bexar County on a strict measure of the number of solar installations. At 2,232 installations, Travis County has nearly triple the amount as Bexar County.

March 20, 2014
Grid Evolves, And FERC Isn’t Just For Energy Wonks Anymore

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An article in EENews details the recent evolution of FERC from an agency “not to be mentioned in Beltway conversations” to one that is now regarded as cool and important. “The electric grid, renewable power, and oil and gas pipelines have moved onto front pages, and FERC has gone with them. The independent agency, with about 1,500 employees, which oversees the grid, pipelines, and wholesale electricity markets even got a shout-out in the new season of Netflix’s political drama, “House of Cards.” And then there’s the fear factor. FERC and other system overseers have become guards against grid-threatening solar bursts, hackers, and terrorists. Last week, the agency grabbed national headlines after The Wall Street Journal outlined on Page 1 a leaked commission report that warned the entire grid could go dark if only nine transmission substations were attacked.” The Sustainable FERC Project aims to translate the agency’s often-convoluted regulatory debates and decisions for people who don’t wear pocket protectors. “As part of the project, a coalition of 23 groups launched a website that focuses on the commission and its decisions on transmission, the integration of renewables and reliability of the power markets. Learning to speak FERC – try “nondiscriminatory open-access transmission service” – is not unlike learning Mandarin,” said one staffer.

March 19, 2014
Tesla Looking For a Place to Park

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Tesla’s founder Elon Musk has a big dream: producing up to 500K electric cars annually (in 2013, sales were at 30K). For that he needs batteries, and so on 2/27/14, an announcement was made that Tesla intends to build a large factory to produce lithium-ion batteries. The press went into over-drive, with the most recent articles noted here: Tesla Fights For A Place To Park, Texas Is Perfect For Tesla Motors, Regulations Could Harm Texas’ Bid For Tesla Plant, States Move To Stop Tesla’s Direct Sales, As Musk Suggests Company Victim Of ‘Mafia’ Tactics, and Lithium Producer Chases Tesla’s Bold Battery Plan.  (A 2013 article has a video of Tesla’s “robot army” in Fremont.) The factory would be large: up to 6,500 workers (by 2020), needing between 500-1000 acres of land, with solar and wind farms, and access to a railroad (and water). The manufactured batteries would be shipped to Tesla’s car plant in Fremont, CA (hence, the railroad). The press reports have indicated varying dates for the start of the project: from permitting by the middle of this year, to just picking a site by December or in January 2015 (right before the start of the legislative session in Texas). Four states are in the bidding: Nevada, Arizona, New Mexico, and Texas. But there’s a big problem – at least for Arizona and Texas: Elon Musk said he won’t do business in a state that places obstacles to his business model. Unfortunately, both states have – what some have called “draconian” – prohibitions on direct car sales to consumers. If Texas decides to live up to its “open-for-business” mantra, the potential sites may include areas around El Paso or the Panhandle. In Arizona, Tuscon is vying for the factory: “Tuscon Mayor Jonathan Rothschild told the Star that a site near local highways and the Union Pacific Railroad mainline has already been chosen, and that the city has prepared tax incentives on top of what the Arizona state government would offer to entice Tesla.” In New Mexico, interest has been expressed by Duke City and Donna Ana County. In Nevada, which is the closest to the Fremont factory, Tesla is said to be looking at areas around Reno-Stead Airport, the Tahoe Reno Industrial Center, and/or a Las Vegas industrial park. And while we’re speculating about the potential sites, let’s not forget a bit of irony here. Elon Musk is fast taking us back to the future: in 1912, 50% of cars on the road were electric. It’s been a long detour….

ERCOT Issues New Fact Sheet
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Did you ever need some basic fact about ERCOT and found yourself hunting for it for way too long?  A new ERCOT fact sheet may have your answer.  On it you will find:  how many customers are in ERCOT, and how many are competitive-choice customers; how many MW of capacity ERCOT has to serve peak demand, and what the record peak demand is; plus many more facts.  There is a section on the State of the Grid with information on transmission and generation development, retail service switches, advanced meters, and demand response.  The ERCOT Board Directors are listed along with the alternates, as well as the ERCOT Officers and a brief description of ERCOT’s governance process and oversight entities. 

March 18, 2014
Could Minnesota’s “Value of Solar” Make Everyone a Winner?

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On 3/12/14, Minnesota adopted allowing “utilities a new method of contracting with distributed solar producers, called the market-based “value of solar.” If adopted by utilities (the provision is voluntary), it will fundamentally change the relationship between solar-producing customers and their electric utility. (Austin Energy has a similar value-of-solar rate since 2012.) Value-of-solar creates a market price for distributed-solar energy in an effort to answer utilities concerns over the net-metering rates. The initial estimates of the market value-of-solar peg it at more than the retail electricity price. It may be that utilities have been getting a sweet deal on solar power. The solar market price includes eight separate factors, but the largest four account for the lion’s share of the value: 25 years of avoided natural gas purchases, avoided new power plant purchases, avoided transmission capacity, and avoided environmental costs. (More info available here.)

March 17, 2014
FERC Was Not Amused by WSJ’s Report on Power Grid Vulnerability
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While the national media were reporting about the weaknesses in the nation’s grid system, FERC commissioners were not amused. A statement from the Acting Chair of FERC Cheryl A. LaFleur on the publication of Wall Street Journal article on grid security said, in part: “Today’s [3/12/14] publication by The Wall Street Journal of sensitive information about the grid undermines the careful work done by professionals who dedicate their careers to providing the American people with a reliable and secure grid. The Wall Street Journal has appropriately declined to identify by name particularly critical substations throughout the country. Nonetheless, the publication of other sensitive information is highly irresponsible. While there may be value in a general discussion of the steps we take to keep the grid safe, the publication of sensitive material about the grid crosses the line from transparency to irresponsibility, and gives those who would do us harm a roadmap to achieve malicious designs. The American people deserve better.”

PJM’s IMM Releases State of the Market Report
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On 3/13/14, PJM’s Independent Market Monitor (IMM), Monitoring Analytics, LLC, released its State of the Market Report, concluding that PJM Interconnection’s wholesale electric energy and capacity markets produced competitive results in 2013.  The IMM also stated that “[t]he PJM markets face significant challenges and the Market Monitoring Unit (MMU) recommends specific improvements to PJM’s market design … to help PJM markets meet those challenges and to enhance the competitiveness and efficiency of PJM markets.”  The report said, in part, that: “[e]nergy prices in PJM in 2013 were set, on average, by units operating at, or close to, their short-run marginal costs. This is evidence of competitive behavior and resulted in a competitive market outcome. A combination of increased, weather related, demand, and higher fuel costs led to an increase in energy prices compared to 2012. The load-weighted average cost of energy (LMP) increased 9.7% in 2013, compared to 2012, from $35.23/MWh to $38.66/MWh. The price of capacity increased 17.8% in 2013, from $6.05 to $7.13/MWh of load. The price of natural gas was higher and the price of coal was relatively flat in 2013 compared to 2012. As a result of the relative changes in fuel costs, coal-fired units were more competitive with gas-fired units, coal output increased by 6.2% in 2013 and gas output decreased by 12.2% in the same period, continuing the short term reversal of the trend towards reduced coal output.

80,000 US New Green Jobs Were Created in 2013
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Clean Technica is reporting that almost 80K jobs have been created by the green economy in the U.S. in 2013.  While California led the way with 15,400 jobs, Texas was second, with 6,300 jobs.  Overall, however, the number of jobs has declined.

March 14, 2014
In Texas, Staples Recognized for Leadership in Energy Efficiency
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One reason why demand growth in Texas is slowing: the Department of Energy (DOE) is reporting that, as part of the administration’s Better Buildings Challenge, on 3/13/14, Staples was recognized “for its leadership in energy efficiency at the Coppell Fulfillment Center near Dallas, Texas. Through the Better Buildings Challenge, building owners and managers are charged with making their commercial building, multifamily housing, and industrial plants and facilities at least 20% more energy efficient over the next 10 years. Staples – one of the world’s largest e-commerce companies – has committed to reducing energy intensity by 25% in more than 1,700 of its buildings in the next ten years. To date, Staples has improved the energy efficiency of 800 facilities by more than 10%.”

Solar Power is Getting Utilities Involved in Writing New Rules
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The EENews.net writes about how the game-changing solar power is getting utilities involved in writing the new rules. The latest solar news include two consecutive records for solar power generation in California (on 3/7/14 – 3,926MW, and 3/8/14 – 4,093MW); a 25-year purchased-power agreement between Austin Energy and SunEdison for just under 5¢/kWh; and the development of a Minnesota program to promote distributed-generation systems, under which owners of solar panels can sell electricity back to regional utilities. At a Minnesota PUC hearing, testimony was heard on the “value-of-solar” tariff, as an alternative to net metering; it would establish a price that utilities could pay to owners of private solar systems who sell electricity back to the grid. While the concept has been explored in a few other places, including Austin, where a tariff has been in place since 2012, Minnesota is the first state to try to apply it across all utilities operating in a state. But “a tariff methodology developed by the Minnesota Department of Commerce, under legislative order, has drawn heavy scrutiny from the state’s largest power suppliers, including Minneapolis-based Xcel Energy and other regional utilities, like Minnesota Power and Otter Tail Power.” 

March 13, 2014
Solar City Moves into Best Buy
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Forbes is reporting that Solar City and Best Buy announced their partnership on Wednesday (3/12/14) and a plan to station SolarCity sales people in about 60 stores in Arizona, California, Hawaii, New York, and Oregon. The announcement formalizes an experiment the two carried out last September at Best Buy stores in California and New York to see if the idea was worth pursuing, said Lyndon Rive, CEO of SolarCity. “Almost every single product you buy there consumes energy. We can now provide you with a cleaner and better source of energy,” Rive said. Solar installers usually do fair bit of online advertising. Some dispatch employees to do door-to-door sales or to station them at community events. Referrals from existing customers are a big way to line up customers. SolarCity sells leases that allow home and business owners to pay for solar electricity over a 20-year contract. Its customers don’t own the equipment or pay the upfront cost of the equipment/installation, but only the energy from the solar panels. SolarCity raises money from banks and other investors to finance those installations.

March 12, 2014
March 11, 2014: Appeals Court Denies Texas’s Challenges On New EPA Rules

Austin City Council to Create Energy Resource Generation Task Force
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The Austin City Council has voted unanimously on a draft resolution to create the Austin Energy Resource Generation Task Force, as part of the 2014 update process to the city’s existing energy plan. The task force will provide recommendations to council members on how AE should meet existing goals for renewable energy by 2020, as well as opportunities for strengthening and expanding such goals through 2024. Each council member will appoint one task force member with experience in energy generation and planning. Task force members will include one member from the Electric Utilities Commission and one from the Resource Management Commission, as well as seven other members appointed by the city council. The task force will report recommendations to the city council by 6/30/14.  Many hope that the approval of this task force will lead Austin on the path to clean energy, transparency and good governance, and make Austin a leader in the clean energy economy. The Austin City Council also recently approved a new wind energy contract, which would enable AE to achieve the goal of delivering 35% of its electricity from renewable sources four years ahead of its goal, and making it the leader of all large public power utilities in the country.

March 11, 2014
March 10, 2014: Energy Future Said to Hold Last-Minute Talks to Ease Bankruptcy 

Home Energy Management Systems Will Reach $2.8 Billion in Annual Revenue by 2020
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According to Navigant Research, “the home energy management (HEM) market continues to attract attention, especially with the increasing presence of broadband service providers like Verizon, AT&T, and Comcast and security companies like ADT and Vivint. Thus far, the HEM market has been fairly sluggish, with only a few cases of utility-led deployments, despite the utility benefits of lower overall energy consumption and not having to invest so quickly in new power plants. This is based on the expectation that a smarter grid would enable wider use of new tools and incentives for consumers to use energy more efficiently, such as demand response (DR) or dynamic pricing, according.” The acquisition of smart thermostat maker Nest Labs by Google, for a reported $3.2 billion, is seen by many industry observers as a potential watershed moment for the overall HEM market. For example, “in 2009, Pacific Gas and Electric Company and the Sacramento Municipal Utility District launched a revolutionary program that joined utilities, retailers and manufacturers together for the first time to encourage businesses and consumers to save energy and lower their electricity costs. The Business and Consumer Electronics program included Best Buy, Sears Holding Company, Wal-Mart, Sam’s Club, and Lenovo. Since then, Best Buy has partnered with Constellation, Reliant Energy, and PG&E.”

GAO Report: Climate Change: Energy Infrastructure Risks and Adaptation Efforts
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In a report released in January, but only now made public, the U.S Government Accountability Office (GAO) concludes that “all the infrastructure Americans rely on to heat their homes, power their lights, and fuel their trains, trucks, and cars is becoming more and more exposed to failure in a changing climate. “The report summarizes much of the research published in recent years about the vulnerability of U.S. energy infrastructure to a changing climate. It is a response to a request from members of Congress for details about risks posed by global warming, how infrastructure can be adapted to withstand the ravages of a changing climate, and what role the federal government plays in helping make the adaptation happen.” The GAO’s report also states that this “may help accelerate the U.S. Nuclear Regulatory Commission’s assessments of aging nuclear power plants in the U.S., set higher standards for those plants, and encourage the federal government to appropriate more money for the research and development of new renewable energy production and storage technologies.” 

March 10, 2014
March 8, 2014
: Drought Hastens End Of LCRA’s Hydropower Era

ERCOT Reports on 1/6/14 Energy Emergency Alert Event
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On 3/6/14, ERCOT issued its Final Report on the 1/6/14 Energy Emergency Alert (EEA) event.  After the event, ERCOT received several requests for information on resource outages and limitations during emergency operations leading up to, and including, the execution of the EEA plan on 1/6/14.  With the expiration of the confidentiality period for the status of Resources, ERCOT has made its analysis of outages and limitations public.  The final report includes the identification of Resources which had performance issues that day.  Overall, at least 109 units experienced some type of a problem, including outages at Sandy Creek (LCRA/Brazos – 970MW) caused by frozen instrumentation and also at several Luminant units. The causes of outages throughout the day varied, with many being weather-related. 

Latest News from FERC
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March 7, 2014 – FERC Directs Development of Physical Security Standards News Release and Order
March 5, 2014 – CFTC and FERC Implement Information Sharing MOU; Create Inter-agency Surveillance and Data Analytics Working Group News Release
March 4, 2014 – FERC submits FY 2015 Congressional Performance Budget Request and FY 2014 – FY 2018 Strategic Plan Budget Request Strategic Plan
March 4, 2014 – FERC Staff to Convene a Technical Conference on the Revisions to Electric Quarterly Report (EQR) Filing Process on 3/26/14 Notice Event Details

March 7, 2014

March 6, 2014: Largest LBO Puts Energy Future-Backed Bonds At Risk: Muni Credit

PUCT Open Meeting 3/6/14
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At the3/6/14 open meeting, the Commission considered a controversial transmission project, with testimony from many affected parties. It also reviewed several proposed rules, and opened a new project on resource adequacy. To read more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151.

Green Banks to Spur Renewable Energy Investment C
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An idea for Texas? There are reports that New York, “looking to boost returns from investments in renewable energy and efficiency, may follow the example of one of its neighbors.” Governor Andrew Cuomo has proposed creating a $1 billion “NY Green Bank,” a quasi-independent authority that would provide capital for energy projects, aiming to leverage scattered resources and open the door to projects that might struggle to attract investment on their own. Though not a bank in the traditional sense – it would lack a charter – the authority would combine public and private funds, largely through the use of low-interest loans, bonding, and credit enhancements. “A Green Bank is a fiscally practical option in a time of severe budget conditions,” the governor said in a booklet companion to his state of the state address Wednesday (1/9/14).  “Many public credit and investment programs require only a small amount of government funds.” A similar $30 million program is currently under way in Connecticut, where it has helped fund several projects over the past year. Lawmakers in a few other states are considering it, too.

March 4, 2014
Alert: March 5, 2014: U.S. Appeals Court to Hear Appeal of Ruling Which Had Granted Class Action Status to Retail Energy Lawsuit Against Stream

ERCOT Expects Tight Reserves At Start Of Summer Only
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On 3/5/14, ERCOT released the final Seasonal Assessment of Resource Adequacy (SARA) for this spring and a preliminary outlook for the summer. The accompanying press release states that: “Although tight conditions are likely on the electric grid during the early summer months, the outlook improves by late summer, when more than 2,100MW from four new natural gas-fired generation resources are slated to begin commercial operations.” These include Ferguson, Panda Sherman, Panda Temple I, and Deer Park Energy Center, and have a start date of 8/1/14. ERCOT anticipates peak demand in the summer to exceed 68,000MW, and the current drought conditions are not expected to cause operational problems.

US House Passes Energy Efficiency Improvement Bill
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On 3/5/14, the U.S. House of Representatives passed bipartisan energy efficiency legislation by a vote of 375-36. The Energy Efficiency Improvement Act, H.R. 2126, is the first significant bipartisan energy initiative approved by the House in the 113th CongressRep. David McKinley (R-WV) is the lead Republican cosponsor of Peter Welch’s (D) bill. Press reports state that “the bill would establish a new voluntary efficiency standard for commercial buildings, direct the federal government to set efficiency goals for its data centers, and require buildings leased by the federal government to disclose their energy usage data.” Rep. Welch said that “he believes the House legislation could then be reconciled with the Senate energy efficiency bill from Sens. Jeanne Shaheen (D-N.H.) and Rob Portman (R-Ohio).  

March 5, 2014
PUCT To Consider Several Rulemakings on 3/6/14

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At the 3/6/14 open meeting, the Commission is scheduled to consider the following rulemakings:

Project No. 41949 – Rulemaking Proceeding to Amend P.U.C. SUBST. R. 25.362, Relating to ERCOT Governance and P.U.C. SUBST. R. 25.363, Relating to ERCOT Budget and Fees (Proposal for Publication, 2) – the proposal will amend Commission’s substantive rules on ERCOT budget process to conform them with the changes made by House Bill 1600 (HB1600, 83rd Regular Session – or, the PUCT Sunset bill). Comments on the proposed rule are due by 4/21/14;

Project No. 41615 – Rulemaking to Revise P.U.C. SUBST. R. 25.107, Certification of Retail Electric Providers (REPs) (Proposal for Adoption, 10) – The proposed amendment will clarify the definition of principal; modify the reporting requirement to extend the relevant time period for complaint history, disciplinary record, and compliance record; add an affidavit reporting requirement, identifying all principals and current employees of the applicant REP who experienced a mass transition of a REP’s customers to a provider of last resort (POLR); and provide additional bases for the suspension or revocation of a REP certificate. The proposed amendment will also standardize the REP Application and Amendment form. While minor changes were made after the Proposal for Publication, the PUCT staff state that the rule remains largely unaltered; and

Project No. 41659 – Rulemaking to Implement Cease and Desist Authority under PURA Chapter 15, as Required by HB1600 (83rd Regular Session) (Proposal for Adoption, 13) – this item was deferred at the last open meeting. The proposal implements statutory provisions granting the Commission the authority to issue cease and desist orders to electric market participants in certain circumstances.

March 4, 2014
ERCOT News Release This Morning (3/4/14)

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At 9AM, ERCOT send out a press release thanking consumers for helping to maintain grid reliability yesterday and this morning.  “Energy conservation by consumers has helped ERCOT keep generation and electric demand balanced during this extremely cold, windy weather,” said Dan Woodfin, ERCOT director of System Operations. “We appreciate this support, as well as efforts by generation and transmission companies to keep as many facilities available as possible.” Peak demand on Monday morning reached 54,549MW, exceeding ERCOT’s previous March peak demand record from 2002, by more than 11,500MW. Hourly demand figures remained above the previous record the entire day. ERCOT said that electric use was lower than expected during these cold temperatures, and remained low enough to prevent an energy emergency. Peak demand on Tuesday morning was about 4,000MW lower than Monday, as temperatures started to rise. The Conservation Alert is no longer in effect.

ERCOT Stakeholders Address Price Reversals In the Market
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Responding to a directive from the PUCT at the last open meeting, stakeholders at ERCOT re-opened the Resource Adequacy Task Force (RATF) to address questions around price reversals/suppression that may happen in the market under certain circumstances. The group’s first meeting was on 3/3/14 to discuss three items and potential solutions, including: (a) how to account for the Emergency Response Service (ERS) in the Operating Reserve Demand Curve (ORDC) calculation; (b) the effect on prices from the deployment of load resources; and (c) the effect on prices of RUC-ed resources (Reliability Unit Commitment) (i.e., 0 to Low Sustainable Limit (LSL)). Participants developed a list of options to resolve price reversals during emergency/scarcity conditions, and will meet again, weekly, until the end of March, when this information is expected at the Commission. If no resolution is found by that time, RATF may continue working on it past March. On 3/3/14, RATF considered adding several other issues, including how to handle Reliability Must Run (RMR) resources and firm-load shed, and possibly raising the RUC floors.  

March 3, 2014
Alert: ERCOT Issues Another Conservation Notice this Afternoon (3/3/14)
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At 1PM on 3/3/14, ERCOT issued another conservation notice, “asking electric consumers to continue limiting their electric use as much as possible through 9AM, Tuesday, 3/4/14, as late winter weather conditions continue.” “We were able to maintain grid reliability without an energy emergency this morning, and we appreciate this help from consumers,” said Dan Woodfin, ERCOT director of System Operations. “With the continued cold weather, we expect conditions to remain tight, especially during the early evening tonight and early morning hours tomorrow.” On Monday morning, peak demand reached 54,549MW, with all available generation being used to ensure system reliability. High demand because of very cold temperatures and windy conditions is expected to continue through at least Tuesday morning, and generation supplies remain limited.

Texas Consumers Asked to Conserve Electricity This Morning  (3/3/2014)
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On 3/2/14, at 9:10AM, ERCOT issued a Watch “due to the strong arctic front that is making its way through the ERCOT system. ERCOT is starting to experience Resource and transmission issues:” (a) QSEs are instructed to keep COPs (Current Operating Plans) updated; (b) QSEs with wind Resources need to update their COPs to reflect accurate data; (c) [generation resources need to] review fuel supplies and notify ERCOT of any known or anticipated fuel restrictions and review and implement weatherization and operating procedures, including winterization; and (d) preparations need to be made for higher than usual loads.  Also resources have to notify ERCOT of any changes or conditions that could affect System Reliability. Shortly after 7PM on 3/2/14, ERCOT issued a conservation alert, asking consumers to use less energy Monday morning.

FERC Notices for Upcoming Technical Conferences Copyright 2014 by Competitive Assets, LLC.  All rights reserved

FERC recently published two notices about upcoming technical conferences: 2/27/14 – FERC staff will convene a “Technical Conference Addressing Critical Infrastructure Protection Issues Identified in Order 791” on 4/29/14Notice and| Event Details; and 2/21/14 – FERC staff will convene a “Technical Conference on Winter 2013-2014 Operations and Market Performance in RTOs and ISOs” on 4/1/14Notice and| Event Details.

Feb 28, 2014
ERCOT Releases New CDR Report

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Today (2/28/14), ERCOT released its much-anticipated Capacity, Demand, and Reserves (CDR) report (also, here). Usually, the winter CDR comes out in December, but this one was delayed to gain stakeholder agreement on revisions to the load-forecasting methodology. The revised methodology resulted in load forecasts significantly lower than in the May 2013 CDR; it uses premise count, with specific economic drivers for various types of customers, including residential, commercial, and industrial. Weather also is a significant driver in system-wide peak demand, and the updated forecast is based on 12-year average weather patterns.  ERCOT stakeholders, an independent consultant, and the ERCOT Board thoroughly reviewed the new methodology prior to the final forecast. The new CDR has updated load and generation data, and uses the previously approved wind Effective Load Carrying Capability (ELCC) of 8.7%. The reserve margin on 6/1/14 is indicated at 13%.

Tesla Considering Texas for Battery Factory
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From Rawstory.com: “Tesla plans to build a $5 billion “gigafactory” to produce more lithium-ion batteries by 2020 than were made worldwide last year – which should be enough, the company said, to power 500K electric vehicles annually. The automaker hasn’t chosen a site for the factory, expected to occupy about 10 million square feet and eventually employ 6,500 workers, but is has narrowed down its options to four states. Arizona, Nevada, New Mexico, and Texas are all vying to be selected as the site for the facility, which will be largely powered by renewable energy sources such as solar and wind. Texas is among a handful of states where Tesla is prohibited from selling its cars directly to customers through its own dealerships, although customers in Texas may buy vehicles through the company’s website. The company indicated previously that it would not locate future manufacturing facilities in states that interfere with its business operations.”

Feb 27, 2014
Threats To Power Sector Gleaned From Other Industries’ Attacks

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An article in EEnews.net points out that, while there are some energy industry officials and regulators at the recently opened RSA Conference on Cybersecurity in San Francisco, more should be attending. There are several reasons, according to a cybersecurity training pioneer Michael Assante, former VP and chief security officer of NERC: “We always need to be learning outside the power system of how attackers are doing their business, because many of our architectures are converging. E-commerce companies are running architectures that kind of look like our architectures.” The current attacks on retailing and financial companies reveal tactics that the energy sector may well face in the future. And while the security of smart meters has recently improved, new risks for utilities and power companies include emails with malware directed at employees who run operational systems and/or company officials. Another worry is the need in energy companies to copy information from the protected operating systems out to business systems.  On the same topic: in Nov. 2013, FERC approved NERC’s version 5 of the Critical Infrastructure Protection (CIP) standards. Compliance with these standards, which address some of the aforementioned risks, is staggered through 2017 (FERC Order 791).

Feb 26, 2014
EEI and NRDC Closer To Getting It Right On Net Metering

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An article at Forbes.com discusses a recent agreement between the Edison Electric Institute (EEI) and Natural Resources Defense Council (NRDC) on the topic “of technology (mostly distributed generation such as solar) and utility cost recovery.” The joint statement to state utility regulators acknowledges that technology is changing how the power grid is used, and a new rate design is needed that would provide for fair cost recovery, while allowing customers to sell excess power. Forbes describes several proposals for net metering, including Net Metering v2.0, drafted by Karl Rábago, who helped set up set up Austin Energy’s program. In recent testimony before the U.S. Senate, a Commissioner with the Minnesota Department of Commerce stated that this approach includes “the value of energy and its delivery, generation capacity, transmission capacity, transmission and distribution line losses, and environmental value.” He opined that “… we expect the ‘Value of Solar” to be an innovative alternative to net metering,” by providing fair compensation to solar customers, while also allowing utilities to recover the reasonable costs of grid services.” Karl Rábago hopes that, with this fair approach, a first step would be an end to some utilities’ anti-solar efforts.

Feb 25, 2014
Microgrid Resources Coalition Launched by Microgrid Businesses and Hosts

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On 2/18/14, several leading microgrid businesses and hosts announced the launch of a new consortium that will support microgrid deployment and the enhanced resilience, cost-effectiveness, and energy efficiency they offer. Founding members of the Microgrid Resources Coalition (MRC) include Princeton University, NRG Energy, ICETEC Energy, Concord Engineering, and the International District Energy Association: “The MRC’s mission is to support accelerated microgrid deployment by improving the regulatory and market environment for existing and new microgrids. By being able to provide power when the grid is down, and energy savings even when the grid is operating, microgrids meet their hosts’ needs for enhanced reliability, energy savings, and reduced emissions, while simultaneously delivering energy services that improve the overall efficiency of energy markets. The MRC will advocate for formal regulatory reforms that recognize and appropriately value these services, while assuring non-discriminatory access to the grid for a wide variety of microgrid configurations and business models.” “Today’s wholesale market rules and transmission planning were not designed with the dynamic capabilities of microgrids and their tremendous cost synergies in mind,” said Thomas A. Nyquist, Chair of the MRC and Executive Director of Engineering and Campus Energy for Princeton University. “As an owner and operator of one of the world’s most advanced microgrids, Princeton has seen first-hand the benefits these systems provide for our community and the grid. The MRC’s work to bring power market rules and practices up to date so they can integrate and incent microgrids with these features is critical to create more value, for microgrid hosts, their communities, and the grid as a whole.”

Tesla Plans to Build World’s Biggest Battery Factor
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Financial Times is reporting that shares in Tesla, the U.S. automaker, rose 5% in pre-market trading after analysts at Morgan Stanley more than doubled their price target on the firm and suggested it could disrupt the $2 trillion electric utility industry. Analyst Adam Jonas said the investment bank no longer viewed Tesla solely as a niche premium auto manufacturer, following the company’s announcement that it would construct a factory possible of manufacturing more than 1bn battery cells. The decision, which will also remove one of the crucial bottlenecks in Tesla’s supply chain, could propel it to the top of the electric storage sector, Mr Jonas said. Tesla’s quest to disrupt a trillion dollar car industry offers an adjacent opportunity to disrupt a trillion dollar electric utility industry. If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again.

Fed Up With Government, Environmentalists Sue Companies
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From Texas Tribune: “Starting Monday, a federal judge in Waco will hear arguments from the Sierra Club that Luminant Generation Company, the state’s largest electric generator, has been spewing far more pollution into the air from an East Texas coal plant than is allowed by federal and state law. The case is one of at least three high-profile lawsuits that are being heard in federal court this year in which environmental groups in Texas have taken matters into their own hands. They are suing industries for excess pollution directly, rather than relying on the government to take action.”

Feb 24, 2014
Can Smart Thermostats Help Manage Texas Energy Market?

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A detailed article in the Austin American Statesman discusses whether “smart thermostats can help Texas.” The thermostats in question are made by Nest, recently bought by Google for over $3 billion; last Christmas, 20% of them were sold as gifts, at a retail price of $250. For utilities, this equipment has the potential to address issues, like the one Texas has been struggling with recently – i.e., the ability to reduce electricity consumption during times of peak demand, to lessen the threat of rolling blackouts, and postpone the need to invest in new power plants. The highest demand in the state is during the hot summer afternoons, but Nest’s VP of business believes that this can be reduced by 50%-60% with the use of its smart thermostat. The article says that: “About 50% of U.S. broadband households own a programmable thermostat, but only 11% have a device that can be connected to the Internet. However, Parks Associates’ consumer survey showed that 62% of the respondents would purchase an Internet-connected thermostat if given a $75 rebate. “Energy efficiency is limited,” said John Barrett of Parks Associates. “Greater convenience and control will be the true market driver for energy management products and services.” Austin Energy, which has a program to adjust customers’ usage at peak, says it saved customers $500K last summer. It now gives an $85 rebate for customers to purchase internet-connected thermostat.

News From FERC
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On 2/20/14, FERC published a notice  about a workshop on “Third-Party Provision of Reactive Supply and Voltage Control and Regulation and Frequency Response Services.”  The workshop will take place on 4/22/14; more details are posted here.

FERC Commissioners Moeller and Norris provided statements (here and here) on the security of the transmission infrastructure in light the 2013 attacks, recently highlighted in the press. 

Feb 21, 2014
Why Austin Energy’s Next Big Wind Contract Could be The Last for A While

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The Austin American Statesman is reporting that Austin Energy may sign a new wind contract, costing $31 million annually. While the 300MW facility would put AE close to achieving 35% of its electricity from renewable sources by 2016, and four years earlier than the original goal, it may also be its last wind power purchase for a while. “With Austin Energy on the verge of satisfying its wind goals for the near future, the utility is now sorting through solar proposals it has already solicited, Mele [AE’s COO] said. The utility’s plan is ultimately to replace some wind contracts that are expiring later in the decade with solar, which is now a negligible part of Austin Energy’s fuel mix. The typical price of large-scale solar projects has dropped from about 21¢/kWh in 2010 to 11¢/k at the end of 2013, according to the U.S. Energy Information Administration. Austin Energy executives think large-scale solar investment could be cost-effective toward the end of the decade.

Feb 20, 2014
Group Urges PUCT to Continue Working on Resource Adequacy

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Calling forecasts “educated guesses,” the Texas Reliability Assurance Market Advocates filed a new statement in time for 2/21/14 PUCT open-meeting discussion. In it, they dispute that urgency in resolving resource adequacy in Texas has diminished and warn that waiting to address these issues until near-term planning reserves are insufficient will lead to high transition costs and threatened reliability. The group lists several factors that may affect reliability in the next few years, including the growth of business, plant retirements (up to 9,000MW), new federal regulations, and transmission constraints. Moreover, potential outages fall disproportionately on residential and small business customers, the group says, adding that going to a 15% reserve margin could be achieved at relatively low cost. “Rather than turning away from the volumes of expert analysis on reliability and resource adequacy that have been produced over the past several years because a series of assumptions have changed, TRAM Advocates recommend that the Commission continue its research and deliberations on resource adequacy by proceeding forward with the cost-benefit analysis previously planned by the Commission.”

U.S. Energy Secretary Celebrates Construction of Two New Nuclear Reactors Copyright 2014 by Competitive Assets, LLC.  All rights reserved

The U.S. Secretary of Energy Ernest Moniz will be today in Waynesboro, GA, “to mark the issuance of approximately $6.5 billion in loan guarantees for the construction of two new nuclear reactors at the Alvin W. Vogtle Electric Generating Plant. The project represents the first new nuclear facilities in the U.S. to begin construction and receive NRC license in nearly three decades.  In addition, the deployment of two new 1,100MW Westinghouse AP1000® nuclear reactors is a first-mover for a new generation of advanced nuclear reactors.” When the new reactors come online, they will provide enough reliable electricity to power nearly 1.5 million homes. “The construction of new nuclear power facilities like this one – which will provide carbon-free electricity to well over a million American energy consumers – is not only a major milestone in the Administration’s commitment to jumpstart the U.S. nuclear power industry, it is also an important part of our all-of-the-above approach to American energy as we move toward a low-carbon energy future,” said Secretary Moniz. “The innovative technology used in this project represents a new generation of nuclear power with advanced safety features and demonstrates renewed leadership from the U.S. nuclear energy industry.”

Feb 19, 2014
ERCOT to Release Capacity, Demand and Reserves Report Feb. 28

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On 2/18/14, ERCOT issued a press release, announcing that the new Capacity, Demand, and Reserves (CDR) report will be published on 2/28/14. This winter CDR, delayed from its usual Dec. 1 release date, will use a revised load-forecasting methodology (leading to new, preliminary results), in addition to modified generation data, an 8.7% value for the Effective Load Carrying Capability (ELCC) of wind, and separation of the coastal and non-coastal wind capacity. It will not, however, list a value for the target planning reserve margin (currently, 13.75%), and will make no changes to the wind ELCC (as originally proposed in the 2013 Loss of Load Study). In July 2013, the ERCOT Board delayed a decision on raising the reserve margin and ELCC; since then, the issue has been discussed at the PUCT, but no recommendations have been made. Moreover, Commissioner Andersonfiled a memo (2/5/14), in which he suggested that the Commission study what should be the appropriate reliability standard for ERCOT; this topic may be discussed at the 2/20/14 open meeting.

Feb 18, 2014
Alert:  New Release: ERCOT to Release Capacity, Demand and Reserves Report Feb. 28

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PUCT To Discuss Several Proposed Rulemakings
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The agenda for the 2/20/14 PUCT open meeting features several proposed rulemakings.  These include:

  1. Project No. 41618, Proceeding to Evaluate Standards for Representation of Parties – The PUCT staff filed a memo (26), seeking guidance on whether to proceed with the drafting of a Proposal for Publication that would “permit parties to appoint non-attorney authorized representatives in routine filings, rulemakings, and other projects, and any other matter for which no hearing is required. The PFP would require representation by counsel in any case for which a hearing at the Commission has been set or any case referred to the State Office of Administrative Hearings, unless a party appears pro se.”
  2. Project No. 41325, Rulemaking to Amend Subst. R. 25.211, Interconnection of On-Site Distributed Generation (DG), and the Pro-Forma DG Interconnection Agreement and Tariff – The Proposal for Adoption (15) includes modifications to P.U.C. Subst. R. 25.211 by adopting the Pro-Forma DG Interconnection Agreement (IA) and Tariff into the rule. Also included are modifications to the Interconnection Agreement with options on indemnification and choice of law for parties entering into an agreement with a federal agency, and modifications to the IA to implement the requirement in P.U.C. Subst. R. 25.211(n) that the owner of a DG generation facility report to the utility any change in ownership of the facility and the cessation of operations of the facility within 14 days of such change.
  3. Project No. 41326, Rulemaking to Amend Subst. R. 25.213, Relating to Metering for Distributed Renewable Generation – The amendments (13) modify Sec. 25.213 by conforming it to PURA § 39.554 and the definition of distributed renewable generation owner in Sec. 25.217 of this title. The amended rule also provides for net metering in the El Paso Electric Company service territory.
  4. Project No. 41659, Rulemaking to Implement Cease and Desist Authority under PURA Chapter 15, as Required by HB1600 (83rd Regular Session). The Proposal for Adoption (13) implements statutory provisions granting the Commission the authority to issue cease and desist orders to electric market participants in certain circumstances.

Feb 17, 2014
12 Trends Leading Us To Zero Energy Homes

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On 2/11-12/14, the South-Central Partnership for Energy Efficiency as a Resource (SPEER) held its annual conference in Austin, exploring such topics as: Combined Heat and Power/Distributed Generation, Building Codes, Role of Water Efficiency, City Initiatives for Energy Efficiency, and others. One area of interest, Zero Energy Homes (ZEH), was a subject of an article in the Sunday’s Austin American Statesman. It explains how Sam Rashkin, the DOE’s chief architect for building technologies, makes a future with ZEH seem inevitable: “In his previous job at the EPA, he directed the Energy Star home program from its inception in 1990s to 2011, when he left for the DOE’s Challenge Home program. He defines the ‘zero energy ready home’ as ‘a high performance home so efficient that almost all annual energy consumption can be offset by renewable energy.’ You can’t help but brag if your $300 monthly utility bill is now $5. Although there are only 8,000 structures in the Challenge Home program so far, Rashkin said 12 trends will drive home buyers to seek the more durable, efficient models;” these include:

  • Energy prices are rising long-term;
  • Buildings are getting more efficient;
  • The appliances in our homes are getting more efficient;
  • Prices for solar installation are falling dramatically;
  • More builder risk in standard buildings;
  • People will pay for healthy choices;
  • Water efficiency is as important as energy efficiency;
  • Disaster risk is everywhere (so better building methods are important);
  • Extreme weather is driving up insurance rates;
  • Americans are innovation junkies;
  • Thanks to the Internet, there are better informed customers; and
  • Finally, homes are getting older.

In fact, Austin mandates that all new homes be net-zero energy capable by 2015: “That means builders must incrementally increase energy efficiency to an aggressive 65% above the DOE’s IECC 2000 energy building code.” More information on the subject is also available at http://energy.gov/energysaver/articles/ultra-efficient-home-design.

Feb 14, 2014
ERCOT Growth Index Evaluation
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Last December, Itron was hired to evaluate ERCOT’s revised load-forecasting methodology, producing two reports; the second report has now been posted. ERCOT’s new methodology has three components: (a) a long-term forecast of premises by class and zone; (b) premise forecasts, weighted together into a single growth driver; and (c) a neural network (NN) model, used to create the long-term forecast, based on multiple model estimation periods and weather scenarios. The key growth driver in the NN model is an index created as a weighted average of ERCOT’s residential, business, and industrial class premise forecasts. The weighted average is derived from the average, annual use-per-premise (UPP) values for each class, computed from the 8/1/12 – 7/31/13 data.  Itron’s second evaluation consisted of two parts: (a) weather-normalized, historic UPP levels to remove weather-driven variations; and (b) an examination of whether ERCOT’s existing weighting scheme is representative of the weather-normalized UPP levels. In addition to the earlier recommendations in the first first report, Itron has made three new recommendations to improve the methodology. On Tuesday, ERCOT staff stated that, while accepted, these would not change their proposal:

  1. Dynamic Weather Normalized Weights (Historical) – The implementation of a dynamic weighting scheme will allow the growth index to bend with the same signature as the underlying UPP trends. Itron recommends that ERCOT implement the weather-normalized, use-per-premise values as the class-level weights throughout the 5-year historical estimation range;
  2. Static Weather Normalized Weights (Forecast) – The class UPP trends have begun to stabilize in recent years. Itron recommends that ERCOT implement the 2013 weight throughout the forecast period; and
  3. Future Consideration – While the UPP trends have begun to stabilize at this point in time, Itron recommends ERCOT perform ongoing research to understand the underlying factors driving the trends. Once the factors have been identified, ERCOT should integrate them into the forecasted weighting scheme. For the Residential class, factors may include evaluation of end-use level saturation and efficiency information. For the Business and Industrial classes, given the abrupt shift in the use-per-premise level that occurred in 2006, ERCOT should consider assessing these classes in aggregate in future analyses.

Feb 13, 2014
ERCOT 2014 Demand and Energy Report is Published
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On 2/11/14, ERCOT published the 2014 Demand and Energy Report, a monthly report on demand and energy in the ERCOT region.  The report lists information about the ERCOT system, such as max/min demand (in January, 57,256MW and 24,815MW), energy use, energy by fuel, etc.

NIST Releases Cybersecurity Framework Version 1.0
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On 2/12/14, the National Institute for Standards and Technology released Cybersecurity Framework v1 “to help organizations charged with providing the nation’s financial, energy, health care, and other critical systems better protect their information and physical assets from cyber attack.” “Organizations can use the framework to determine their current level of cybersecurity, set goals for cybersecurity that are in sync with their business environment, and establish a plan for improving or maintaining their cybersecurity. It also offers a methodology to protect privacy and civil liberties to help organizations incorporate those protections into a comprehensive cybersecurity program.”

Huge Thermal Plant Opens As Solar Industry Grows
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YahooNews is reporting on the opening of a “huge thermal plant” in the Mojave Desert: “The Ivanpah Solar Electric Generating System, sprawling across roughly 5 square miles of federal land near the California-Nevada border, formally opens Thursday after years of regulatory and legal tangles, ranging from relocating protected tortoises to assessing the impact on Mojave milkweed and other plants.  The $2.2 billion complex of three generating units, owned by NRG Energy Inc., Google Inc., and BrightSource Energy, can produce nearly 400MW – enough power for 140,000 homes. It began making electricity last year. The opening of Ivanpah is “a dawn of a new era in power generation in the United States,” said Rhone Resch, president of the Solar Energy Industries Association, a trade group. “We are going to be a global leader in solar generation.”

Rough Winter Exposes Weakness in US Natural Gas Supply Network
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A Reuters story on ”the rough winter exposing weakness in the U.S. natural gas supply network” discusses how “the severe cold has also revealed potential structural shortfalls that could push prices higher not just this summer, as depleted inventories are restocked, but in coming years if investments are not made to increase storage and pipeline capacity.” “Already, natural gas futures hit a four-year high above $5.70/MMBtu at the end of January. Regional prices for next-day delivery have hit records across the United States. If natural gas prices rise, power providers will turn to cheaper coal to generate electricity, denting natural gas use.”

Feb 12, 2014
Battle for Future ERCOT Electric Market is Heating Up
 
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The war of words is heating up in the ongoing effort to address resource adequacy concerns in Texas.  A group, Texans for Reliable Power, is running radio ads, noting that: “A new report says rolling blackouts could be 10 times more likely in a few short years,” and that a capacity market is the answer. The ad asks its listeners to contact legislators to tell them “you don’t want to be left in the dark and to act before the crisis.” The list of supporters on the group’s website includes several former FERC commissioners. The ads come after a couple of setbacks for capacity markets proponents, as explained in a subscription-only article in the Sunday’s Austin American Statesman, Texas blackout debate – doing nothing is now an option. It notes recent developments, including: (a) ERCOT’s new Load-Forecasting Methodology (also, ERCOT Board’s update), which lowers peak demand (e.g., by 4,000MW in 2016); and (b) the Brattle Group’s report, which “determined that the existing wholesale market should create ‘sufficient reserves’ for years,” barring unforeseen political reactions. The article quotes Senator Fraser, “There is no crisis;” Commissioner Marty: “We’re getting information now that suggest we have room to breathe;” and Chairman Nelson: “I think it’s time for us to turn it over to the legislature.” This may have been the first time the Chair publicly suggested turning the matter over to the legislators. The next phase in the debate may be a struggle over numbers; for example, how much additional cost would a capacity market and/or mandated reserve margin impose on consumers vs potentially lower energy prices sometime in the future.

Feb 11, 2014
Battle for Future ERCOT Electric Market Continues
 
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The battle for the future of the Texas electric market continues in the PUCT filings and on the newspaper pages. Yesterday, the Texas Public Policy Foundation (TPPF) filed a statement, noting that just recently, NRG Energy filed comments with the EPA in support of its petition to move gas turbines to Texas to be used for generation: “NRG Texas considered the efficiencies, capital costs to install, potential revenue sources, operating costs, and the targeted “super peak” hours before arriving at the decision to install the GE 7 turbines [that] represent the only identified generating technology which meets the … requirements for low capital cost and economic viability.”  The filing also mentions a TXU expectation from 2001 that “it is highly likely that the market itself will address any predicted future shortfall by encouraging generators to build new generation because market prices will likely increase when reserve margins decrease.” The TPPF then cites a 2013 paper by Kleit and Michaels, disputing the Independent Market Monitors’ conclusion that the Peaker Net Margin is an accurate measure of generator revenues: “Peaker Net Margin is an administrative creation that does not fully reflect the economic opportunities open to generators. Our calculations show that adding the option of producing non-spin to that of the balancing market can raise a peaking generator’s net margin in ERCOT into the range of economic viability.”

Feb 10, 2014
2014 Sustainable Energy in America Factbook

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FierceEnergy.com is reporting on the publication of the 2014 Sustainable Energy in America Factbook, produced by the Bloomberg New Energy Finance for the Business Council for Sustainable Energy: “Renewable energy had a record year in 2013, providing 13% of U.S. electricity generation – up from 12% in 2012, and 8% in 2007. At the same time, renewable energy costs reached all-time lows, allowing clean energy, with the aid of incentives, to be cheaper than fossil fuel electricity in some parts of the country. Small, distributed generators and off-grid installations, meanwhile, began to emerge as a transformative force in the power industry. Financiers who back small-scale solar systems have raised nearly $6.7 billion since 2008.” “The U.S. energy transformation that began in the mid-2000s, gained additional momentum in 2013,” said Lisa Jacobson, president of the Business Council for Sustainable Energy. “The factbook plays a vital role in chronicling this fast-moving transformation, which is creating whole new industries and thousands of new jobs in the energy efficiency, natural gas, and renewable energy sectors.”

Feb 7, 2014
Nuclear Energy Operators Say Market Stacked Against Them

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 An article in Forbes discusses the current difficulties faced by the nuclear generators, highlighted by Entergy’s decision to close its Vermont Yankee plant.  The company is concerned that “the abundance of shale gas has resulted in sustained low natural gas and wholesale energy prices, while market designs, especially in the Northeast, have resulted in artificially low energy prices. That’s a vague reference, in part, to wind energy that is subsidized and that does not provide electricity around the clock.”  Five nuclear units have announced closures in the last year: Duke Energy in Florida and Southern California Edison in Southern California closed their facilities because of “persistent technical issues.” Dominion Resources has closed its Wisconsin unit and Exelon will shut down a New Jersey plant because neither one is able to compete with natural gas.  Additional 38 reactors in 23 states are at risk of early retirements. In large part because of cheap natural gas.

Feb 6, 2014
Alert: ERCOT New Release:
Texas Consumers asked to conserve electricity due to extreme cold, limited generation from 5 p.m. today through noon on Friday, Feb. 7

PUCT Commissioner Anderson Proposes New Directions for ERCOT Resource Adequacy Development
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Proposing to change course, Commissioner Anderson filed a new memo in the resource adequacy Project No. 40000.  The memo, in time for the 2/6/14 open meeting, states that recent information from ERCOT and the Brattle Group (BG) – the preliminary load forecast and BG study – has lessened concerns about inadequate reserves.  Instead, the Commission ought to evaluate whether the current reliability standard – i.e., the one-in-ten years Loss-of-Load Expectation – is appropriate.  He writes that the Commission could also look at the “normalized expected unserved energy,” an option recommended by BG, but one that “would constitute a total redesign of ERCOT’s reliability standard.”  He urges the Commission to open a “project focused upon all aspects of ERCOT’s reliability standard and resulting reserve margin, including, without limitation, whether it is necessary to adopt the resulting standard as a target or a requirement,” with a staff-developed process and workshops in the summer/fall.  This would also defer the need for any additional studies by BG, as previously requested.

ERCOT’s Retail Market Subcommittee Meeting 2/4/14
C
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In February, the Retail Market Subcommittee heard an update on the shortening of a mass transition process and discussed a work-around for the Continuous Service Agreement issues.  Two upcoming REP workshops were noted – for Sharyland and CNP – and the members also raised the possibility of providing retail market training for the PUCT staff.  For more about the meeting, Please click here.

Feb 5, 2014:
EPA Shifts Greenhouse Gas Permitting to Texas

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There are reports from the wires on the decision of the Environmental Protection Agency (EPA) to give “Texas authority over greenhouse gas permitting on Tuesday, ending a long, often bitter battle between the federal agency and the state.”  “EPA’s administrator in Dallas, Ron Curry, said he signed the paperwork earlier Tuesday delegating authority over the program to the Texas Commission on Environmental Quality. It comes after months of negotiations concerning what the program would look like. There will be a 30-day public comment period on the program’s outline. Noting the EPA and Texas’ often contentious relationship and the many unresolved issues between the two, including a backlog of 80 greenhouse gas permits currently in the process of being approved, Curry said “that is big news” when announcing the program had been approved. He spoke at a luncheon sponsored by Air Alliance Houston, an environmental group.”

Assessment of the US Retail Electric Market
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

For several years now, the Distributed Energy Financial Group LLC (DEFG) has published its Annual Baseline Assessment of Choice in Canada and the United States (ABACCUS), which has presented an evaluation of the electric retail market across the country and, not surprisingly, Texas has come on top for much of that time.  Texas Electric Watch has summarized the 2014 assessment’s main findings for residential and commercial customers, and also looks at Texas in greater detail.   To read more, please subscribe to Texas Electric Watch. If you are interested in purchasing this TEW issue, please click here. If you are interested in subscribing the Texas Electric Watch, please click here or call Competitive Assets at 512-581-0151.    

Feb 5, 2014
Technology Choice Is Finally Coming to Residential Demand Response

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An article from the Energy Collective discusses the efforts of several companies, including Comverge, “which announced its retail device aggregation platform at DistribuTECH as part of an updated offering of its IntelliSOURCE system.  The offering is similar to others on the market, such as what AutoGrid and EnergyHub are doing, but Comverge hopes to be the first to support any popular smart thermostat on the market to give utilities the most choice possible.  “Despite the challenges, there is already a land grab going on among companies that want to be the utility’s gateway into the home, since it is increasingly clear that most utilities do not have the desire to build and manage sophisticated home area networks just for peak shaving purposes. Peak shaving, however, is just one piece of the market.  Increasingly, DR providers like Comverge are also offering energy efficiency services to utilities, and energy efficiency companies like Opower also want to offer DR services.”  The article concludes that just a few years ago, the industry was still referring to customers as “ratepayers.” “The cultural leap that has come with simply calling them “customers” today shows just how far utilities still need to go, no matter how integrated or siloed their energy efficiency and load reduction programs may be. (The annual DistribuTECH Conference was held in San Antonio on 1/28-30/14.  The conference is one of the largest gatherings of companies working in the field of “smart” – whether cities, grid, utility, meters, and customer interactions.  With session titles like “Transforming your customers into an energy resource,” it presented the latest information on demand response, big data analytics, micro-grids, and innovative technologies.) 

ERCOT’s Revised Load Forecasting – Workshop II
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The second load-forecasting workshop at ERCOT delved into the details of the proposed methodology, model validation, and reviewer’s recommendations. The stakeholders asked for additional information and some suggested changes to the forecast.  To read more, please subscribe to Texas Electric Watch. If you are interested in purchasing this TEW issue, please click here. If you are interested in subscribing the Texas Electric Watch, please click here or call Competitive Assets at 512-581-0151.    

Feb 3, 2014
Brattle Group Report:
The Economically Optimal Reserve Margin in ERCOT Would Be 10.2%
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According to the much-awaited Brattle Group report, filed in Project No. 40000, related to resource adequacy, the economically optimal reserve margin in ERCOT would be 10.2%. This is lower than the 14.1% reserve margin needed to meet the typical one-in-ten Loss of Load Expectation (LOLE) target; BG estimates that going from 10.2% to 14.1% would increase the total system costs by about $100 million, or a small amount in the annual $35 billion market. The report presents a range of possible reserve margin targets, including “the 11.5% equilibrium reserve margin that the current energy-only market design is likely to achieve,” and which exceeds the 10.2% risk-neutral, economically optimal reserve margin. This means that the “current market design will support sufficient reserve margins from an economic perspective,” concludes the report. The authors touch on the correlation between the reserve margin and capacity: “If reserve margins are low and prices are high, suppliers will build because they expect to earn more than their investment costs. Those newly built plants will increase the average reserve margin and thereby suppress energy prices.” The report does not rule out going to a capacity market, which the authors believe would cost an extra $400 million annually, but getting there may be hindered by a contentious process and even litigation. They also acknowledge ERCOT’s recently released preliminary load forecast, which may decrease the urgency in addressing resource adequacy issues. 

At LCRA, New General Manager May Ease Infighting
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The Austin American Statesman published a lengthy article on the incoming general manager at LCRA, Phil Wilson. The job of turning around the river authority will not be easy, as even one its Board members describes the Board as a “hornets’ nest,” with disputes about the water policy, contract cancellations by some wholesale electric customers, and problems caused by drought. The difficulties led the previous manager to shrink the agency by cutting 500 jobs, but the sense of being beleaguered has not diminished.  Wilson is an outsider, with no experience in water issues or electric generation, and only time will tell whether he can handle the job, states the article. 

Jan 31, 2014:PUCT Starts to Take on its New Water Rate-Making Duties
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The PUCT has opened several projects related to its new, water rate-making duties.  A workshop will be held in Project No. 42190, Migration of Rules Related to Water Utilities from the TCEQ (Chapter 291) to the PUC (New Chapter 24); Project No. 42191, Amendments to P.U.C. Procedural Rules Related to the Migration of Water Utilities from TCEQ to the PUC; and Project No. 42192, Migration of Forms Related to Water Utilities from the TCEQ to the PUC, on Wednesday, February 26, 2014, at 10:00 a.m.

Obama Announces His FERC nomination
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On 1/30/14, the White House announced the intent to nominate as a Commissioner at FERC, Norman C. Bay, who would be designated as Chairman upon appointment.  Mr. Bay is currently the Director of the Office of Enforcement, a position he’s held since 2009.

Renewables Account for 37 Percent of All New Electrical Generating Capacity in 2013
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The Energy Collective is reporting that the 1/27/14 FERC Energy Infrastructure Update shows “37% of all new U.S. electrical generation deployed in 2013 came from renewable sources.  Energy sources including biomass, geothermal, hydropower, solar, and wind provided 5,279MW of new installed electrical capacity in 2013, contrasting with coal, which ramped up only 1,543MW, or just under 11% of total new generation.”  Nuclear had no new capacity come online in 2013. Renewable sources of energy coming online in 2013 were three times that of coal, oil, and nuclear combined. “Not surprisingly, natural gas provided most new electrical capacity, putting online 7,270MW in 2013, or a bit more than 51%.”

Much Of North Dakota’s Natural Gas Is Going Up In Flames Copyright 2014 by Competitive Assets, LLC.  All rights reserved

There are several reports today about large amounts of natural gas in North Dakota “going up in flames.”  KERA NEWs has an article about this problem, which arose with the oil and gas boom: “The state doesn’t have the pipelines needed to transport all of that gas to market. There’s also no place to store it. In many cases, drillers are simply burning it. “People are estimating it’s about $1 million a day just being thrown into the air,” says Marcus Stewart, an energy analyst with Bentek Energy. Stewart tracks the amount of gas burned off – or flared – in the state, and his latest figures show that drillers are burning about 27% of the gas they produce. While that percentage has been declining, Stewart says the overall amount of wasted gas is still rising as more oil wells are drilled.”  The New York Times is reporting on growing criticism of the practice and efforts to address it.

Jan 30, 2014: Texas Power Play: War Of Words Heating Up
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The Texas Energy Report published details about a letter, sent to state lawmakers by “a group called Texans for Reliable Power (TRP), founded by power generating companies seeking major changes in the state’s competitive electric market.”  In the letter, TRP calls statements by its opponents “downright wrong or grossly misleading.”  Among the most vocal opponents of these changes in Texas – i.e., capacity markets – have been many large industrial customers, the Texas Public Policy Foundation, and some environmental groups.

10 American Cities Will Lead the Nation on Energy Efficiency
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An article in HuffPost lists Houston as one of ten cities in the country that will partner to achieve significant energy savings: “Ten mayors of American cities announced today that they’ll be partnering with the Natural Resources Defense Council (NRDC) and Institute for Market Transformation in the new City Energy Project. By working to transform energy-sucking buildings into energy sippers, these cities will slash energy use, cut pollution, and save residents and businesses combined $1 billion a year on their bills.”  The article states that “Atlanta, Boston, Chicago, Denver, Houston, Kansas City, Los Angeles, Orlando, Philadelphia, and Salt Lake City will work with City Energy Project experts in an unprecedented effort that will dramatically scale up building efficiency and allow city residents to see the benefits more quickly. Each city will develop its own customized energy-saving plan. A lot of energy waste can be fixed with simple low- to no-cost measures, like installing sensors that turn off lights when no one is there, or making sure that the heating system is turned down on weekends. In addition to encouraging the private sector to invest in equipment upgrades or operational improvements, many cities will set an example by improving the efficiency of their own municipal buildings first. City officials, major real estate companies, financial institutions, and efficiency experts are all on board.”

Jan 29, 2014
Energy Storage Having Mixed Results In Market

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On the heels of the Xtreme Power’s bankruptcy announcement, Forbes.com suggests that not all is lost for the storage industry.  Not only is the company running 12 projects, producing 60MW of grid scale electricity, and maintaining its partnerships with GE, Samsung, and Duke Energy, another industry player – AES Energy Storage – is “having success, with 174MW of battery-based controllable resources.” Its products monitor the grid and then release stored energy either in response to wind variations or to help support unplanned outages, with facilities in the U.S. and Chile.  AES hopes that a recent California initiative to increase energy storage will create new economies of scale. The article concluded that the “price of energy storage technologies is still expensive, which is one of the reasons why Xtreme Power has faltered ….Odds are that the technology will continue to advance, as AES Energy Storage has shown. But the pace of progress is still a question and largely a function of whether these ideas are supported by private investors and public policies.”

TSF’s Census 2013 Finds U.S. Solar Jobs Grew 20% Since Last Year
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The Solar Foundation released “its highly anticipated National Solar Jobs Census 2013, which found that the U.S. solar industry employed 142,698 Americans as of November 2013. This figure includes the addition of 23,682 solar workers over the previous year, representing 19.9% growth in employment since September 2012. During the period covered by the Census, solar employment grew 10 times faster than the national average employment rate of 1.9 percent. This growth rate is also significant in that it shows – for the first time ever – the solar industry exceeded the growth projections made in the previous year’s report.”  A growth of 15.6% is expected in 2014. 

Natural Gas Big Winner In Obama SOTU Address
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The Hill.com concluded that the big winner from yesterday’s State of the Union speech was natural gas. President Obama “credited natural gas as one of the key factors in bringing the U.S. closer to energy independence for the first time in decades. In a ‘fact sheet’ accompanying the speech, the White House called on Congress to establish sustainable shale gas growth zones.” The President “added that he will work with Congress to create jobs by building fueling stations, as the administration plans to propose new incentives for medium and heavy-duty trucks to run on natural gas, or other alternative fuels.” But not all agreed: “We can’t drill or frack our way out of this problem,” said Michael Brune, executive director of the Sierra Club. “Make no mistake – natural gas is a bridge to nowhere.”

Jan 28, 2014
Kyle Energy Storage Company Xtreme Power Files For Bankruptcy

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The Austin American Statesman is reporting that Xtreme power, an energy storage company, has filed for “Chapter 11 bankruptcy last week in U.S. Bankruptcy Court for the Western District of Texas, allowing it to continue operations” as it tries to find a new owner. Xtreme Power’s core engineering, project development and operations staff will remain in place during the process. “Two years ago, it employed 285 people, about half of whom worked in the Central Texas area, including in Kyle and Austin. Company officials said Monday that Xtreme Power now has 53 employees and that layoffs are likely during the bankruptcy process.”

NARUC Meets on 2/9/14 through 2/12/14 in Washington
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The National Association of Regulatory Utility Commissioners (NARUC) meets on 2/9-12/14, in Washington.  Five U.S. senators and two cabinet secretaries will address the gathering, including Sens. Lamar Alexander (TN), Mary Landrieu (LA), Joe Manchin (WV), Lisa Murkowski (AK), and Mark Pryor (AR) of Arkansas, who will speak during the morning general session on 2/11/14.  The U.S. Transportation Secretary Anthony Foxx will deliver a keynote address at the Opening General Session on 2/10/14, and the Secretary of Energy Ernest Moniz will speak at the closing session on 2/12/14.  Dan Utech, director for Energy and Climate Change at the White House, will join Secretary Moniz.  Also, Environmental Protection Agency Acting Assistant Administrator of the Office of Air and Radiation Janet McCabe will participate in a panel discussion on 2/11/14.  Other speakers include EPRI CEO Mike Howard, Edison Electric Institute Executive Vice President of Business Operations David Owens, Natural Resources Defense Council Energy Program Co-Director Ralph Cavanagh.  The FERC commissioners will join the NARUC Committees on Electricity and Energy Resources and the Environment for a joint meeting 2/11/14.  The cross-cutting agenda will feature discussions on net neutrality, climate policy, energy efficiency, renewable energy development, gas pipeline safety, telecommunications legislative policy, and distributed generation and the smart grid, among other topics.

Jan 27, 2014
Demand Response Could Factor into Grid Debate

Copyright 2014 by Competitive Assets, LLC.  All rights reserved

The Texas Tribune reports on the renewed importance of Demand Response (DR), particularly as the recent cold pushed the ERCOT grid toward a possibility of outages.  Demand response deserves more focus and attention, according to Doyle Beneby, the president of CPS Energy, a municipally owned utility: “In Texas, it could be a big part of the solution.”  When the polar vortex hit, CPS Energy saved about 77MW of power use through its two demand response programs.  That is enough to power 32,725 homes under normal conditions and 13,680 homes at peak times.  “You don’t really notice,” said Adam Leija, who said he has seen his energy bills shrink since he became one of nearly 100,000 enrollees in the utility’s programs. “It helps us become more energy conscious.”  The Brattle Group estimated that DR could shave about 4% during peak, but an obstacle to greater growth of DR in ERCOT is its inability to participate in the wholesale market.

Texas Regulators Air Concerns on Greenhouse Gas Rules C
opyright 2014 by Competitive Assets, LLC.  All rights reserved

The Texas Tribune reports on “a letter written by the Texas Commission on Environmental Quality and the PUCT.  The letter, sent to EPA administrators after the agency asked for feedback, outlines several concerns, including those about the federal rule-making process, but it also touches on a hot-button issue in Austin: electric reliability.”  Texas regulators say they fear that new regulations would make coal production less economical, speeding up plant retirements and straining the grid.

Why Natural Gas Prices are Soaring C
opyright 2014 by Competitive Assets, LLC.  All rights reserved

BusinessInsider.com is reporting that on 1/24/14, “… natural gas soared 9.6% to $5.18/MMBtu at the Henry Hub.  Up 20% for the week.  The highest close since June 2010.”  The bottom was in April 2012, when gas hit $1.92/MMBtu.  Today, however, not only the cold weather, but increasing exports to Mexico are leading to higher prices, although LNG exports are still in the future.  The article goes on to describe the effect of low prices on utilities and drillers, while noting that these days “not enough wells are being drilled.”  The rise in prices is also affecting trading, bringing “big money” into the market.

PUCT Open Meeting 1/23/14
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At the 1/23/14 open meeting, the PUCT finalized rate cases for SWEPCO and Sharyland, and approved several rulemakings for publication.  The Commission also addressed issues related to resource adequacy, including requesting cost estimates for real-time co-optimization and several market design scenarios. To read more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151.    

Jan 24, 2014
EPRI Releases Reports on Cyber Security Impacts on Power Grids

Copyright 2014 by Competitive Assets, LLC.  All rights reserved

The Electric Power Research Institute (EPRI) “recently released three documents examining various ‘failure scenarios,’ in which the maintenance of confidentiality, integrity, and/or availability of cyber assets creates a negative impact on the generation, transmission, and/or delivery of electricity.  The reports, published by EPRI’s National Electric Sector Cyber Security Organization Resource (NESCOR), study:

  • How a utility may use the documents in failure scenarios;
  • Identification of threat agents;
  • Criteria, methods, and results of prioritization of the failure scenarios;
  • A list of failure scenarios, using common terminology for mitigation measures; and
  • An analysis of common mitigation measures that identify the greatest potential benefit across multiple scenarios.”

The three reports are: Electric Sector Failure Scenarios and Impact Analyses, Analysis of Selected Electric Sector High Risk Failure Scenario, and Attack Trees for Selected Electric Sector High Risk Failure Scenarios.

Solar Saved Southern States From New And Costly Demand Peaks 
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

While much of the United States is shivering through record cold temperatures, our antipodean friends in Australia have just experienced a week of record heat.  REneweconomy.com.au is reporting that demand has been the highest since the end of January 2009; however, in spite of a 7% population growth, the peak usage was just under the 2009 peak.  “Speculation has already started on the effect of solar [power] on electricity demand during the heat wave, with the Electricity Supply Association and the Australian Solar Council each producing different estimates of the amount solar contributed to reducing demand.”  One of the findings was that “[n]ot only did solar reduce the peak demand, it actually shifted the apparent time of maximum demand to much later in the day for South Australia.”  

Jan 23, 2014
PUCT Chairman Proposes Postponing ERCOT Resource Adequacy Workshop and Asks for More Comments
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

On the eve of the 1/23/14 open meeting, the PUCT Chair Donna Nelson filed a memo (643) in Project No. 40000, related to resource adequacy, suggesting that – before proceeding with decisions in this project – the Brattle Group study the cost of the various market designs and the Commission postpone its planned workshop/hearing until mid-May.  In addition, she proposed asking for comments on the parameters of such a study, to be filed by 2/7/14, with a discussion set for 2/21/14.  The memo describes four market scenarios, which the Brattle Group would analyze: (a) the current market design (with the system-wide offer cap at $9,000/MWh); (b) an energy market, with the Operating Reserve Demand Curve (ORDC) and a “forward reliability market;” (c) same as (b), with a 14% reserve margin; and (d) same as (a), with a backstop designed to achieve a 14% reserve margin (e.g., Supplemental Reserve Service, as proposed by the Texas Industrial Energy Consumers).  The Commission will discuss this, and several related projects, at the 1/23/14 open meeting, including on Capacity, Demand, and Reserves; Demand Response; and the feasibility of instituting real-time co-optimization in ERCOT.  

ERCOT Expects to Complete More Than $3.6 Billion Transmission Projects by 2018 
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

On 1/23/14, ERCOT issued a press release on the publication of the 2013 Report on Existing and Potential Electric Constraints and Needs, which states that “transmission providers in the ERCOT region expect to complete more than $3.6 billion in projects between 2014 and 2018. These include additions or upgrades to more than 3,300 miles of transmission lines and other equipment improvements to increase capacity and support reliability.”

ERCOT Prepares for its 1/27/2014 Workshop on the CDR Load Forecast
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

ERCOT will hold a workshop on the Review of the Capacity, Demand, and Reserves (CDR) Load Forecast Methodology on 1/27/14, and has posted additional materials on the proposed load forecast.  The workshop will discuss Itron’s Evaluation of ERCOT’s Forecasting Methodology, which includes recommendations to re-specify the Neural Network (NN) model to isolate the growth index and obtain a stable model; explore the use of a regression model to validate any advantage of a NN model over a traditional approach; and use the historic weather simulations to capture weather uncertainty.  Also posted for this workshop are the Itron Premise Presentation and ERCOT’s Preliminary Load Forecast

Jan 22, 2014
ABACCUS 2014: Annual Baseline Assessment of Choice in Canada and the United States

Copyright 2014 by Competitive Assets, LLC.  All rights reserved

On 1/22/14, the Distributed Energy Financial Group LLC (DEFG) is releasing its 2014 Annual Baseline Assessment of Choice in Canada and the United States (ABACCUS) report.  Similar assessments have been regularly issued since 2007, providing a useful and comprehensive report card for the evolution of customer choice in the North American deregulated electric markets.  The 2014 report finds that more than 17 million residential customers and many businesses are actively participating in the electric markets.  “Competition and increased consumer shopping have prompted retail energy providers to deliver lower prices, and a great variety of innovative products and service choices. For commercial and industrial customers, the evidence is also quite clear. These customers participate in the market at extremely high levels in the states and provinces that allow direct access from supplier to consumer,” said Nat Treadway, a managing partner at DEFG.  In Texas – the leader in competitive retail electric markets for the seventh consecutive year – more than 300 product choices are available to customers, and the selection is not limited to lower prices.  Interest in convenient bill payment features, emails, and text alerts on daily usage is growing, in addition to power generated by renewable resources, smart meters, and providing real-time feedback. 

Electricity Capacity Markets Are Nothing To Advertise About
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

On 1/20/14, the Austin American Statesman published an op-piece from the Texas Public Policy Foundation, arguing against the recent advertisement by a pro-capacity-market group, Texans for Reliable Power, that Texas is running out of generation capacity.  In what is yet another salvo in the ongoing struggle for public opinion on the pros and cons of the two types of electric markets, the author, Kathleen Hunker, explains what happened when ERCOT declared Energy Emergency Alert during the recent cold spell.  She looks at regions that have a capacity market and concludes that it does not protect customers against unplanned outages and potential shortages in extreme weather.

Fact Check: Is Texas Experiencing the Fastest Population Growth in the Country?
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

In the 1/20/14 issue of the Austin American Statesman, PolitiFact Texas looks at the claim by the Texans for Reliable Power that “Texas is experiencing the fastest population growth in the country” by adding more than 1000 people a day.  The evaluation concluded that, while Texas added the most new inhabitants in 2012-2013 (i.e., 1061 per day, on average), North Dakota, Utah, and Colorado had higher population growth rates.

FERC: Recent Weather Impacts on the Bulk Power System
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On 1/16/14, FERC published a staff update on the recent weather effects on the bulk power system.  The report made the following conclusion: “Last week, cold temperatures stressed the bulk power system with high loads, increased generator forced outages, and other challenging operating conditions. The bulk power system remained stable and generally performed reliably throughout the event. The credit for this good outcome goes to the many system operators and other utility personnel who worked long and hard, and communicated extensively with each other to keep the grid up and running.”

Jan 21, 2014
Review of ERCOT Premise Forecast
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Last year, ERCOT contracted Itron to perform an analysis of its proposed load-forecasting methodology.  The first report, dated 1/10/14, has been posted on the ERCOT website; it evaluates the premise class forecasts (by exploring alternative economic drivers to improve the forecast beyond the five-year average method), and provides preliminary recommendations on the Neural Network model.  Itron is also expected to complete an evaluation of the premise forecast weights.  For this analysis, Itron developed “a geometrically weighted average (Weighted Index) to test whether improvements could be made to the single driver approach,” which it then recommended for calculating Residential and Business Economic Indices (based on premise counts).  For residential premises in low-growth zones, business premises in the West Zone, and industrial premises, Itron recommended using the five-year average method, as proposed by ERCOT staff.  Preliminary recommendations for the use of Neural Networks (NN) include: (a) re-specifying the NN model to get a more stable model; (b) using a regression model for validation; and (c) using historic weather simulations to capture weather  uncertainty.  ERCOT has scheduled a workshop on 1/27/14, to review Itron’s study and discuss additional issues related to load forecasting and Capacity, Demand, and Reserves (CDR) report.    

Jan 20, 2014
ERCOT Experienced a Brief Loss of Generation
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On 1/18/14, ERCOT went into an Energy Emergency Alert (EEA) Level 1 because of “sudden loss of generation,” occurring at 08:41, totaling 1, 231MW.  Also, frequency declined to 59.710Hz, while ERCOT load was 39, 428MW.  The operators deployed Non-Spin at 8:44 and at 9:05, before issuing a Watch (Physical Responsive Capability (PRC) at less than 2500MW) and EEA (Reserves below 2300MW).  At 9:00, the EEA was cancelled, but later that day, a couple of Advisories were issued (PRC below 3000MW).

Updated Report Regarding Real-Time Co-Optimization of Energy and Ancillary Services in ERCOT Filed by ERCOT and IMM
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

On 1/17/14, ERCOT and the Independent Market Monitor (IMM) jointly filed an Updated Report Regarding Real-Time Co-Optimization of Energy and Ancillary Services in the ERCOT Markets.  Based on a request by Commissioners, this report adds additional information to the report originally filed by ERCOT and the IMM on 12/12/13.  In this update, they describe what they see as “the different benefits of the two approaches under consideration for Real-Time Co-optimization of energy and AS: the “minimum” approach, which co-optimizes on a single-interval basis; and the “maximum” approach which would incorporate a multi-interval Real-Time Commitment and Real-Time Dispatch.”

The report concludes that “implementation of the recently-approved ORDC will address the operating reserve shortage pricing aspect of “minimum” real-time co-optimization. Additional market efficiency value can be gained from the added functionality afforded by the “maximum” approach including multi-interval SCED – namely the enabling of SCED dispatch of additional resources to contribute to price formation.”  They also note that an additional option could be considered:  – a market construct with multi-interval Real-Time Commitment and Dispatch incorporating the already-approved reserve price adder based on ORDC, while foregoing the more complex challenges of real-time energy and AS co-optimization.  A table is provided comparing various features.

Hackers Invaded Home Appliances and Sent 750,000 Malicious Emails
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An article in Rawstory.com discusses the news about a recently discovered large “botnet, which infected Internet-connected home appliances and then delivered more than 750,000 malicious emails.”  A California firm that found the problem said that “hackers managed to penetrate home-networking routers, connected multi-media centers, televisions, and at least one refrigerator to create a botnet – or platform to deliver malicious spam or phishing emails from a device, usually without the owner’s knowledge.  Security experts previously spoke of such attacks as theoretical.  The case “has significant security implications for device owners and enterprise targets” because of massive growth expected in the use of smart and connected devices, from clothing to appliances.”

Jan 17, 2014
FERC Testimony on
Regulating Financial Holding Companies and Physical Commodities
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

On 1/15/14, Norman Bay, Director of the Office of Enforcement at FERC, testified before the Senate Banking, Housing, and Urban Affairs Committee, Subcommittee on Financial Institutions and Consumer Protection, on ”Regulating Financial Holding Companies and Physical Commodities.”  The testimony focused on FERC’s efforts “to combat fraud and market manipulation.”  Its power is derived from EPAct 2005, which also granted the Commission the authority to impose up to $1 million per violation per day for fraud and market manipulation (and other violations).  To date, the Commission has imposed and collected approximately $873 million in civil penalties and disgorgement.”  The Director’s remarks also elaborated on FERC’s new abilities: “Over the past few years, the Commission’s Office of Enforcement has substantially expanded its investigative and analytical capabilities and has developed extensive new surveillance tools. Among the most important achievements is the creation, in February 2012, of the Office of Enforcement’s Division of Analytics and Surveillance (DAS).  DAS develops surveillance tools, conducts surveillance, and analyzes transactional and market data to detect potential manipulation, anticompetitive behavior, and other anomalous activity in the wholesale electricity and natural gas markets.” 

Jan 16, 2014
ERCOT’s
2013 Operation Report and Plan
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

On 1/15/14 ERCOT filed its 2013 Operations Report and Plan.  The report summarizes key statistics in ERCOT’s Wholesale Market for calendar year 2013, including information concerning prices, costs, and quantities of energy, capacity commitments, ancillary services and the Peaker Net Margin.  The 2013 peak demand was 67,180 MW on August 7th which was less than the all-time peak record of 68,305 MW set on August 3, 2011.  The 2013 winter peak demand was 50,687 MW on January 16th, more than the previous winter peak of 46,924 MW set on January 13, 2012.  The Mean Absolute Percent Error (MAPE) for the Day-ahead Load Forecast from Jan-Nov 2013 was 2.82%.  Advisories for Physical Responsive Capability (PRC) below 3000 MW were issued on 15 days.  There were no Watches issued for PRC below 2500 MW.  There were no Energy Emergency Alert (EEA) events issued.

Jan 15, 2014
Why Did Google Buy Nest?

Copyright 2014 by Competitive Assets, LLC.  All rights reserved

In the last two days, the Internet has exploded with speculation about why Google bought a startup company, making thermostats and smoke alarms, and at such a hefty price tag.  The reasons are as varied as the writers: access to customer home data via a conscious/connected home, Google’s push into robotics, and/or further developing the Internet of Things.  Google also sought talent: the Nest thermostat is an elegant device, clearly reflecting its CEO’s pedigree as a designer of iPod and iPhone.  But a couple of interesting articles in doctordisruptive.com and fastcodesign.com look at the implications for the energy industry.  “The Nest Energy Services, as they’re calling the new features, will be available to customers of a handful of NRG Energy subsidiaries, including National Grid, Green Mountain Energy, Reliant, and more. The most ambitious component is a pair of opt-in energy-saving programs that kick in when demand for energy is at its highest. When these periods roll around, Nest owners can rack up extra savings by letting the thermostat intelligently decrease their household’s energy needs. And it’s not just the homeowner who benefits: Nest’s new features are also intended to serve another class of customers entirely: the utility companies.”

The purchase also raised privacy concerns.  In ERCOT, stakeholders engaged in Smart Meter Texas have spent significant effort on issues related to third-party access to customer data.  The project is yet to be completed.  But Austin Energy and Reliant, Nest’s Texas energy partners in the “Rush Hour Rewards,” which adjusts usage at peak, have their own customer agreements.

Jan 14, 2014
Texas Nuclear Power Plants Seek New Workforce

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The Texas Tribune has an extensive article about the looming worker retirements at the South Texas Project (STP) nuclear plant.  “The company’s 1,200 employees average more than 22 years of experience, and in the next few years, about 40% will be eligible for retirement.”  This observation encapsulates STP’s dilemma, as the article notes: “When we stopped building in the U.S., we stopped seeing massive numbers of new workers flock to the industry,” said Elizabeth McAndrew-Benavides, manager of strategic work force initiatives at the Nuclear Energy Institute in Washington. “It was a very large issue for us.”  The situation is not hopeless, though, since Texas and the local counties have invested extensively in educational programs to grow a new generation of nuclear-plant experts.

Jan 13, 2014
Senator Touts Plan To Address Water, Power Issues

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The 1/12/14 edition of the Austin American Statesman featured on its front page a proposal by Senator Fraser to build new power plants at sites where brackish groundwater can be desalinated and used as a substitute for fresh water.  The idea, addressing the both electricity shortages and a lack of water, would lead to power plants being used for water desalination, until they are needed for electric power in times of shortages.  The Senator proposes to use revenues from power sales to lower the cost of desalination, plus this peaker unit would be productive year-round – unlike the usual peakers.  The proposal is being discussed with ERCOT, LCRA, and CPS Energy, and may be first tested in San Antonio.  While it still needs a lot of study, several officials involved in the talks seem to believe the idea to build four-to-ten such projects is promising and could help alleviate both water and electric energy shortages.

Micro-Windmills May One Day Power Your Smart Phone
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An article in Phys.org reports that “a UT Arlington research associate and electrical engineering professor have designed a micro-windmill that generates wind energy and may become an innovative solution to cell phone batteries constantly in need of recharging and home energy generation where large windmills are not preferred:  “Smitha Rao and J.-C. Chiao designed and built the device that is about 1.8 mm at its widest point.  A single grain of rice could hold about 10 of these tiny windmills. Hundreds of the windmills could be embedded in a sleeve for a cell phone. Wind, created by waving the cell phone in air or holding it up to an open window on a windy day, would generate the electricity that could be collected by the cell phone’s battery.  The UT at Arlington also issued a press release about the new technology.

PUCT Open Meeting 1/9/14
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

At the 1/9/14 open meeting, the Commission finalized orders in a couple of dockets, deferred two rulemakings, and agreed on comments for the EPA.  The Commissioners discussed possible dates for the resource adequacy workshop, originally scheduled for the end of January and also observed that the recent cold spell caused problems at MISO and PJM. To read more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151.

1/10/14
PUCT Open Meeting 1/9/14

Copyright 2014 by Competitive Assets, LLC.  All rights reserved

At the 1/9/14 open meeting, the Commission finalized orders in a couple of dockets, deferred two rulemakings, and agreed on comments for the EPA.  The Commissioners discussed possible dates for the resource adequacy workshop, originally scheduled for the end of January and also observed that the recent cold spell caused problems at MISO and PJM. To read more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151.

Austin Faces Long Odds To Cut Coal Ties
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A front-page article in the today’s Austin American Statesman discusses problems related to a potential sale of the Fayette power plant, as part of an effort to get Austin Energy (AE) out the coal business.  The city’s legal staff drafted a confidential memo, noting that a sale of the Fayette, co-owned by AE and LCRA, could ‘prove daunting.”  Moreover, AE does not have authority to shut down its portion of the plant, which generates about a quarter of its electricity and is responsible for two-thirds of the carbon emissions.

Austin Energy Bills Are Lower Than Deregulated Competitors
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

On 1/10/14, the Austin American Statesman features an editorial about the fact that electricity prices in the areas of Texas with public power, both municipal and electric cooperatives, have been lower than in the deregulated areas.  “The report by the Texas Coalition for Affordable Power compared rates for residential customers in deregulated markets with those in regulated markets.  It found that the 85% of Texans in deregulated areas ‘have continued to pay significantly higher residential rates, on average, than Texans living in areas exempt from deregulation.”

Capacity Market Fight Takes to Advertising Pages
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On 1/9/14, Austin American Statesman carried a full page ad from a new group, Texans for Reliable Power, alleging that “Texas is on course for a power reliability crisis, with the potential for regular rolling blackouts in just a few short years.”  The ad also states that “special interests” opposed to changes “are largely unaffected by blackouts, under the current system,” and provides a PUCT customer line email for contact.  The group includes NRG Energy, Calpine Corp., NextEra, and Exelon.

Jan 9, 2013
Energy Efficiency Programs In Texas And California

Copyright 2014 by Competitive Assets, LLC.  All rights reserved

In the sign of changing times for the Texas electric market, a stakeholder sub-group at ERCOT will start addressing costs associated with solar and energy storage facilities, including how to add them into the verifiable cost process.  Also, the Texas Tribune is reporting that the City of Houston “approved changes to the city’s Residential Energy Conservation Code, increasing by 5% efficiency requirements for most newly constructed dwellings.  The move, which supporters say will cut carbon emissions and slash electricity bills, comes as cities across Texas, the nation’s largest energy consumer, are eying building codes as a way to rein in energy use.” 

In California, however, an energy efficiency program seems to be struggling, as reported by Greentechmedia: “The problem, say some contractors, is that Energy Upgrade California is nothing like the state’s performance-based solar initiative. Rather than tracking actual energy reductions, the program relies on complicated modeling which, contractors say, increases overhead costs and limits the number of jobs they can undertake.”  Over the last three years, the state has spent $230 million on the efficiency program, but only reached 12,200 homes (from the original goal of 100K).

Jan 8, 2014
ERCOT Set a New Winter Demand Record

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On 1/7/14, ERCOT issued a press release, noting a new winter demand record of 57,277MW during the hour ending at 8:00AM.  The previous winter record was from 2/10/11, when demand reached 57,265MW.

TRE’s 2014 New Membership and 2013 Accomplishments
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

On 1/7/14, the Texas Reliability Entity (TRE) published the new membership of the 2014 Reliability Standards Committee.  The CEO Lane Lanford also issued a list of the TRE’s 2013 accomplishments, including: (a) the continued development of the Reliability Assurance Initiative (RAI) (which may be fully implemented in 2014); (b) the near completion of the five-year development process of Regional Standard BAL-001-TRE-1, Primary Frequency Response in the ERCOT Region; (c) increasing and improving stakeholder outreach and training; (d) publishing the first TRE Assessment of Reliability Performance for the ERCOT Region; (e) decreasing the enforcement caseload and enforcement processing times; and (f) receiving FERC approval to streamline our hearing procedures.

3 Major Energy Themes to Watch in 2014
Copyright 2014 by Competitive Assets, LLC.  All rights reserved

On 1/7/14, Forbes.com listed as “the three major energy trends to watch in 2014: intelligent efficiency, clean energy, and distributed power.”  Intelligent efficiency, which includes access to real-time data, was spurred by “the IT revolution in the energy industry, driven by innovations such as energy management software, virtual audits, and better data crunching abilities,” leading to cheaper energy across the grid.  Under “clean energy,” Forbes means natural gas, which “revolutionized the energy industry in 2013.”  As for the future, it’s all about “distributed power.”  The article states that “storing electricity has been one of the great challenges and promises for the power sector since its inception. The ability to store power at low cost and easily access it for distribution would in a moment eliminate many of the thorny problems that plague transportation and transmission transformation efforts today. Real advances are being made in storage, but current business and regulatory models fail to support further evolution. Storage is the game changer for the power sector and the technology that needs the most dedicated attention and external support to make meaningful gains in the next year and over the coming decade.”


Jan 5, 2014
ERCOT Narrowly Avoided Blackout on 1/6/14

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On the morning of 1/6/14, ERCOT called an Energy Emergency Alert (EEA), bringing all available generation online and deploying all load resources under contract, including for the Emergency Response Service (ERS).  Because of unusually cold weather, the morning peak demand reached 55,487MW (8:00AM), while available reserves were impacted by the tripping of two units in North Central Texas, totaling about 3,700MW. The units experienced problems with their instrumentation, according to ERCOT staff.  At the same time, about 9,300MW were offline because of planned outages, and available wind power was around 2,000MW.  ERCOT also had to bring in about 800MW from the Eastern interconnect and 180MW from Mexico.  The staff noted that energy prices went up to the cap in the morning.

By 9:18AM, ERCOT cancelled the alert notice, noting that conditions had returned to normal, and by mid-morning, the two units were also back in service.  In the evening, the peak demand rose even higher, to 56,031MW (8:00PM)

For the morning of 1/7/14, ERCOT is now forecasting peak demand at 59,770MW, with the ISO issuing an additional advisory for generators and TDSPs.  Based on public notices, here is the chronology of relevant notices:

  • 1/5/14 – 10:10AM, ERCOT issues an “Advisory due to Hard Freeze,” through the early morning of 1/6/14;
  • 1/6/14 –
    • 6:47AM, ERCOT issues a “Watch for Physical Responsive Capability (PRC) below 2,500MW;”
    • 6:56AM, ERCOT issues EEA Level 1 (i.e., reserves below 2300MW);
    • 7:05AM, ERCOT moves to EEA Level 2 (i.e., reserves are below 1,750MW, with load resources deployed, a conservation appeal, and a possibility of rotating outages);
    • 7:51AM, ERCOT returns to EEA Level 1, after the system started to recover;
    • 9:18AM – ERCOT moves from EEA Level 1 to “Normal” conditions;
    • 9:57AM – the “Watch for PRC below 2,500MW” is cancelled.  

Jan 4, 2014
Despite Blizzards, Temperatures Rising In Colorado Over Rooftop Solar Energy

Copyright 2014 by Competitive Assets, LLC.  All rights reserved

On 1/5/14, Forbes.com published an article about a brewing battle in Colorado “pitting the rooftop solar energy business against the legacy utility companies, both of which fear they would get a raw deal as an increasing number of consumers potentially detach from the grid.”  “The debate that Colorado is having comes atop ones that are taking place in California and Arizona. In October, the California’s Public Utility Commission presented a study that examined how traditional utility customers would be affected by net-energy metering rules. It used the “avoided costs” suppositions, which then concluded that more onsite power means greater overall benefits.

In mid-November, the Arizona Corporation Commission made some decisions. While the main utility there, the Arizona Public Service (APS) that is part of the Pinnacle West Power Corp., had requested a roughly $50 monthly charge for self-generating solar consumers, the Commission settled on $5 a month. The Colorado Public Utility Commission is about to consider this contentious issue. “Colorado ranks seventh in the nation, with 314MW of solar generation installed and 328 solar companies creating a bright future,” says Gabe Eisner, executive director of the Energy and Policy Institute.

Jan 3, 2014
FERC, CFTC Sign MOUs on Jurisdiction and Information Sharing

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On 1/2/14, FERC and the Commodity Futures Trading Commission (CFTC) announced the signing of two Memoranda of Understanding (MOUs) “to address circumstances of overlapping jurisdiction and to share information in connection with market surveillance and investigations into potential market manipulation, fraud, or abuse.”  The press release states that the “MOUs allow the agencies to promote effective and efficient regulation to protect energy market competitors and consumers.”  “These memoranda will further strengthen FERC’s ability to perform its market oversight and enforcement responsibilities,” said Acting Chairman LaFleur.  “As FERC’s role in overseeing the competitive energy markets has grown since the passage of the Energy Policy Act of 2005, our need to coordinate with the CFTC is increasingly important.”  The MOUs – on Jurisdiction and Information Sharing – had been under development for quite some time, and come as a result of the requirements in the Dodd-Frank Act. 

Jan 2, 2013
New Year Brings Good and Bad News For Texas Wind Power

Copyright 2014 by Competitive Assets, LLC.  All rights reserved

On 12/31/13, the StateImpact reminded us that by “New Year’s Day, the network of transmission lines that comprise Texas’ Competitive Renewable Energy Zone (CREZ) will be fully operational, bringing electricity from wind turbines in West Texas and the Panhandle to points east. Many of the lines are already active (and have contributed to record-breaking percentages of Texas electricity coming from wind), but the Jan. 1 deadline is cause for celebration among those who have long prided Texas’ role as a leader in wind power.” (The last wind record, reported by ERCOT, was on 2/9/13 – at 9,481MW.)

The article continues by pointing out that “just as this infrastructure to carry wind power is completed, the expiration of federal tax credits for wind projects could hinder investment.  The wind operators believe that the credit expiration will have an impact, but remain optimistic. For Texans in the ERCOT area, the new CREZ lines will also bring an added charge on their electric bills.

Dec 31, 2013
How One Austin Church Could Lead to More Urban Solar Power

Copyright 2013 by Competitive Assets, LLC.  All rights reserved

On 12/27/13, the StateImpact published a story about the efforts of one church in Austin to install solar panels.  After considering the move for many years, Saint David’s decided last year that the time was right – and then they talked to Austin Energy.  The utility told them that the project could not be done because “the church’s proposal was too big, with solar production of around 150kW.”  The article explains that “it goes back to the way cities set up electric grids in downtown areas,“ as downtown “networks are often separated from the rest of the city, to ensure extra protection for densely-populated, commercially-important parts of town.  The issue this causes is that, for safety, the system is designed so that power can only flow to the customer.  So if there is any back-feeding power, the circuit trips and opens up and cuts off power to that facility.”

“The fix was to create a system that will decrease the amount of electricity produced during those days when the panels make more energy than the church needs.  Bennet Ford, an engineer on the project with contractor Meridian Solar, says it was the first time he’s worked to reduce a project’s capacity. “You never like to curtail a solar system that’s free energy from the sun and it’s not going to be used here on site,” Ford says.  But with these new controls in place, the project could move forward. On a recent day, Ford watched as cranes took positions at the church. He says if all goes well, the project can serve as an example not just for other buildings in downtown Austin, but in other cities.”

Dec 30, 2013
PUCT Proposes New Rules

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At the 12/19/13 open meeting, the Commission approved on consent two Proposals for Publication in:

  • Project No. 41904, Rulemaking Proceeding to Amend P.U.C. Subst. R. 25.101, Relating to Certification Criteria (7).  Initial comments are due on 2/10/14, and replies on 2/24/14; and
  • Project No. 41616, Rulemaking to Revise P.U.C. Subst. R. 25.272, Code of Conduct for Electric Utilities and Their Affiliates (24).  Initial comments are due on 2/3/14, and replies on 2/17/14.    

In addition, the Commission agreed with the PUCT staff that no further action is required in Project No. 41641, Project to Investigate Potential Impacts of an Increase of the System-wide Offer Cap to Retail Markets (staff memo, 13).

Dec 27, 2013
More Comments Filed in ERCOT Resource Adequacy Project

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On 12/23/13, seven parties filed reply comments in PUCT Project No. 40000, related to resource adequacy.  The Sierra Club and Texas Industrial Energy Consumers oppose a capacity market and question whether the Commission has the authority to make a market change; Environmental Defense Fund and Demand Response (DR) Coalition support a capacity market in the belief that it would lead to greater development of DR; and NRG, Texas Reliability Assurance Market Advocates, and STEC all support a forward capacity market.  They state that the PUCT has statutory authority to make this change, with some arguing that it would be similar in concept to the current Ancillary Services market.  The Commission will discuss at its 1/9/14 open meeting whether to reschedule a resource adequacy workshop, currently planned for the end of January.  At the last open meeting, concerns were raised that some of the information (e.g., the Brattle Group report or Capacity, Demand, and Reserves report) might not be ready in time for the workshop.    

U.S. Energy Department, Pay-Television Industry and Energy Efficiency Groups Announce Set-Top Box Energy Conservation Agreement
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On 12/23/13, the Department of Energy, Natural Resources Defense Council (NRDC), American Council for an Energy-Efficient Economy (ACEEE), Appliance Standards Awareness Project (ASAP), Consumer Electronics Association (CEA),® and National Cable and Telecommunications Association (NCTA) announced “non-regulatory energy efficiency standards for pay-TV set-top boxes that will result in significant energy savings for more than 90 million U.S. homes. These new standards – developed through a non-regulatory agreement between the pay-TV industry, the consumer electronics industry, and energy efficiency advocates – will improve set-top box efficiency by 10% to 45% percent (depending on box type) by 2017, and are expected to save more than $1 billion on consumer energy bills annually.”   

Dec 23, 2013
Report: Future Ancillary Services in ERCOT – Workshop II
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On 12/13/13, ERCOT held a second workshop as part of its effort to develop new Ancillary Services (AS).  The first one, on 10/24/13, presented initial information about the proposed services and concluded with a request for comments.  In the subsequent weeks, at least eight parties filed comments on the redesign of the current AS into five plus one new AS.  The latest issue of the Texas Electric Watch summarizes the comments and outline of the six-month stakeholder review process, as proposed by ERCOT staff at the workshop. To read more, please subscribe to Texas Electric Watch. If you are interested in purchasing this TEW issue, please click here. If you are interested in subscribing the Texas Electric Watch, please click here or call Competitive Assets at 512-581-0151. 

PJM 2014 Load Forecast
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The newly proposed load forecasting methodology points to slower load growth in ERCOT – down from about 2.5% to 1.1% (or even less).  But as events in PJM indicate, ERCOT is not alone in registering slower load growth.  The RTO Insider reports that “PJM predicts summer peak loads will increase by about 1% annually over the next decade, with a 1.4% increase in 2014, according to a draft forecast outlined to the Planning Committee last week.”  (ERCOT did, however, report that demand grew both in October (by 13.3%) and November (by 12.8%.)

Double the Power-PPPL Races Ahead with Fusion Research
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The premier issue of Quest Magazine – published by the Department of Energy’s Princeton Plasma Physics Laboratory (PPPL) reports on the advanced research into fusion energy and plasma science, carried out at PPPL.  The director of PPPL writes that “[f]usion powers the sun and stars, and harnessing this power on Earth could provide a safe, clean, and virtually limitless way to meet global electricity needs.  PPPL is a world leader in this quest. The first sections of this magazine detail our progress in understanding the superhot, electrically charged plasma gas that fuels fusion reactions, and in learning how to control this gas with magnetic fields.  Fusion is the foremost, but far from the only, focus of our research. PPPL’s study of plasma, often called the fourth state of matter, ranges from its use in fusion energy to its role in fields as vast as astrophysics and as small as nanotechnology. These pages describe our research in these areas and some of the benefits it could bring, including improved forecasts of disruptive solar storms and new techniques for manufacturing items from golf clubs to microchips.”

Report: PUCT Open Meeting 12/19/13
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At the 12/19/13 open meeting, the Commission agreed to re-hear certain issues in SWEPCO’s rate case, dismissed Entergy’s asset transfer application (while noting the company’s 12/19/13 go-live at MISO), and approved several violation settlements.  Out of eight proposed rulemakings on the agenda (for either publication or adoption), most were approved, but the rules on POLR and rate case expenses were deferred. To read more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151. 

Dec 19, 203:
EIA Unveils Enhanced State Energy Profiles Webpage

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The U.S. Energy Information Administration (EIA) has unveiled an enhanced State Energy Profiles webpage, including a new renewables section.  The State Energy Portal contains new analytical narratives on the energy sectors of each of the 50 states, the District of Columbia, and five U.S. territories.  Not surprisingly, Texas holds the number one spot in energy production, followed by Wyoming.  But while Texas remains the largest gas-producing state, with steady growth, including a 5% uptick in production this year, the Marcellus Shale is allowing Pennsylvania to narrow this gap.

Dec 18, 2013
Wind Power Rivals Coal With $1 Billion Order From Buffett

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Bloomberg.com is reporting on “the decision by Warren Buffett’s utility company to order about $1 billion of wind turbines for projects in Iowa,” which shows how a drop in equipment costs is making renewable energy more competitive with power from fossil fuels.  “Turbine prices have fallen 26% worldwide since the first half of 2009, bringing wind power within 5.5% of the cost of electricity from coal, according to data compiled by Bloomberg.  MidAmerican Energy Holdings Co., a unit of Buffett’s Berkshire Hathaway Inc., yesterday announced an order for 1,050MW of Siemens AG  wind turbines in the industry’s largest order to date for land-based gear.”  “Growing demand for wind power will offset waning use of fossil fuels, said MidAmerican Energy CEO Bill Fehrman.”

Dec 17, 2013
New Round of Comments filed in Texas ERCOT Resource Adequacy Project
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At least 28 parties filed initial comments in PUCT Project No. 40000, related to resource adequacy.  The comments on specific questions about capacity markets had been requested at the PUCT open meeting in November by Chairman Nelson and Commissioner Anderson.  The filings provide responses to such fundamental questions as whether the Commission has statutory authority to undertake a major market redesign, the efficacy and costs of capacity markets, the likelihood of regulatory uncertainty, effect on the retail market, proposals for alternatives, and others.  Considering what type of a capacity market might be appropriate, one commenter stated: “As an extreme example, a ten-year forward market would model reserves needed based on a forecast 10 years ahead and assign obligations to Load Serving Entities (LSEs) on that basis.  There is little likelihood that such outcomes will be accurate.  Looking one year ahead is likely to be much more accurate.  The problem with shorter forward markets is that they do not align with construction decisions for many resources.”  This is just one of many questions the Commission will be addressing at the 1/29-30/14 workshop.  Replies to comments are due on 12/23/13.

ERCOT Load-Forecast Methodology
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On 12/16/13, ERCOT staff held a workshop to review the newly proposed revisions to the load forecasting methodology.  The same presentation was made to the ERCOT Board in December, after a November decision to postpone the release of the Capacity, Demand, and Reserves (CDR) report.  The staff announced that ERCOT had just signed a contract with Itron to perform an independent review of the new methodology by mid-January, and that the CDR report is expected to be released in late January or early February.  The latest issue of the Texas Electric Watch captures the discussion at the workshop, in addition to the summary of the original and revised methodologies and resulting decreases in load growth.  To read more,, please subscribe to Texas Electric Watch. If you are interested in purchasing this TEW issue, please click here. If you are interested in subscribing the Texas Electric Watch, please click here or call Competitive Assets at 512-581-0151.

Dec 16, 2013
Texas RE Membership Approved Independent Directors/Board Elected Chair and Vice Chair for 2014
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The Texas Reliability Entity announced that on 12/11/13, the TRE Board of Directors unanimously elected Dr. Massoud Amin to serve as Board Chair and Dr. Delores Etter to serve as Board Vice Chair for 2014.   In addition, John Coughlin was approved as a new member.

Texas Consumer Advocate Agency’s Aim: ‘Provide a Voice’ For Consumers On Utility Rates
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The Austin American Statesman features a profile and an interview with Tonya Baer, the recently appointed Public Utility Counsel.  She previously worked at the TCEQ and PUCT.  “I come to the Office of Public Utility Counsel at a very exciting time.  New technologies are coming online and the agency is expanding its focus to include water issues.  With the increased focus on water resources and the continued need for reliable and affordable energy markets, I look forward to working with all involved parties to ensure that the voices of those we represent drive the policy making in Austin,” she stated.

DOE Announces New Projects
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On 12/11-12/13, the Department of Energy made announcements on several projects:

Report: Texas House Representative Keffer Speaks at ERCOT Annual Meeting
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The featured speaker at the 43rd ERCOT Annual Membership Meeting was the Chair of the Texas House Committee on Energy Resources, Representative Jim Keffer.  He spoke about the robustness of the state’s oil and gas sector and the leading role Texas plays in the energy industry overall.  The resulting boom in the economy is allowing the state to take care of its infrastructure needs, including the approval of Proposition 6 for water, and the expected proposal for highway construction.  Concluding that the state’s cooperative political process ought to be emulated, he urged the participants to get involved in the coming legislative races. To read more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151.   

Dec 13, 2013
Report: Texas House Representative Keffer Speaks at ERCOT Annual Meeting

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The featured speaker at the 43rd ERCOT Annual Membership Meeting was the Chair of the Texas House Committee on Energy Resources, Representative Jim Keffer.  He spoke about the robustness of the state’s oil and gas sector and the leading role Texas plays in the energy industry overall.  The resulting boom in the economy is allowing the state to take care of its infrastructure needs, including the approval of Proposition 6 for water, and the expected proposal for highway construction.  Concluding that the state’s cooperative political process ought to be emulated, he urged the participants to get involved in the coming legislative races. To read more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151.

ERCOT and IMM’s Report on Implementation Of The Real-Time Co-Optimization Of Energy And Ancillary Services
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On 12/12/13, ERCOT and the Independent Market Monitor (IMM) jointly filed a report (3) in Project No. 41837, PUCT Investigation on the Feasibility of the Institution of Full Co-optimization in ERCOT Energy Markets.  The filing was in response to a set of questions (2), from the 11/15/13 open meeting (OM), related to a possible implementation of the real-time co-optimization of energy and Ancillary Services (AS), and will be discussed at the 12/19/13 OM.  ERCOT and the IMM state the following conclusions:

  • The implementation of the Operating Reserve Demand Curve (ORDC) will address the OR shortage pricing aspect of the “minimum” real-time co-optimization;
  • Additional market efficiency may be gained from the functionalities of the “maximum” approach, including the multi-interval Security Constrained Economic Dispatch (SCED) (i.e., the dispatch of additional resources to contribute to price formation); and/or
  • Another option may be worth considering – i.e., a market construct with multi-interval Real-Time Commitment and Dispatch, incorporating the reserve price adder, based on ORDC, without the complexities of real-time energy and AS co-optimization.

The report provides a breakdown of the numerous ERCOT projects planned for 2014-2015, including changes to AS, but notes that a full impact assessment would require more time.  In addition, a table lists features and costs of the different market constructs.  The minimum co-optimization with ORDC would cost $25 million and take 3-4 years; the maximum version would cost $42.5 million and take 3-5 years.

Austin Energy Billing Disputes to be Mediated by an Independent Reviewer
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The Austin American Statesman is reporting on a decision by the City Council that “Austin Energy needs an independent reviewer to mediate billing disputes.”  “Council members said they are receiving numerous complaints, ranging from over-billing to unfair disconnections, and that, at least anecdotally, the city-owned utility still appears to be having more problems than it did before its $55 million billing system went live in late 2011.”

Dec 12, 2013
El Paso Electric Reaches Deal on Proposed Power Plant

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The Texas Tribune is reporting that an agreement has been reached between El Paso Electric and the residents of a low-income neighbourhood to build a natural gas power plant: “Under the agreement, El Paso Electric cannot expand construction beyond the four natural gas units planned for the Montana Vista neighborhood in far east El Paso County, though it may consider building solar panels on the site.  Some of the company’s employees will also join a citizens advisory panel that will hear concerns over environmental and emergency issues related to the plant’s operations. The electric company will also establish a fund to help residents obtain energy-efficient materials for their homes, according to a statement by El Paso Electric Company.”

Near-Catastrophe During Flooding Highlights Issues at Dam in Austin
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StateImpact Texas has a report about various problems at the Longhorn Dam, which was connected to the decommissioned Holly plant in East Austin and is operated by Austin Energy.  Built in 1960, the floodgates at the dam have stored and released water from the Lady Bird Lake for over 50 years, but now the age is showing.  “There’s been a lack of maintenance on the dam for the last 15 years,” Dennis Hipp, a recently-retired Austin Energy employee told StateImpact Texas.  “It’s steadily gotten worse and it’s to the point now where it’s going to start doing some damage. [Both] upstream and down.”  The article continues: “Now that the power plant is gone, there’s nobody close at hand to control the floodgates.  Hipp says that’s a serious problem, because the gates need to be manually opened and closed in response to quickly changing water levels.  Adding to the challenge is the fact that dam’s seven floodgates suffer from mechanical problems.”

Dec 11, 2013
Mississippi PSC Rejects Transfer of Entergy Transmission to ITC

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At the PUCT, Docket No. 41850 was established for Entergy Texas, Inc., to re-file its application for the transfer of transmission assets to ITC Holdings, and other relief.  On 12/10/13, Entergy filed its press release on the Mississippi Public Service Commission’s (MPSC) recent action, stating: “We are disappointed that the Mississippi commission took action today and found that the transaction is not in the public interest.  We will evaluate the Mississippi commission’s 99-page order and work with ITC to determine next steps.”  The order, which unanimously denied Entergy’s application for the asset transfer was also filed.  According to news reports, the denial was based on three negative aspects of the proposal: “an increase in customer rates, a loss of commission’s jurisdiction over transmission cost of service, and no clear benefits to customers.”  The Commission estimated that the deal would raise customers’ rates by $300 million over 30 years.  In a separate press release, ITC strongly disagreed with MPSC.

Report: Partnering Natural Gas and Renewables in ERCOT
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On 12/10/13, the Texas Clean Energy Coalition announced the receipt of a study, prepared by the Brattle Group, titled Partnering Natural Gas and Renewables in ERCOTThe study’s executive summary states: “Low natural gas prices have fueled concerns that natural gas will soon crowd out renewable resources, undermining Texas’ progress toward the development of a thriving wind industry and toward reducing emissions.  At the same time, recent ERCOT analysis found wind and solar resources to be competitive with natural gas over the next 20 years under a number of plausible scenarios.  This white paper, therefore, analyzes the interactions between gas and renewables in ERCOT, both in the short and long term.  The main conclusions of this white paper are that in the short-run, low gas prices are extremely unlikely to change the fact that existing renewables will nearly always have priority over gas-fired plants since, due to the absence of fuel costs, their variable costs are lower than those of essentially all other resources.  Over the long-term, as new plants are planned and built, it is possible that new gas-fired plants will compete with new sources solar and wind generation.  Which source is cheaper will depend on the levels of gas prices, the existence (or lack thereof) of continued federal (and perhaps state) support and the technological progress of both wind and solar resources.  In addition, it is possible that in the long-run, some combination of renewables and gas will displace existing coal-fired generation.”

Supreme Court Tackles EPA’s Good Neighbor Rules on Cross Border Pollution
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On 12/10/13, the U.S. Supreme Court heard arguments on environmental rules aiming to reduce smog that drifts from one state to another.  An appeals court in Washington had blocked the Environmental Protection Agency’s “good neighbor” regulations, saying the agency exceeded its authority, after 14 states, including Texas, and several industry groups appealed.  But nine states and six cities have asked the top court to reverse the appeals court decision and put the regulations into force.  A decision is expected in the spring 2014.

Dec 10, 2013
PUCT Staff’s Analysis Disputes NRG’s Study on Capacity Markets

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On 12/9/13, Commissioner Anderson filed his staff’s analysis of the Charles River Associates study on resource adequacy and outages in ERCOT (573), which was commissioned by NRG and recently filed in Project No. 40000 (449).  The staff’s analysis consists of three parts: an executive summary; methodology review; and an appendix, with details of mathematical assumptions used in CRA’s study.  The filing asks interested parties to “critique this analysis” and file responses in Project No. 40000, in an effort to improve accuracy of the information available to the PUCT Commissioners, as they address resource adequacy issues in ERCOT.

The executive summary of the Analysis of Charles River Associates Capacity Market Study states: “The CRA Study grossly overstates the direct cost per event of electric service interruption in its evaluation of the energy market construct.  This is the value that CRA uses in its economic model to determine the effect on the Texas gross state product.  In calculating the direct cost per event, CRA ignores warnings from the authors of a referenced national study and uses summer weekday afternoon cost values for every time period of the year.  Ignoring yet another warning from the same national study, CRA fails to account for a significantly higher load profile for afternoon and evening periods, which also inflates its numbers.  The inflation is so great that the CRA Study uses $85,000/MWh as an overall average cost per un-served MWh (or $85 per un-served kWh), for every time period of the day, season of the year, business type and residential consumer.  Finally, CRA assumes an 8.4% reserve margin by way of incorrect assumptions and basic math errors for the energy market in 2016, to determine the total amount of un-served energy in a year, and it carries these errors throughout all years of the study.  The net effect of these errors and omissions is to increase the cost estimate of an energy market by at least a factor of ten (likely, by a factor of at least 40).  Some, but not all, of the errors also affect CRA’s results for the energy plus capacity market.”

Commissioner Anderson’s web page also contains a breakdown of Capacity Market Costs Allocated by Meter, posted on 12/9/13.    

ERCOT Raises its System Administration Fee on 1/1/14
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On 12/9/13, ERCOT sent out an email, announcing the approval of ERCOT’s requested budget for the 2014/2015 biennium by the PUCT.  The new budget raises the ERCOT System Administration Fee from $0.4171/MWh to $0.4650/MWh, effective on 1/1/14.  The budget filing and other relevant documents in P.U.C. Project No. 38533, Review of ERCOT Budget, are available on the PUC Interchange; additional information is posted at ERCOT’s 2014-15 Budget Request.

Dec 9, 2013
On State’s Power Grid, Which Bogeyman Are We Fighting?

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The Austin American Statesman published an article titled “On state’s power grid, which bogeyman are we fighting,” which summarizes many of the difficult issues in the current debate about resource adequacy.  Two of the main ones are clarifying the 1-in-10-years event and agreeing on a reliability standard.

Eastern States Press Midwest to Improve Air
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In Sept. 2011, Texas Attorney General sued the U.S. Environmental Protection Agency, seeking to block rules aimed at curbing pollution.  The New York Times is reporting that on Monday (12/9/13), the governors of eight Northeastern states plan to petition the EPA “to force tighter air pollution regulations on nine Rust Belt and Appalachian states.”  This will be a “battle that pits the East Coast against the Midwest over the winds that carry dirty air from coal plants.”  The Times writes that “the petition comes the day before the Supreme Court is to hear arguments to determine the fate of a related E.P.A. regulation known as the “good neighbor” rule. The regulation, officially called the Cross-State Air Pollution Rule, would force states with coal pollution that wafts across state lines to rein in soot and smog, either by installing costly pollution control technology or by shutting the power plants.”

U.S. House Hearing on Evaluating the Role of FERC in a Changing Energy Landscape
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On 12/5/13, the Subcommittee on Energy and Power of the U.S. House Energy and Commerce Committee held a hearing titled, “Evaluating the Role of FERC in a Changing Energy Landscape.”  The four current Commissioners of FERC testified (Acting Chairman’s Testimony, Commissioners’ Testimony: Moeller, Norris, and Clark).  The topics discussed included: cybersecurity, FERC Order 1000, cost allocation of new transmission lines, energy reliability, LNG exports, rates, and retirement of coal-fired plants.  Some committee members stressed that the grid “effectively incorporate the increasing amounts of intermittent renewable energy” and urged FERC to continue to pursue smart grid technologies that incorporate demand response and smoother inputs of renewable energy.

Dec 6, 2013
Democrat Candidates for Governor and Lt. Governor Weigh in the ERCOT Electric Market Change Discussion

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Texas Senators Wendy Davis and Leticia Van de Putte, running for Governor and Lt. Governor, respectively, waded into the discussion about a potential capacity market in Texas, by filing comments in Project No. 40000 (Davis and Van de Putte), related to resource adequacy.   Both urged the Commission to conduct a cost/benefit analysis before proceeding any further in its decision-making process.  Senator Davis suggested that the analysis focus on these points:

  • What would the impact be on the costs of electricity to the average residential ratepayer, the average commercial ratepayer, and the average industrial ratepayer?
  • What guarantee can be provided that switching to a capacity market will result in the construction of new generation, eliminating the specter of future capacity shortfalls?
  • What might the impact to our state’s economy be were such a shift to occur, measured particularly by potential impact to the costs of doing business in the state and the subsequent impact that might occur to our state’s continued ability to attract and grow business?  In this regard, I am particularly interested in determining the potential impact that added costs might have to the energy production sector of our state’s economy.

The next step in this project will be the filing a comments on 12/16/13, and a workshop on load forecasting on the same day.

Dec 5, 2013
ERCOT TAC Voted to Approve PGRR031: Implement 95% Facility Rating Limit in the Planning Criteria

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At the 12/3/13 meeting of the Technical Advisory Committee (TAC), the members considered Planning Guide Revision Request PGRR031, Implement 95% Facility Rating Limit in the Planning Criteria.  The PGRR would change criteria under which transmission projects get proposed and approved by adding language that “… for Transmission Facilities with loading greater than or equal to 95% of their applicable Ratings under normal system conditions and under contingency events …, Transmission Service Providers (TSPs) and ERCOT shall initiate and pursue projects to be in service in a timeframe consistent with loading greater than or equal to 95%.”  The PGRR was developed in response to outages during Feb. 2011, in the Valley.  At TAC, it failed to get approval in a close vote, mainly because of opposition from the generators and Independent Power Marketers.  A day later, however, ERCOT staff determined that the vote was not calculated correctly, and PGRR031 did, in fact, pass.  It may still be reconsidered or appealed.

CAISO And NERC Examine Energy Storage Role In California   
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A FierceEnergy.com article reports that “the North American Electric Reliability Corporation (NERC) and California Independent System Operator Corporation (CAISO) have issued a joint report confirming energy storage as an integral component of California’s future electric grid.”  The article states that “[t]he report highlights how CAISO is pursuing market enhancements, such as pay-for-performance regulation modeled after FERC Order 755, which has proven highly beneficial to integrating storage in other markets like PJM….”  It also highlights that CAISO will partner with storage, and enhance market mechanisms to promote energy storage participation as a reliability and flexibility tool.”  “… In light of CPUC’s announced energy storage target for 2020, we believe storage will be essential to making a resilient, efficient, clean, and cost-effective grid,” said Darrell Hayslip, chair of the Electricity Storage Association.

Dec 4, 2013
ERCOT Proceeds to Re-evaluate its Newly Revised Load-forecasting Methodology

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At the 12/3/13 meeting of the Technical Advisory Committee (TAC), ERCOT staff described the process to re-evaluate the newly revised load-forecasting methodology.  The first step will be a detailed presentation at the 12/10/13 ERCOT Board meeting; next, a workshop has been scheduled for 12/16/13, to get market participant input; and third, there are plans to discuss related issues with the TDSPs at the 12/17/13 meeting of the Regional Planning Group (RPG).  In addition, ERCOT is planning to hire an independent consultant to review the methodology and provide suggestions for improvement.  The TAC Chair clarified that the purpose of all this is to get a better understanding of the methodology and thoroughly vet it, as it is a significant change.  He added that any decision on the methodology has to be right, rather than quick. A staff presentation to the Board has been posted.    

Dec 3, 2013
Texas Leads in Creating Clean-energy Jobs

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On 11/28/13, the Austin American Statesman reported that “Texas “Texas was one of the top states in the country for clean-energy jobs in the third quarter and is a nationwide leader in creating such jobs, according to a report.  Companies announced projects in the third quarter that could add more than 770 jobs in Texas, placing it fifth in the country. In all, there were more than 80 clean energy and clean transportation projects announced nationwide in the third quarter that could create more than 15,000 jobs.”  “Clean energy continues to put Americans to work,” said Judith Albert, executive director of Environmental Entrepreneurs, a nonprofit business group that produced the report. The report includes announcements from 30 states in industries ranging from solar power generation to recycling to clean-energy related manufacturing and biofuels. The top sectors were renewable power generation, with 6,700 jobs announced, and manufacturing, with 3,300 jobs announced.

Dec 2, 2013 13
States Receive Nearly $4 Million To Increase Statewide Energy Savings

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On 11/26/13, the Department of Energy announced that 13 states, including Texas, received “nearly $4 million to increase statewide energy savings and boost the energy efficiency of public institutions, local governments, and industrial sectors.  The Department’s State Energy Program has a long history in assisting states in saving energy and deploying new clean energy technologies.”  The DOE will invest approximately $751,000 to help Alabama, Iowa, Kentucky, Minnesota, Mississippi, Oregon, Texas, and Wisconsin address specific policy, regulatory or market barriers to greater investment in energy efficiency and combined heat and power (CHP) technologies.  The CHP technology captures and reuses heat created during electricity production and other industrial processes – boosting overall building efficiency.

A day before, DOE announced “up to $30 million in Advanced Research Projects Agency – Energy (ARPA-E) funding for a new program focused on the development of transformational electrochemical technologies to enable low-cost, distributed power generation.  The ARPA-E’s Reliable Electricity Based on ELectrochemical Systems (REBELS) program will develop fuel cell technology for distributed power generation to improve grid stability, increase energy security, and balance intermittent renewable technologies while reducing CO2 emissions, associated with current distributed generation systems.”

Nov 27, 2013
ERCOT May Delay Its Capacity, Demand, and Reserves (CDR) Report by Two Months

Copyright 2013 by Competitive Assets, LLC.  All rights reserved

At the last ERCOT Board meeting, on 11/19/13, there was a discussion about the issuance of the next Capacity, Demand, and Reserves (CDR) report, planned for 12/1/13.  The discussion and uncertainty about the load data led the Board Chair to recommend delaying the report, until after the next Board meeting, on 12/10/13.  This would give members an opportunity to review the results of the revised load forecast and compare them to the previous methodology.  A few days after that, Reuters reported on a statement by ERCOT’s CEO Trip Doggett that the CDR may be delayed by up to two months, because of the decision to let the revised load data go through the stakeholder review.  Consequently, the just-issued agenda for the Technical Advisory Committee (TAC) meeting on 12/3/13, features as one of the first items an update on the “Process for Finalizing the Load Forecast Methodology for the CDR Report.”  It is not, however, shown as a voting item.

Nov 26, 2013
Senator Fraser Tells PUCT, “Slow Down!”
 
  
  
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Amid accusations of “agency creep,” the Chair of the Senate Committee on Natural Resources reprimanded the PUCT at the 11/25/13 hearing about getting ahead of itself and “putting the cart before the horse” in its deliberations about resource adequacy and mandated reserve margin. Senator Fraser asked the Commissioners to slow down, reminding them that the change to a capacity market would be major, and that the legislature also has an opinion on the matter.  The Committee then heard from various stakeholders, mostly in opposition to a potential capacity market.   To read a complete summary of the hearing, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue (including the supplemental issue), please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151. 

Nov 25, 2013:
New Developments on ERCOT Electric Market Changes
 
  

Copyright 2013 by Competitive Assets, LLC.  All rights reserved

Today, on 11/25/13, the Texas Senate Committee on Natural Resources, chaired by Senator Fraser, is holding a hearing on resource adequacy issues facing the Texas electric market.  There will be invited testimony only.  The hearing was scheduled after several PUCT open meetings this summer and fall, during which Commissioners debated vastly differing visions of how to address resource adequacy, with little agreement in sight.

 On 11/22/13, the PUCT staff filed a Notice of Workshop and Request for Comments (564) in Project No. 40000, related to resource adequacy.  As discussed at the 11/15/13 open meeting, a workshop has been scheduled for 1/29-30/14, with comments on Commission’s questions due on 12/16/13, and replies on 12/23/13.  The questions – which reflect two very different perspectives – may be found at: http://interchange.puc.state.tx.us/WebApp/Interchange/Documents/40000_522_771540.PDF (by Chairman Nelson) and http://interchange.puc.state.tx.us/WebApp/Interchange/Documents/40000_559_773656.PDF (by Commissioner Anderson).

Nov 22, 2013
The New Orleans City Council Is Investigating Entergy’s Operation and Transmission Ownership Changes
 
  

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On 11/21-22/13, the PUCT is holding a hearing in Docket No. 41850, Updated Application of Entergy Texas, Inc., ITC Holdings Corp., Mid South Transco LLC, Transmission Company Texas, LC, and ITC Midsouth LLC for Approval of Change of Ownership and Control of Transmission Business, Transfer of Certification Rights and Related Relief.  On the first day of the hearing, there is news that the New Orleans City Council is targeting Entergy for investigation “after the council’s utility regulating committee warned that some proposed changes could raise rates for customers in years to come.”  “The council voted Thursday for a probe into how New Orleans customers will pay for upgrades to the power grid in the city and possibly statewide as Entergy companies consolidate some operations.  The council also raised questions of whether a recent Entergy Corp. decision could leave New Orleans customers holding the bag when it comes to sharing the costs of producing power across the company’s four-state territory.”

First Securitization of Rooftop Solar Assets 
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Forbes.com is reporting on the first securitization of rooftop solar assets: “SolarCity (SCTY)  announced Thursday it has completed the market’s first sale of notes backed by the rooftop solar systems it’s installed across the country.  The securitization effort has been a while in the making and closely watched by the solar industry as an indicator of investors’ sentiment toward this relatively new energy market.  California-based SolarCity sold about $54.23 million worth of notes with a 4.8% interest rate.”  The notes are scheduled to mature in December 2026, and the pricing of the notes was announced on 11/13/13.”  The company sells leases or power purchase agreements to home and business owners, who pay for the solar electricity from their rooftop solar panels, but do not own the equipment.  Those contracts run up to 20 years.

Lack of Storage is Holding Back Solar Energy Developments
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In other news on solar power, Business Insider discusses that the only thing holding back solar is lack of storage.  Storage is needed not only to guarantee continuous supply of “fuel,” but also to make sure the grid is balanced.  It turns out, there is such a thing as “too much solar power,” which can destabilize the grid.  “Germany is already running into problems with this, as its solar capacity has skyrocketed. Soon, solar will be capable of meeting most of the country’s electricity demand between 12 and 2PM.  As Citi’s Jason Channell writes, “any further installations beyond this point could push structural solar power supply above demand and cause permanent mid-day grid instability.”  Without batteries, that bulge is literally disruptive because it eats into conventional baseload generation, the backbone of current supply needs.  There are two ways to address this problem: one way is through smart grids; the second is batteries – to capture any excess generation above the natural run rate of conventional baseload.

Nov 21, 2013
FERC Authorizes Information Sharing between Gas Pipelines and Electric Utilities
 
  
  
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On 11/20/13, FERC released a report, Energy Infrastructure Update for October 2013, which lists several projects in Texas.  On 11/15/13, FERC announced that it is authorizing information sharing between gas pipelines and electric utilities: “With the increasing reliance on natural gas as a fuel for electric generation, ensuring robust communications between transmission operators in the electric and natural gas industries will help both systems operate reliably and effectively, FERC said. Today’s rule authorizes interstate natural gas pipeline and electric transmission operators to voluntarily share non-public, operational information. To protect against undue discrimination and ensure that the shared information remains confidential, the rule also adopts a No-Conduit Rule that prohibits recipients of the information from disclosing it to an affiliate or a third party.”  The final rule will take effect mid-to-late December.

Also, on 11/15/13, the Department of Energy announced an authorization for additional volume at the proposed Freeport LNG Facility to export Liquefied Natural Gas (LNG): “The Energy Department announced today that it has conditionally authorized Freeport LNG Expansion, L.P., and FLNG Liquefaction, LLC, to export additional volumes of domestically produced LNG to countries that do not have a Free Trade Agreement (FTA) with the United States from the Freeport LNG Terminal in Quintana Island, Texas.  Freeport previously received approval to export 1.4 billion cubic feet of natural gas a day (Bcf/d) of LNG from this facility to non-FTA countries on May 17, 2013.”

Nov 20, 2013
Heated Debate at ERCOT Over the Use of Moody’s Load Growth Data in the CDR Report
 
  

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A heated debate occurred during the ERCOT CEO’s report, at the 11/19/13 ERCOT Board meeting, after he mentioned that the Capacity, Demand, and Reserves (CDR) report will be issued on 12/1/13, using the Moody’s load growth data.  Commissioner Anderson reacted with some disbelief, objecting that Moody’s data have been proven wrong and wondering why ERCOT would be putting out an incorrect report.  His impression was that the December CDR would use the new load-forecasting methodology, as recently revised by ERCOT staff. 

The revised methodology was presented this fall at several ERCOT stakeholder meetings and a PUCT workshop, with staff stressing that Moody’s data seem too optimistic and also that the historical relationship between load growth and economic growth appears diminished.  At the latest release of the Seasonal Assessment of Resource Adequacy (SARA) report on 11/1/13, ERCOT staff confirmed that they’d be using the updated load growth methodology in the CDR.

In a tense exchange that followed, Trip Doggett explained that the CDR has to be released in early December to show changes to the generation data, but that the new load numbers have to be reviewed first by the Board before they are released – therefore, Moody’s numbers would be applied instead.  The review would happen in December [the Board is meeting on 12/10/13, although during the September Board meeting presentation on the subject, the indication was that these issues would be addressed in November].  Trip Doggett also confirmed that the new load forecast will be lower.   

Commissioner Anderson persisted in his questioning the wisdom of releasing what many consider to be the wrong data, saying that this will be too confusing – particularly, once the corrected data are issued.  Eventually, several Board members commented that the question of which data to use in the CDR ought to be discussed further, and raised the possibility of delaying the report.  The Board Chair agreed that it’d be better to delay the CDR until after the Board meets in December, thus providing an opportunity for the Board to learn about, and debate, the topic further.

ERCOT to Post Indicative Real-Time On-Line and Off-Line Reserve Price Adders Copyright 2013 by Competitive Assets, LLC.  All rights reserved

On 11/19/13, ERCOT staff sent out a notice on the implementation of Nodal Protocol Revision Request NPRR568, Real-Time Reserve Price Adder Based on Operating Reserve Demand Curve (ORDC).  The notice stated that, starting with Operating Day 11/20/13, “ERCOT will begin posting the indicative Real-Time On-Line and Off-Line Reserve Price Adders required by NPRR568,” as approved by the ERCOT Board on 11/19/13.  The posted adders will be calculated based on Phase 1 of NPRR568, and will include only the inputs currently available in ERCOT systems (i.e., excluding RTOFF10 and RTOFF30 telemetry points).  The posting will also contain the variable inputs to the On-Line and Off-Line reserves. 

Two Market Information System (MIS) Public reports will be associated with this posting: (a) Real-Time Reserve Price Adder Based on ORDC – Interim; and (b) Real-Time Reserve Price Adder Based on ORDC – Interim Historical Reports.

The first report above will provide a .csv file of reserve price adders and underlying inputs to the Real-Time reserve calculations and will be updated every five minutes.  Each successive report will include this data set for the current SCED (Security Constrained Economic Dispatch) run and all previous SCED runs in the same Operating Day.  In the instance where more than one file is displayed, the most current report will have a later time stamp.  At the end of each Operating Day, the final posting, which includes all of the SCED runs in the Operating Day, will be posted as the historical report for that Operating Day.

The second report listed above contains historical .csv files for each Operating Day between implementation of this interim posting and the project implementation date, which is anticipated to be on 6/1/14. 

Additionally, the Real-Time Reserve Price Adder ORDC Interim Instruction file, which describes column headings and definitions, will be included in the historical report and also posted on the User Guides page on ERCOT.com

The reports will be available on the Scarcity Pricing Mechanism section of the Real-Time Market page of ERCOT.com.  The reports will also be available on the Scarcity Pricing Mechanism portlet on the Real-Time Market page of MIS.  More information on this may be found at http://www.ercot.com/mktrules/issues/nprr/551-575/568/index.

Nov 19, 2013
Alert: Texas Senate Committee Hearing Scheduled on Electric Market Changes Discussions at the PUCT   

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The Texas Senate Committee on Natural Resources, chaired by Senator Fraser, announced today that a hearing has been scheduled for 11/25/13, to “to receive an update on recent electric discussions at the Public Utility Commission of Texas.”  The hearing starts at 9:30AM, and will have invited testimony only.  Click here for the notice of the hearing.

Comments filed on PUCT’s Proposed Cease and Desist Rules  
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At the 10/3/13 open meeting, the PUCT approved a Proposal for Publication (4) in Project No. 41659, Rulemaking to Implement Cease and Desist Authority under PURA Chapter 15, as Required by HB1600 (83rd Regular Legislative Session).  Yesterday, several parties filed comments, with revisions and answers to questions, including:

  • Luminant, which asks for further guidance in the proposed rule on what situations meet the “heightened standard” necessary to warrant the Commission’s exercise of cease and desist authority, and suggests that “imminent and irreparable harm” (that cannot be remedied by monetary penalties) be used.  Also, the term “practicable” ought to be better defined, and the executive director should not have the power to issue cease and desist orders, until there is more experience with the process;
  • CPS Energy suggests a clearer definition of the word “practicable:” “to clarify the procedure applicable to cease and desist orders when notice and opportunity for hearing is practicable, the rule should provide that a cease and desist order is not effective until after the market participant has received notice and an opportunity for hearing;”
  • NRG Energy proposes to add “basic qualifications” to the actions that would be subject to cease and desist orders, maintain as much as possible the full Commission’s involvement in the issuance of orders, and clarify the scheduling of a hearing;   
  • The REP Coalition submits that the criteria necessary to warrant a cease and desist order should be interpreted primarily to address system reliability and physical safety issues, given the extraordinary nature of the remedy, and asks for greater specificity in defining certain terms in the new rule; it also recommends clearing up inconsistencies in the proposed sections; and
  • Texas Competitive Power Advocates recommend a better definition of the terms “practicable” and “telephonic notice” to make them more consistent with the statute.

 

Central Texas Energy Startup Ideal Power Files For Initial Public Stock Offering
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

The Austin American Statesman is reporting that a “Central Texas energy start-up, Ideal Power, has filed for an initial public stock offering that could raise up to $16.1 million, according to documents filed with the U.S. Securities and Exchange Commission.  The Spicewood-based company, which was founded in 2007, makes power converters that are designed to lower system costs and improve efficiency in solar and wind energy systems, motor drives and electric vehicles. The inverters take direct current coming from a solar power array and convert it to alternating current that can be used in a business or transferred to the electric grid.  The company — which was previously a tenant at the Austin Technology Incubator — says its systems are smaller, lighter, cheaper and easier to install that conventional power inverters.”

Nov 18, 2013
The Pace of US Electricity Load Growth Slows Down  

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The December 2013 Capacity, Demand, and Reserves (CDR) report will be using updated load-forecasting methodology, recently revised by ERCOT staff.  The revisions seemed necessary, as it became apparent that the historical relationship between load growth and economic growth was diminishing.  It turns out that this is happening nationally, not just in ERCOT.  The Energy Information Administration (EIA) recently predicted that demand growth will be below 1% for the foreseeable future.  The WSJ commented on this phenomenon last winter, quoting Exelon’s CEO on a “stressed balance sheet,” and observing that some utilities are “shifting resources to their regulated side, where regulators practically guarantee them a profit.”  In PJM, “… this year’s model projected demand growth to be relatively flat,” as peak load was forecasted to be a little over a 1% increase from last year.  The Brattle Group took note of the changes in its presentation to the Edison Electric Institute, in February 2013, listing as causes of lower load growth weak economy, demand side management, codes and standards, distributed generations (e.g., Austin’s requirement for new homes to be net-zero energy capable by 2015), and fuel switching.  Moreover, the Brattle Group believes that load growth slightly below 1% will be the new normal.

Nov 15, 2013
Report: PUCT Open Meeting 11/15/13
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The 11/15/13 PUCT open meeting was light in the number of decisions made, but made up for it in the intensity of the discussions, as the three Commissioners addressed resource adequacy issues.  And this was just the procedural issues!  To find out more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151.

Alert: PUCT Commissioner Anderson Asks Parties to Address A Number of Questions Regarding Implementation Of A Mandatory Reserve Margin For Generation Capacity In ERCOT
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

On 11/15/13, PUCT Commissioner Ken Anderson filed a memo detailing 38 questions he would like considered in the upcoming workshop on Resource Adequacy in Texas.  The questions are about alternatives to an energy-only market in ERCOT and implementation of a mandatory reserve margin, and cover 4 broad topics:  1) Questions of General Applicability, 2) Backstop Generation as an Ancillary Emergency Reserve Service in EOM, 3) Reserve Margin Obligation on Load Serving Entities (LSEs), and 4) Centralized Forward Capacity Market.  The Commission is discussing this topic in Project 40000 at their open meeting today, 11/15/13.

Nine States Contest EPA’s Authority for CSAPR in Supreme Court Brief
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

Powermag.com is reporting that nine states have filed a brief with the U.S. Supreme Court, arguing that the Environmental Protection Agency (EPA) exceeded its authority under the federal Clean Air Act when it promulgated the Cross-State Air Pollution Rule (CSAPR) in 2011.  The article says: “The brief filed by a bipartisan group of attorneys general from Arizona, Arkansas, Kentucky, Missouri, Montana, North Dakota, South Dakota, West Virginia, and Wyoming is the latest filing in EPA v. EME Homer City Generation, a much-watched case that will decide whether, as the EPA contends, the D.C. Circuit exceeded its jurisdiction when it vacated the rule in August 2012.”  Oral arguments are set for 12/10/13, and a decision is expected by next June.

KUHF Houston filed a story on the same subject, when it looked at the effect of past regulations on refineries: “In the past 20 years, a series of pollution-control rules have taken a toll on refineries nationwide.  According to 2011 report by the U.S. Department of Energy: “This series of regulations forced U.S. refiners to invest billions of dollars for process, logistics and other capital upgrades… The cost of compliance contributed to economic stresses that resulted in the shutdown of 66 refineries from 1990 through 2010.”  But the report went on to say the shuttered refineries were mostly smaller ones. Big plants actually grew in size and total production capacity has actually increased.  One of the new rules apparently benefited the refining industry. Reporting by The Atlantic found that a rule that required cleaner burning low-sulfur diesel fuel created a new export market for the fuel that is produced in Gulf Coast refineries.  Europe and other foreign countries are now buying it because it meets their standard which was not the case when it contained higher levels of sulfur.”

Nov 14, 2013
Fraser Tells PUCT to Back Off Electricity Market
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The Dallas Morning News is reporting that Senator Fraser yesterday sent a letter to PUCT Chairman Nelson, requesting PUCT “not take any further action that would result in changes to the fundamental design of the Texas market before the appropriate legislative bodies have had the opportunity to provide clear guidance in the form of instruction or statute.”  As one of the co-authors of Senate Bill 7, the legislation that restructured the retail electric industry in Texas to make it competitive, Senator Fraser noted that current Commission lacks the institutional knowledge that would have made them aware that the Legislature deliberately applied free market economic principles to design the energy only market that ERCOT currently uses.  He further states that “[i]t certainly was not envisioned [that] the law would give the agency unprecedented power to do whatever they wanted under the pretext of ensuring ‘resource adequacy’.”  He states that because the proposed plan for a capacity market could cost as much as $4 billion per year, he “cannot justify a potential hike of this magnitude imposed upon [his 800,000 constituents] by an appointed board, unaccountable to the voters.”

ERCOT Reported Preliminary Results Of The Revised Loss-Of-Load Expectation (LOLE) Study
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At the 11/7/13 meeting of the Technical Advisory Committee (TAC), ERCOT staff reported that preliminary results of the revised Loss-of-Load Expectation (LOLE) study point to a planning reserve margin of 14.7%, and the Effective Load Carrying Capability (ELCC) for wind of 13.9% (non-coastal) and 27.2% (coastal).  The study is being revised, based on ERCOT Board’s directive during its July meeting.  Before revisions, TAC – but not the Board – approved a planning reserve margin of 16.1% and wind ELCC of 14.2% (non-coastal) and 32.9% (coastal). 

Austin Festival SXSW Moved From Music To Environment And Into SXSW Eco
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Yesterday, Forbes.com reported on how the popular Austin festival – South by Southwest (SXSW) – moved from music to environment and into SXSW Eco.  The most recent SXSW Eco took place in October, growing from about 1,000 attendees at its initial event in 2012 to over 2,800 this year.  The article states: “SXSW has a competition between start-ups called the Startup Showcase, pitching to a panel of judges.  The approach may not be novel – it’s used in a variety of forums from the MIT Energy Club to VERGE to UltraLight’s Future Energy events. But the crowd here is somewhat different, and the net they cast is wide. As a consequence, the VC community is getting on board – in 2013 SXSW Eco had 27 venture capital firms attend, including Black Coral Capital, Braemar Energy Ventures, Khosla Ventures, and RockPort Capital.  Investor money has started to follow….”

Nov 13, 2013:
NERC Conducts a Two-Day Security Drill on Power Grid
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Today, NERC will be conducting a two-day grid exercise, “joined by utilities corporation executives, stakeholders, National Guardsmen, the FBI antiterrorism division, and international partners from Canada and Mexico” simulating physical and cyber attacks that could take down large sections of the power grid.”  As reported in news outlets, “… nearly 200 utilities corporations and various organizations have agreed to participate in the drill to expand on the idea of having “a loss of power for” an extended period of time “to explore how governments would react as the loss of the grid crippled the supply chain for everyday necessities.”  The first such exercise was conducted in 2011, and NERC issued a report “2011 NERC Grid Security Exercise: After Action Report,” which was released last year.  It found that:

Utilities corporations needed “additional training” to “enhance preparedness” Clearer communication “across industry,” NERC, and the government should not be limited because of “concerns about compliance implications” An Information Sharing Task Force (ISTF) should be installed to “develop guidance and outreach strategies” to enable cross information sharing Centralized coordination must be understood throughout the industry as a mandated response to a power grid shutdown appropriate policies implemented to “secure the grid [from] physical intrusions into infrastructure can have grave cyber implications, entities should ensure their response protocols address a coordinated threat.”

Nov 12, 2013
PUCT Staff Asks For Comments on its Investigation of the Feasibility of the Institution of Full Co-Optimization in ERCOT Energy Markets

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On 11/8/13, the PUCT staff filed (2) a list of questions in Project No. 41837 – Investigation of the Feasibility of the Institution of Full Co-Optimization in ERCOT Energy Markets, noting that they will ask for the Commission’s input and approval at the 11/15/13 open meeting:

  1. What is the comparative value of proceeding with implementation of some form of real-time co-optimization, in light of the potential costs and disruption to other ongoing projects?
  2. What are the arguments in favor of implementing the minimum approach, the maximum approach, a subset of the maximum approach, or an alternative approach, particularly with regard to single or multi-interval dispatch and the configuration of ancillary services?
  3. To what extent does the Operating Reserve Demand Curve, currently being implemented by ERCOT, approximate the benefits of the various forms of real-time co-optimization, such that additional market enhancement becomes unnecessary?
  4. How would the implementation of co-optimization affect ERCOT’s potential redesign of ancillary services products in terms of project duration and material interaction between the two efforts?
  5. What other issues should the Commission consider in evaluating the need for implementation of real-time co-optimization?

The filing also contains a notice of workshop in the project, scheduled for 1/28/14, with comments being due on 1/3/14 (and replies on 1/17/14).

Nov 8, 2013
ERCOT Approves Nodal Protocol Revision Related to Real-Time Reserve Price Adder Based on Operating Reserve Demand Curve (ORDC)

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On 11/7/13, the Technical Advisory Committee (TAC) approved Nodal Protocol Revision Request NPRR568 (Real-Time Reserve Price Adder Based on Operating Reserve Demand Curve (ORDC)).  The NPRR was modified after a long discussion and now also includes the 11/6/13 ERCOT comments (plus attachment), reflecting a concern about the setting of Locational Marginal Prices (LMPs) at the price floor of -$251/MWh before the addition of the price adder (based on NPRR385, which set a pricing floor at a Settlement Point Price of no less than -$251/MWh).  An initial motion to pass the NPRR568 without ERCOT comments failed.  ERCOT staff also revised the Impact Analysis, which now estimates: (a) the cost of $400k-$500K; (b) a longer implementation time, including stabilization period; and (c) delivery of the NPRR in two phases, starting on 6/1/14.  The staff will provide monthly updates at TAC on the implementation process, and will develop education for market participants. 

Nov 7, 2013
DOE Engages the Public with its Current Energy Policy

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On 11/6/13, the Department of Energy announced three initiatives to engage the public with the current energy policy:

Join the American Energy Data Challenge – “The goals for this four-part challenge are to introduce the public to the valuable data and resources offered by the Energy Department, to solicit feedback about the data, to amplify the energy data available to consumers today under the Green Button Initiative, to create new ways to visualize and discover energy data, and to spur the development of new tools and services that leverage these high-value data sets in ways that benefit the American people.”

Rooftop Solar Challenge: Empowering Innovators to Reach for the Sun – “…the latest round of the Rooftop Solar Challenge — an initiative that empowers local governments across the nation to make it easier, cheaper, and faster for more Americans to go solar. The Rooftop Solar Challenge is spearheaded by the Energy Department’s SunShot Initiative – a national collaborative effort to make solar energy cost-competitive with traditional energy sources by the end of the decade.”  In Texas, the City of San Antonio is a participant.

Champions of Change: Veterans Advancing Clean Energy – “The Champions of Change series highlights the ordinary Americans who are doing extraordinary things in their communities to out-innovate, out-educate and out-build the rest of the world. Yesterday’s event honored 12 veterans and leaders who are using the skills they learned in the armed services to advance the clean energy economy.”

Nov 6, 2013
Needs For Strong Cybersecurity Standards for The Electric Industry

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In the last two months, there have been reports (also, here, here, and here) that some of the standards, developed by the National Institute of Standards and Technology (NIST), have been compromised.  For example, recently, NIST “strongly” advised against using one of the standards for elliptic curve cryptography, which cryptographers have long suspected contained a back door.  Since 2010, there have been at least two workshops at the PUCT, during which the NIST representatives urged the use of strong cybersecurity standards by the electric industry.

On 11/1/13, Ars Technica reported that NIST gave notice that it would formally review its standards development process.  NIST is apparently going beyond its initial review, and is promising to do a full audit of its standards development process.  “Recent news reports about leaked classified documents have caused concern from the cryptographic community about the security of NIST cryptographic standards and guidelines,” the statement read.  To restore the  lost confidence, NIST plans to compile its “goals and objectives, principles of operation, processes for identifying cryptographic algorithms for standardization, methods for reviewing and resolving public comments, and other important procedures necessary for a rigorous process.” It will then make its process available for review by both the public and an (as yet unnamed) independent organization.

Nov 5, 2013
The Perils of Forecasting Texas Electricity Needs
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On 11/3/13, the Austin American Statesman published an article (subsc. only) describing the difficulties and coming changes in energy forecasting at ERCOT.  The author notes that the longer the term of the load forecast, the less certainty there is.  For example, the reserve margin changed from 14.48%, as predicted in December 2010, to 7.64% in 2011, 10.9% in 2012, and then to 13.8% in 2013.  The December 2013 report on Capacity, Demand, and Reserves (CDR) will use a revised methodology for load forecasting, which is expected to be more accurate.

Little Fanfare for Now Complete CREZ transmission Lines in Texas
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The Statesman also published a long article on the completion of most of the Competitive Renewable Energy Zone (CREZ) lines, observing that the event has “little or no fanfare.”  The project will add $5-$10 to customer bills, and some former supporters now question its usefulness.  They blame wind for lowering energy prices in ERCOT, thus causing the current adequacy problems.  But other stakeholders note that the lines could be used for other projects, and may even help with the development of solar power.

Nov 4, 2013
The Perils of Forecasting Texas Electricity Needs
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

On 11/3/13, the Austin American Statesman published an article (subsc. only) describing the difficulties and coming changes in energy forecasting at ERCOT.  The author notes that the longer the term of the load forecast, the less certainty there is.  For example, the reserve margin changed from 14.48%, as predicted in December 2010, to 7.64% in 2011, 10.9% in 2012, and then to 13.8% in 2013.  The December 2013 report on Capacity, Demand, and Reserves (CDR) will use a revised methodology for load forecasting, which is expected to be more accurate.

Little Fanfare for Now Complete CREZ transmission Lines in Texas
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

The Statesman also published a long article on the completion of most of the Competitive Renewable Energy Zone (CREZ) lines, observing that the event has “little or no fanfare.”  The project will add $5-$10 to customer bills, and some former supporters now question its usefulness.  They blame wind for lowering energy prices in ERCOT, thus causing the current adequacy problems.  But other stakeholders note that the lines could be used for other projects, and may even help with the development of solar power.

Nov 1, 2013
A Giant Solar Power Plant in California

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Yesterday, Forbes reported on SunPower’s completion of a 250MW solar plant in the Carrizo Plain, in Central California.  “California Valley Solar Ranch’s completion reflects the emergence of large-scale solar farms in a state that has an aggressive goal of sourcing 33% of its power supplies from renewable sources by 2020.  Many such projects have been proposed over the past 8 years, and the state’s big three utilities have signed a slew of agreements to buy solar power from developers to meet the mandate,” says the article. 

But the road has not been easy.  “The fact is, project developers, utilities and state regulators all have been going through this steep learning curve to create a new power generation market that relies on sun to produce electricity.  The biggest chunk of the state’s power comes from natural gas power plants.”  The project, now owned by NRG, was built with federal subsidies, and faced tough negotiations with environmental groups.  Two other completed solar power projects, built with the same federal program, are the 280MW Solana by Abengoa Solar in Arizona and the 150MW Mesquite Solar project in Arizona by Sempra Generation.

Oct 31, 2013
Energy Storage Providers Support a Capacity Market for ERCOT

Copyright 2013 by Competitive Assets, LLC.  All rights reserved

The new filings in Project No. 40000, related to resource adequacy, are a presentation by Tom Pierson of Texas Energy Storage Alliance (TESA), and comments by Robert Klein of VdE Corp.  Both support creation of a capacity market in hopes that their technologies could be utilized under such a market construct.  The TESA presentation focused on accurately measuring capacity of gas turbines during peak times, explaining that “ERCOT’s peak power supply decreases, as temperatures increase (at 100°F, a gas turbine may have lost up to 20% of its nameplate capacity).”  Accurate measurements and a corresponding market value would ensure adequate summer peak capacity, according to TESA. 

VdE Corp. develops sustainable, low-pollution energy, and is currently working on “one or more Closed Loop Pumped Storage (CLPS) projects in the Texas Panhandle, near Tulia.”  Closed cycle, limited aquatic resource impact pumped storage facilities represent a sustainable, zero pollution technology for converting wind and solar generated electricity into dispatchable power.  Clean-wind-generated electricity is purchased in the surplus, off-peak hours to pump water to the upper reservoir at night (when the wind-generated electricity would otherwise have been unused); and this stored water is run back downhill in the daytime on-peak hours to generate scarce, valuable on-peak electricity. 

Potential Increased Participation of Energy Efficiency and Demand Response Providers in ERCOT
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Greentechmedia is reporting on the potential efforts by energy efficiency and Demand Response (DR) providers to increase their participation in the ERCOT market, given the recent indications of a change to a capacity market in Texas: “ … efficiency advocates argue that it could unlock new demand side resources that can get better compensated for their ability to lower power consumption when demand skyrockets. They want to follow the model of PJM and ISO New England, the regional grid operators that have allowed DR providers to bid into capacity markets and get paid for future efficiency procurement.” 

PUCT Revises its Rules Applicable to the Retail Electric Providers
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

On 10/30/13, the PUCT published a notice of its intent to review all rules applicable to the Retail Electric Providers (REPs) (5) in Project No. 41937.  Comments on the ongoing applicability of these rules are due on 12/9/13, and replies on 12/23/13.  The same comment deadlines apply to Project No. 41615, Rulemaking to Revise P.U.C. Subst. R. 25.107, Certification of REPs, in which the staff filed the approved Proposal for Publication (5). 

Oct 30, 2013
Two Complaints of Interest Filed with the PUCT

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Docket No. 41790 – Odessa-Ector Power Partners LP’s Appeal and Complaints against ERCOT’s Denial of Settlement Disputes

On 8/26/13, Odessa-Ector filed an appeal (1) with the PUCT, alleging that “ERCOT is obligated to provide compensation to Odessa in real-time market settlement payments for the losses it incurred as a result of complying with ERCOT’s manual override instructions.”  The claimed losses amount to $300K. 

On 10/1/13, ERCOT filed a response (6), explaining that in November 2012, ERCOT operators restricted the output of Odessa’s generating units for the purpose of ensuring reliability of the ERCOT system and that Odessa is seeking payment for losses allegedly incurred as a result of those restrictions, citing inapplicable Protocol provisions. 

On 10/18/13, the PUCT staff filed a response (8), stating that “[w]hile the Protocols establish that ERCOT had the authority to issue the manual overrides, there are no clear Protocols that mandate that ERCOT compensate Odessa for the manual overrides. Because ERCOT’s denial of real-time market settlement payments to Odessa does not appear to be a violation of ERCOT Protocols, staff recommends that the Commission deny Odessa’s complaint.” 

Docket No. 41922 – Complaint of HURF for Enforcement of the Final Order in PUC Docket No. 40627

On 10/7/13, Homeowners United for Rate Fairness (HURF) filed a complaint (1) against Austin Energy, claiming “… that both the data and the procedures the utility used to calculate the need for the Power Supply Adjustment (PSA) increase were specifically flawed and improper and that there was no hearing on this issue.  Additionally, “the rate case expense surcharge is illegal pursuant to the settlement.” 

On 10/29/13, Austin Energy filed a lengthy response (3), denying the allegations and explaining that “[d]uring that budgeting process, the City Council adjusted the PSA and directly assigned the rate case expenses associated with Docket No. 40627 to the customers who benefitted from that litigation, the customers outside the City of Austin.”  Docket No. 40627 dealt with HURF’s complaint against Austin Energy’s proposed rate increase in 2012.

At this time, there is no procedural schedule for either case.

Oct 29, 2013
Texas Senators Voice Different Opinions Regarding PUCT’s Decision to Change ERCOT Market

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The Austin American-Statesman is reporting that Senator Troy Fraser, who is one of the original state Legislators who supported deregulation of the Texas wholesale electricity market, has expressed an opinion that the Public Utility Commission lacks authority to shift the market design from an energy-only market to a capacity market.  As the chairman of the Senate Committee on Natural Resources, he stated that “he intends to convene a hearing to question the three members of the utility commission about their 2-to-1 decision last week to begin mandating the level of electricity reserves, a first step to possibly redesigning the market.”  At this time the hearing has not yet been scheduled.

The article goes on to say that “State Sen. John Carona, R-Dallas, wrote the utility commission last summer supporting its efforts to address the issue.  On Monday (10/28/13), Carona – who is chairman of the Senate Business and Commerce Committee – repeated his support. “The Public Utility Commission is charged with the responsibility of ensuring that adequate energy resources are available for Texas consumers,” Carona said by email. “I have encouraged the Commission to examine the issue closely and do what is necessary to meet this challenge.” Carona concluded that the commission’s decision to ensure an adequate reserve margin “is a move in the right direction” to help the Texas economy and he would work with Senate colleagues to be sure the utility commission has authority to do what it needs to do.”

ERCOT Files Back Cast Analysis Regarding Proposal In GDF Suez Energy’s Comments
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On 10/18/13 ERCOT filed a Back Cast Analysis regarding a proposal made by GDF Suez Energy NA in their comments in PUCT Project No. 40000.  The Commission is scheduled to discuss the adoption of an Operating Reserve Demand Curve on November 15, 2013, and has requested comments from interested parties by November 4, 2013. The Commission requested the ERCOT Back Cast analysis before the November 4th deadline so it could be evaluated by parties who plan to comment.

The Back Cast reviews the impact of the Value of Lost Load at $18,000 and $25,000, using 3 scenarios.  The analysis found that the estimated additional Peaker Net Margin would have ranged in 2011 from $157,333/MW to $378,764/MW, and in 2012 from $27,173/MW to $78,509/MW.  Also reported are the Energy Weighted Average Price Adder P_S and the Energy Weighted Average Offline Reserve Price P_NS.

Oct 28, 2013
Updated:  The Commission Charts a Path on Reserve Margin

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By now, it has been widely reported that the PUCT, at its 10/25/13 open meeting, delved into a discussion on whether to have the planning reserve margin (PRM) be a mandate or a target.  Chairman Nelson – in a somewhat surprising move – asked that the Commission decide the question at the meeting.  Commissioner Anderson opposed making the decision, noting that it is a precursor to a capacity market, which is opposed by some of the state’s largest employers.  The newly appointed Commissioner Marty sided with the Chairman during the discussion, which at times became quite heated and contentious.

The Texas Tribune is reporting that “State Sen. Troy Fraser, R-Horseshoe Bay, who co-authored legislation that deregulated Texas’ electric market in 1999, said the Commissioners should wait for more information before solidifying their opinions, calling the vote a “severe miscalculation” that is “putting the cart before the horse.”  Fraser also questioned the PUC’s authority to overhaul the market, and said he would soon meet with his colleagues to discuss the legislature’s role: “I don’t think it was ever envisioned that the PUC would change the market,” he told the Tribune. “That’s a huge decision, and it should not be made by an agency.  It should be made by the Legislature.”

The latest issue of the Texas Energy Policy News “PUCT Open Meeting 10/25/13 Excerpt of Discussion on Reserve Margin“ summarizes only what at times was a heated and contentious debate about this topic and clarifies the final outcome. If you are interested in purchasing just the Excerpt, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151. 

In addition, a full report on 10/25/13 Open Meeting is available and if you are interested in purchasing this full TEPN issue, please click here.

Energy Related Reports by the Christian Science Monitor Copyright 2013 by Competitive Assets, LLC.  All rights reserved

The Christian Science Monitor has recently reported on several different energy topics:

 

Oct 25, 2013
ALERT:  The Commission Charts a Path on Reserve Margin
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

At the 10/25/13 open meeting, the Commission delved into a discussion on whether to have the planning reserve margin (PRM) be a mandate or a target.  Chairman Nelson – in a somewhat surprising move – asked that the Commission decide this question today.  Commissioner Anderson opposed making the decision and said that he did not “appreciate the surprise.”  Commissioner Marty was leaning toward the Chair’s position during a discussion, which at times became quite heated and contentious.

After a recess, and an agreement on the schedule to consider resource adequacy further (through January 2014), Chairman Nelson again pushed for a vote on the mandate/target determination for the reserve margin.  There was an additional discussion, partly about the appropriate reliability standard and also on whether the Commission would be locking itself into the future approval of a capacity market with this vote (this was a question Commissioner Marty wanted resolved before voting).  The Chairman then repeated that she wants a vote and got confirmation from Commissioner Marty on her support for the reserve margin to be a mandate. 

Commissioner Anderson made a strong statement in opposition to the vote at this time and the approval of the reserve margin as a mandate, saying that this was a slippery slope toward destroying “the economic engine that is Texas.”  Chairman Nelson stated that she is making this move so that the economy of Texas would not suffer from unreliable power supply and that it is a balancing act. 

When asked whether she wants to proceed with a vote today, the Chair briefly said “No.”  It appears, however, that the intent may have been to put everybody on notice that there are at least two votes to designate ERCOT’s reserve margin as a mandate.  (Some other press outlets have interpreted the entire discussion as a positive vote (i.e., 2-1) on the mandated reserve margin; while others have not drawn this conclusion.) 

The latest issue of the Texas Energy Policy News “PUCT Open Meeting 10/25/13 Excerpt of Discussion on Reserve Margin“ summarizes only what at times was a heated and contentious debate about this topic and clarifies the final outcome. If you are interested in purchasing just the Excerpt, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151. 

In addition, a full report on Today’s Open Meeting is available and if you are interested in purchasing this full TEPN issue, please click here.

Report: ERCOT Planning Reserve Margin Workshop 10/8/13
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

The debate about resource adequacy and what type of a market construct to have in ERCOT continued during the October workshop at the PUCT.  The Commission, perhaps for the first time, delved into the pros/cons of a capacity market and considered differing viewpoints of various market participants.  Read more about this debate in the latest issue of the Texas Electric Watch, including why the Independent Market Monitor does not believe that the centralized, forward capacity market is the way to go. If you are interested in purchasing this TEW issue, please click here. If you are interested in subscribing the Texas Electric Watch, please click here or call Competitive Assets at 512-581-0151. 

A New Way to Finance Storage Projects
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

The SmartGridNews.com is reporting on a new way to finance storage projects – i.e., imitating the solar industry in using no upfront costs: “Stem Inc., a leader in advanced energy storage systems, today announced it has secured funding to accelerate the adoption of its solution. With this project finance fund, commercial and industrial customers can deploy a Stem energy system at no upfront cost, and take advantage of immediate energy bill savings. The fund is backed by up to $5 million in investment from Clean Feet Investors I, LLC (CFI).  The new financing model, which Stem developed in collaboration with CFI, is designed to open access to a wider pool of customers by removing barriers to adoption, enabling up to 15MW of energy storage to be deployed.”

Battle Over Solar Power in Arizona
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

The Washington Post is reporting on the battle over solar power in Arizona: “An insider fight over how much a utility company must pay for electricity generated by solar panels on private rooftops is boiling over into a full-fledged campaign, complete with shadowy  money, expensive television advertising, calls for grass-roots action, and some of the best pollsters and consultants money can buy.”  And while the amount of solar power produced in Arizona is small, “… the national ramifications, both sides say, could be huge. For the solar industry, if rates consumers can charge drop to a point at which solar panels aren’t economically viable in Arizona, sales could plummet.  For the utility companies, a victory in Arizona would set the ball rolling in other states where net metering rules are up for debate.”

Oct 24, 2013
ERCOT Workshop on Future Ancillary Services
C
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On 10/24/13 (today), ERCOT is conducting a workshop on Future Ancillary Services (AS) in ERCOT. The staff have posted a white paper and presentation, which propose a complete redesign of the current AS.  The reasons for the redesign include: 

  • Resources could provide some services more efficiently if the requirements were decoupled (Primary Frequency Response (PFR)/Fast Frequency Response (FFR)/Contingency Reserve)
  • Requirements for services ought to align with technical needs to allow the technically capable resources to provide services
  • Some new services are needed to ensure technical requirements are met that used to be provided, inherently, by generators (e.g., inertia)
  • Changes in the market design and control systems (e.g., five-minute dispatch and Hourly Reliability Unit Commitment (HRUC) have reduced the need for other services) and New regulatory requirements.

After the workshop, the staff will be asking for comments, to be filed by 11/1/13.

EPRI to Coordinate Advanced Electric Grid Monitoring and Control Initiative
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The NERC website is reporting that “the Electric Power Research Institute (EPRI) will coordinate the community meetings of the North American SynchroPhasor Initiative (NASPI) through 2015.  NASPI is a collaborative effort among the U.S. Department of Energy (DOE), EPRI, and North American electric utilities, vendors, consultants, federal and private researchers and academics.  Since the establishment of NASPI in 2006, DOE and the North American Electric Reliability Corporation (NERC) have funded NASPI meetings and work.  Beginning in January 2014, DOE will take over the principal funding role and EPRI will work with NASPI as its meeting coordinator. Announcement”

Oct 23, 2013
PUCT Revises its Retail Electric Providers Certification Rule

Copyright 2013 by Competitive Assets, LLC.  All rights reserved

For its 10/25/13 open meeting, the Commission has scheduled consideration of a Proposal for Publication (PFP) in Project No. 41615 – Rulemaking to Revise P.U.C. Subst. R. 25.107, Certification of Retail Electric Providers (REPs).  The PFP proposes to amend the REP certification rule to:

  • Clarify the definition of principal;
  • Modify the reporting requirement to extend the relevant time period for complaint history [from 60 months to 10 years], disciplinary record, and compliance record;
  • Add an affidavit reporting requirement, identifying all principals and current employees of the applicant REP who experienced a mass transition of a REP’s customers to a provider of last resort (POLR);
  • Provide additional bases for the suspension or revocation of a REP certificate; and
  • Standardize the REP Application and Amendment forms.

Comments on the proposed rule are due 30 days after publication, and replies within 45 days.  A public hearing, if requested, may be held on 1/8/14.

ERCOT to Conduct a Market Testing Process Review
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At the request of RMS and ERCOT, Texas SET will conduct a market wide review of the Market Testing Process the morning of the November 14th. This group will propose changes to offer more efficient means to certify market participants. Market Participants are asked to plan to have the appropriate personnel attend this discussion either in person or via WebEx. Details will be sent with the November 2013 Texas SET meeting agenda.

Oct 22, 2013
Former FERC Chairman Kelliher on Texas Resource Adequacy Solutions

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The 10/22/13 edition of the Austin American Statesman carries an opinion piece by the former Chairman of FERC, Joseph T. Kelliher, on the need for Texas to implement “smart electricity reforms.”  He writes that reliability is valuable and necessary, but comes at a price, and the challenge for Texas is to figure out how to pay for it.  While the energy-only market has worked in Texas in the last ten years, “…short-term prices can and do sharply increase.  The potential for enormous price spikes inevitably leads to “price caps,” which ironically discourage the development of the planning resources needed for the longer term.  This negative feedback loop has played out in other states – notably California – resulting in supply inadequacies with disastrous results.” 

He states that “the experience of other regions suggests that a planning reserve market, otherwise called a capacity market, will ensure electricity reliability at a reasonable cost – if Texas can avoid the mistakes of other regions.”  The best procurement period would be at least five years, which would help with long-term planning.  In his view, limiting a capacity market to new resources only or for congested areas is not recommended.  

ERCOT Publishes Reports Related to Implementation of ORDC
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

Starting last weekend, ERCOT has been publishing Indicative Real-Time Reserve ORDC (Operating Reserve Demand Curve) Price Adder: “This report captures the value of the opportunity costs of online reserves, based on the defined ORDC.  This will be an adder to the Real-Time Locational marginal Price (RT LMP), based on Nodal Protocol Revision Request NPRR568.  The ORDC is a curve that represents the value of reserves at different reserve levels, based on the Loss of Load Probability (LOLP) at that reserve level and the Value of Lost Load (VOLL).  (The RT Reserve and Price Adder is calculated, based on the ERCOT Comments 101113 for NPRR568, plus the Online Wind Resource capacity in the online reserve calculation.  Any comments and changes made to the NPRR568 after the 10/11/13 ERCOT comments are not included in the current report.) 

As part of the information on the scarcity-pricing mechanism, ERCOT also publishes the Peaker Net Margin (i.e., the cumulative Peaker Net Margin in dollars per MW, since the start of the annual resource adequacy cycle, posted daily) and the System-Wide Offer Cap (i.e., the cap in place for Ancillary Services and Energy, posted for the last thirty days, on a daily basis).

Potential Impacts of the Growth of Microgrids
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Bloomberg.com is reporting today on the growth of microgrids, which “are emerging as a credible threat to the dominance of America’s 100-year-old-plus utility monopoly.  The small-scale versions of centralized power systems, once just used against blackouts, are now gaining thousands of customers as homeowners in states with high power costs turn to them as a way to manage rooftop solar systems, cut electricity bills and, in some cases, say goodbye to their power companies.”

The article predicts that “microgrids have the potential to radically change the U.S. electricity paradigm as they proliferate and begin to eat into the utility revenue stream.  For example, U.C. San Diego saves an estimated $850,000 a month on its electricity bill by self-generating and using its microgrid to fine-tune campus power consumption.”  Modernizing grid, rising power prices, reliability, and other reasons are listed as the causes for the coming proliferation of microgrids, which could turn into a $40 billion business by 2020, according to Navigant Research.

Oct 21, 2013
PUCT Should Make the Right Call

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On 10/21/13, the Austin American Statesman published an opinion piece by Kathleen Hunker of the Texas Public Policy Foundation, arguing against a mandated reserve margin and capacity market in Texas.  Calling it a “corporate redistribution scheme,” she says that generators want such “radical transformation” because it is necessary to maintain a reliable supply of electricity.  In her view, however, there is no energy shortage and the energy-only market is working well: “In fact, the transition to competition has been so successful that the market has too much electricity today – which is one reason prices are so low.” 

At the end, the author reiterates that “the PUC should not rush into a decision to mandate a reserve margin.  In fact, it should not adopt a mandatory reserve margin at all.  Projections of future reserves in a capacity market would be no more reliable than projections today, but the cost of poor projections for consumers would be significant.”

PUCT to Discuss Entergy’s Proposed Transfer of its Transmission System to ITC
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On 9/18/13, Entergy refiled its application to transfer transmission assets in Docket No. 41850 – Application of Entergy Texas, Inc., ITC Holdings Corp., Midsouth Transco LLC, Transmission Company Texas, LLC, and ITC Midsouth LLC, for Approval of Change of Ownership and Control of Transmission Business, Transfer of Certification Rights, and Related Relief.  Its first attempt at the transfer was withdrawn, without prejudice, on 8/9/13 (Docket No. 41223), after the parties failed to reach an agreement and the Commission noted information missing from the application.  At the upcoming 10/25/13 open meeting, the Commission is scheduled to discuss the new case, including possible consideration of a Preliminary Order.

PUCT Workshop on Investigating Potential Impacts of an Increase in the System-Wide Offer Cap on Retail Markets
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On 10/17/13, the PUCT staff held a workshop in Project No. 41641, Project to Investigate Potential Impacts of an Increase in the System-Wide Offer Cap on Retail Markets.  Previously, on 10/7/13, parties filed comments, responding to staff’s questions on mitigating potential impacts, possibly increasing capital requirements on REPs, impact of peak load events on some REPs, and any other impacts.  At the workshop – which ran only about 30 minutes – there were several questions about Interval Data Recorder (IDR) meters, since one of the ways to lessen impact on the retail market would be a shortened settlement timeline.  Participants pointed out that IDR data are provided monthly, so data estimation would have to become more prevalent with a shorter timeline.  Switching such meters to Advanced Metering Systems (AMS) would be costly to REPs and their large customers, many of whom maintain entire systems, based on IDR.  The staff were also cautioned that, while going to a five-day settlement timeline is manageable, anything shorter than that will have to be very carefully evaluated. 

ERCOT PRS Approves NPRR on ORDC Copyright 2013 by Competitive Assets, LLC.  All rights reserved

On 10/1/8/13, the Protocol Revision Subcommittee (PRS) approved an extensively amended Nodal Protocol Revision Request NPRR568 (Real-Time Reserve Price Adder Based on Operating Reserve Demand Curve (ORDC)).  The amendments include  Morgan Stanley Comments 100813 (without the reference to load), ERCOT Comments 101113, and Luminant Comments 101613.  Also added were PRS revisions, based on informal comments submitted by Citi.  Moreover, a couple of issues were assigned to a subcommittee and working groups:

  • – The issue of Load Resources providing OFF10/30 [minutes] to the Wholesale Market Subcommittee and Demand Side Working Group (WMS/DSWG);
  • – A review of verification of Real-Time Production Potential to WMS and QSE Managers Working Group (QMWG).

The next step for ERCOT staff is to develop an Impact Analysis on the approved revisions.

 NPRR568 will be considered next at the 11/7/13 meeting of the Technical Advisory Committee; its rank and priority was set at 2013/70.

Also on 10/18/13,  ERCOT staff announced that: ” ERCOT published the Indicative Real-Time Reserve Price Adder on ercot.com for Operating Day (OD) 10/17/2013.  The posted price is calculated, based on the 10/11/13 ERCOT comments for NPRR568, and include the Online Wind Resource capacity in the Online reserve calculation.  Any comments and changes made to the NPRR568 other than the 10/11/2013 comments are not included in the currently posted prices.  The posting is a zip file that can contain multiple csv files; each csv file contains the price adder for all the Security Constrained Economic Dispatch (SCED) runs in each operating day.  The prices are posted under Scarcity Pricing Mechanism section (http://www.ercot.com/mktinfo/rtm/).

Oct 18, 2013
ERCOT Continues to Work on Implementing
Real-Time Reserve Price Adder Based on Operating Reserve Demand Curve
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The Protocol Revision Subcommittee (PRS) is meeting again on 10/18/13, to continue the review and voting on Nodal Protocol Revision Request NPRR568 (Real-Time Reserve Price Adder Based on Operating Reserve Demand Curve (ORDC)).  Thursday’s deliberations proved inconclusive, as several motions and amendments to motions were being made and voted on.  Also, some parties filed additional comments.

California PUC Requires Utilities to Buy a 1.3 GW of Electric Storage by 2020 C
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The San Francisco Chronicle is reporting on the new storage rules from the California PUC, noting that by the end of 2020, California utilities will have to buy enough large-scale energy storage to power nearly a million homes.  “The groundbreaking regulations from the CA PUC require the state’s big, investor-owned utilities – Pacific Gas and Electric Co., Southern California Edison and San Diego Gas and Electric Co. – to buy a total of 1.3GWs of storage. The rules are designed to boost the large-scale energy storage industry, whose products can bottle enough electricity to supply whole buildings or towns. (For a deeper look at the rules and some of the technologies involved, click here.)  Adding storage will help strengthen the state’s electricity grid, making blackouts less likely. It will also provide back-up electricity for solar power plants and wind farms, whose output varies throughout the day.”

US and Canada Utilities Vulnerable to Hacking
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An article in the Guardian.com discusses recently revealed vulnerabilities in the security of power plants: “Power plants across the US and Canada could overheat, shut down or be caused to malfunction because of vulnerabilities that leave them open to hacking, according to new research.  If exploited, the vulnerabilities could be used to crash or potentially hijack the servers controlling electronic substations, water utilities and power plants.  Adam Crain, Chris Sistrunk and Adam Todorski, who are working with industrial consultants Automatak, found 25 zero-day vulnerabilities – flaws which have never before been seen in the wild – in the protocol by which power plants and other parts of the electricity grid communicate internally.”

Oct 17, 2013
ERCOT Considers Implementing
Real-Time Reserve Price Adder Based on Operating Reserve Demand Curve
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On 10/17/13, ERCOT’s Protocol Revision Subcommittee (PRS) will consider Nodal Protocol Revision Request NPRR568 (Real-Time Reserve Price Adder Based on Operating Reserve Demand Curve (ORDC)).  Last week, ERCOT staff filed updates to the NPRR and a revised procedure, after several rounds of stakeholder discussions.  The updates incorporate consensus items for the summer 2014 implementation and beyond, in addition to listing unresolved items.  Also before the meeting, several market participants filed additional comments that may be discussed at PRS.  The NPRR, which is estimated to cost between $150-$250K to implement, with a four-to-six month timeline, is expected to be considered by the ERCOT Board in November.

ERCOT Staff Asks Market Participants To Review Several Retail Market Reports Copyright 2013 by Competitive Assets, LLC.  All rights reserved

At the meeting of the Retail Market Subcommittee (RMS), ERCOT staff brought up several reports, posted on the Retail page, that summarize information about ESI ID switching, maintaining a relationship with the original Affiliated Retail Electric Provider (REP), or staying with a Provider of Last Resort.  The staff asked for a market participant review of the reports to see which ones are most useful.

Oct 16, 2013
ERCOT Workshop on
Loads in Security Constrained Economic Dispatch
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On 10/15/13, ERCOT held a workshop on ‘Loads in SCED’ v2.0 (Security Constrained Economic Dispatch).  The starting point was a preliminary list of issues, including settlement methodology, ability of third-party Demand Response (DR) QSEs to participate in SCED, and accessibility for various DR assets.  In making their presentation, DR providers restated their goal of increasing DR in ERCOT by improving access to markets for existing DR and attracting new DR, while acknowledging that the task is not easy.  Version 2.0 of Loads in SCED is being developed to improve price formation for all market participants, since a load curve is necessary for accurate reflection of scarcity conditions.

The next step is for the Demand Side Working Group to consider the issues further and try to reach a consensus, so that a Nodal Protocol Revision Request may be drafted.  In the discussion, it was noted that the PUCT may have to provide direction on some aspects of this effort.  

Energy Efficiency Efforts at Eanes ISD Result in Significant Energy Use Reduction
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In trying to understand what affects load growth in ERCOT – with consequent revisions to the load-forecasting process – this brief article in the Austin American Statesman might shed some light.  It states that: “due to recent bond-funded upgrades,” the Eanes School District has reduced energy use in its buildings by 12% in the past year, and by 18% in the last two years.  “Most of this is due to upgrading the heating, ventilation, and air conditioning in schools and switching to LED and motion-sensor light, said the district’s maintenance and operations department officials.”  And rate increases make it even more important to reduce energy use in the future.

The article continues that major changes include replacing 28 heating and air conditioning units at one school and roof-top units at other schools; replacing a hot-water boiler with a solar-powered one; replacing an entire school’s roof; replacing the slow-to-activate lights in all school gyms with fluorescent, motion-sensor lights; switching outdoor light bulbs with LEDs; and adding an automated heating and air conditioning system to an elementary school.  In addition, principals have started to compete for which school is most energy efficient.

PUCT Commissioner Marty Testifies on Generation Adequacy Issues before a Senate Committee
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On 10/15/ 13, the Texas Senate Business and Commerce Committee met to discuss its interim work and hear testimony from several state agencies, including the PUCT.  The Austin American Statesman (AAS) is reporting that the new PUCT Commissioner Brandy Marty indicated her preference for a quick resolution of the generation adequacy issue – perhaps as early as next year: “Certainly one option would be to make the decision to adopt a mandatory reserve margin and not be able to build anything around that until we have the information on what that exactly should look like,” Marty said.”  Laylan Copelin of AAS writes that “her remarks … are likely to be interpreted as favoring redesigning the existing wholesale electricity market – a prospect that critics have warned could raise electricity rates.”

The article continues: “After the Tuesday’s hearing, Marty said the industry and consumers should not assume that the ultimate solution would be the capacity market favored by most owners of power plants.  “I think people’s minds go there because of the model we’ve seen, but Texas tends to do what’s best for Texas and there are going to be components from several different markets,” she said. “I don’t know yet because we are waiting for information.” 

At the 10/8/13 PUCT workshop on resource adequacy, the Chairman was inquiring about how much time would be needed before the effectiveness of the Operating Reserve Demand Curve (ORDC) solution, currently under development at ERCOT,  could be evaluated.  One participant suggested that it would take at least twelve months after the implementation – i.e., not until the summer of 2015 – to see the full effect. 

Oct 15, 2013
Report: Solar Heating & Cooling: Energy for a Secure Future
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

An article in Salon.com reports on a new solar study: “[t]he Solar Energy Industries Association (SEIA) believes the nation could save $61 billion in energy costs by 2050, creating 50,250 jobs along the way.  The U.S. could achieve those goals by vastly expanding the solar heating and cooling capacity (SHC) across the country, according to a SEIA reportSolar Heating & Cooling: Energy for a Secure Future, released this month. Installing 100 million new SHC panels nationwide would increase SHC capacity from 9GW to 300GW in the next 37 years, according to the report prepared by Boston-based BEAM Engineering.  The country’s 9GW of SHC capacity rank it just 36th in the world, relative to its population.”  Heating and cooling represents about 44% of U.S. energy consumption.  Expanding SHC systems could allow the nation to generate about 8% of its heating and cooling needs through “clean, affordable solar energy,” the report states, displacing in the process an estimated 226 million tons of carbon emissions annually.

Oct 14, 2013
More Comments Filed in PUCT Resource Adequacy Project
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In response to questions raised by CPS Energy on whether to include Emergency Response Service (ERS) in the Operating Reserve Demand Curve’s (ORDC’s) calculation of available reserves, six comments were filed in Project No. 40000, related to resource adequacy.  Mostly, commenters opposed the inclusion:

  • The Steel Mills said that it would not be in the public interest and may be detrimental to resource adequacy in Texas; it could also have a negative impact on ERS;
  • Luminant recommended excluding ERS capacity from the calculation, in addition to excluding Reliability Unit Commitment (RUC) and on-line Reliability Must Run (RMR) capacity;
  • Environmental Defense Fund (EDF) stated that adding the ERS load to the operating reserves would dampen scarcity pricing;
  • The Demand Response Coalition opined that ERS resources may, for sound policy reasons, be included in the ORDC for some purposes and excluded for others; and
  • The Texas Industrial Energy Consumers (TIEC) recommended treating the ERS capacity the same way as loads providing Responsive Reserve Service (RRS). 

GDF SUEZ suggested that for Nodal Protocol Revision Request NPRR568 (Real-Time Reserve Price Adder Based on ORDC), the Commission should first set a guiding policy to outline the parameters/qualifications for the inclusion of various products and services for online and offline reserves to eliminate any confusion, delays, or results that do not accomplish the purpose of the ORDC.  The ones that meet the parameters of the policy would be included in the calculation of reserves, but those that do not, would be left out.

The discussion of the ORDC and NPRR568 now moves to the Protocol Revision Subcommittee (PRS) on 10/17/13.  ERCOT staff will review several issues from last week’s stakeholder discussions, and may provide a revised version of the NPRR in time for PRS. 

Oct 11, 2013
Comments Filed on PUCT Staff’s Strawman Rule on Representative Appearances
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On 9/10/13, the PUCT staff filed a proposed strawman amendment to P.U.C. Proc. R. 22.101, on representative appearances, adding that to “appear before the commission or in a hearing…” “[t]he authorized representative of a party must be either an attorney licensed by the state or related within the third degree by consanguinity or affinity to the party….”  The preamble to the rule mentions a “contested case,” but the rule language does not.   On 10/10/13, a number of parties filed comments, most of whom opposed the change.  In fact, out of 16 commenters, only two thought that staff were on the right track, and they also proposed revisions to the new language.  Many commenters saw no need to alter the rule, while others objected to it because it: (a) would limit representation; (b) failed to clarify applicability to a ‘contested case;’ and (c) could prevent some employees from representing their companies.  Adding ‘contested case’ to the language would not necessarily fix the problem because, as one filing stated, there are many different contested proceedings, and some are better handled by consultants or technical experts.  The rule would also exclude out-of-state attorneys.  One commenter opined that “this is a rule attempting to fix a problem that does not exist.” Since this is a strawman rule, the staff may decide not to proceed with it, based on the comments.

Oct 10, 2013
Nuclear Regular Commission Remains Open with 300 Essential Personnel
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There are reports in the press that the “Nuclear Regulatory Commission, which monitors the nation’s 100 commercial nuclear power plants, is set to furlough 3,600 employees on Thursday (10/10/13), after depleting funds amid the government shutdown.”  The shutdown will disable non-emergency licensing of nuclear reactors, emergency exercises, and the inspection of nuclear materials and waste licensees.  Three-hundred ‘essential personnel’ will stay on the job, 150 of which are ‘resident inspectors,’ who will address immediate safety and security matters, the NRC said.

Oct 9, 2013
PUCT Workshop on Resource Adequacy Project 10/8/13

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On 10/8/13, the PUCT held a workshop in Project No. 40000, on resource adequacy, to discuss whether the reserve margin should be a target or a mandate and how best to maintain adequate reserves.  The afternoon session focused on presentations from: (a) ERCOT staff on revisions to the forecasting model, resulting in lower load forecasts and somewhat higher reserve margin (i.e., 16.7% in 2014 and 16.1% in 2015); (b) the Sierra Club on the need to incorporate energy efficiency, Demand Response, distributed generation, renewables, and other new technologies into the forecasting methodology; and (c) the Texas Industrial Energy Consumers (TIEC), whose representative noted ERCOT is the best price-responsive market in the US and that a 10-year Capacity, Demand, and Reserves (CDR) report might not be too useful beyond five years.  The Commission made no decisions, although the new Commissioner Marty expressed concern about sufficient reserves to enable business growth.  At one point, Commissioner Anderson alluded to possible changes to the Emergency Response Service (ERS), and explained how ERS can bid into the market.  Also, at the workshop, ERCOT staff reported that they will start producing indicative prices for the Operating Reserve Demand Curve (ORDC) on 10/19/13.  The information will  be posted to the Market Information System (MIS) page. On the same day, Representative Turner filed comments, cautioning the Commission before proceeding with a capacity market, without doing a thorough cost/benefit analysis.     

Oct 8, 2013
ERCOT Staff Presented Changes to its Load Forecast Process

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At the 10/7/13 Generation Adequacy Task Force (GATF) meeting, ERCOT staff presented revisions to the load-forecasting process, which are leading to lower-forecast values.  One significant change has been to stop using the Moody’s economic-growth model, since it has consistently proven too optimistic (or, “a bubble,” according to staff).  The result of the changes, including how solar, hydro, and wind are counted, is that the planning reserve margin for 2014 has risen to 16.7% (not yet adjusted for the Effective Load Carrying Capability of wind).  The same presentation will be discussed at the 10/8/13 PUCT workshop and the ERCOT Board in November.  

Parties Filed Reply Comments for the Rulemaking Project to Revise PUC Substantive Rule 25.272, Code of Conduct for Electric Utilities and Their Affiliates
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On 10/7/13 parties filed reply comments in PUC Project No. 41616 Rulemaking to Revise PUC Substantive Rule 25.272, Code of Conduct for Electric Utilities and Their Affiliates.  The project was opened in response to issues raised in Docket No. 40636, related to a petition for a declaratory ruling on Centerpoint’s joint advertising with a competitive affiliate. (An earlier Docket No. 39509 involved AEP, with similar issues.)  In replies, the REP Coalition reiterated that PUC Substantive Rule 25.272 should be revised to specifically prohibit utilities from sharing brands with their competitive affiliates, while CNP argued that the Commission has already considered this question and rejected that proposal:  “In Docket No. 39509 the Commission found that, based on the facts of that case, the sharing of identical AEP branding among AEP Retail Energy and AEP Texas TDUs constituted prohibited joint advertising.  But the Commission concluded that shared branding was not ‘categorically ‘ by PURA.”  TNMP expressed support for continued discussions on the proposed prohibition, but asked to exempt TDUs that do not have competitive affiliates.  AEP Energy reminded that the question of “whether the Commission can constitutionally impose a per se ban on the shared use of the brand or logo by utilities and their competitive affiliates” is currently on appeal, and suggested that the rule be finalized only after the appeal decision is issued.

Oct 7, 2013
ERCOT Considers Changes to its Load Forecast Methodology

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On 10/7/13, the Generation Adequacy Task Force (GATF) is meeting to review:

  1. the ERCOT Load Forecasting Methodology;
  2. a status report on the 2012 Loss-of-Load Expectation (LOLE) Study, based on revised load models; and 
  3. the Effective Load Carrying Capability (ELCC) of wind. 

The changes for the load forecast methodology that staff are proposing include:

  • Daily energy forecasts would be based on Neural Network Models;
  • Forecasts would be based on many model simulations, instead of on a single, linear model;
  • Historical energy relationships would be based on premise counts by customer class (residential, commercial, and industrial); and
  • The determination of a 15-year normal forecast would now be based on model output, using the most recent 15 years of historical weather data.

ERCOT’s Resource Adequacy Task Force Continues to Work on Implementing ORDC
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The Resource Adequacy Task Force (RATF) met on 10/4/13, to discuss further details of the Operating Reserve Demand Curve (ORDC)  and the revised Nodal Protocol Revision Request 568NPRR ERCOT Comments (Real-Time Reserve Price Adder Based on ORDC).  The group sought consensus on remaining unresolved issues, and scheduled additional meetings for 10/9/13 and 10/11/13.  Also, comments in Project No. 40000, related to resource adequacy are due on 10/11/13.

Report: ERCOT Technical Advisory Committee Meeting 10/3/13
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At the 10/3/13 meeting of the Technical Advisory Committee (TAC), the participants tabled NPRR550 (Modifications to Planning Reserve Margin Inputs) to get more information on the impacts of the proposed modifications; generally approved a significantly revised 2014 schedule; and expressed support for a new project designed to make the resource registration process much easier.  There were also discussions about further shortening of the settlement timeline and revisions to TAC Procedures (comments are due on 11/1/13). For more about this meeting, please click here.

Fight Between Utilities and Solar Industry
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The Austin American Statesman is reporting on a brewing struggle between utilities, which are proposing an extra fee for solar customers, and the solar industry, which is fighting potential new charges.  Some utilities are trying to roll back or block programs that allow customers to trade the solar power they generate during sunny days for power they need from the grid during other times. “As rooftop solar expands from a niche product to a mainstream way to save money on power bills, utilities are afraid they will lose so many customers – and revenue – that they won’t be able to afford to build and maintain the grid.” “They are trying to punish people for buying less electricity,” said Bryan Miller, vice president for public policy at Sunrun, a solar financing company. “They are trying to kill solar.”  The article explains that the fight has “come about because solar systems have plummeted in price and grown more popular at a time when U.S. electricity use is flat or even declining. Utilities, already facing the prospect of weak sales for years to come, are seeing more customers buy drastically less power when they generate their own with solar panels, fuel cells, or other so-called “distributed generation” technologies.” Regulators in several states, including Arizona, California, and Georgia, are considering strategies and new rate structures to deal with these issues.

Oct 4, 2013
Update on Federal Cyber Security Efforts
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The current issue of the Texas Electric Watch (TEW) presents the most recent developments in the federal-cybersecurity efforts.  The TEW looks at the work of the main, energy-related organizations (i.e., DOE, FERC, NERC, and also NIST), and reviews federal legislation from 2009-2013.  Also covered are the President’s Executive Order on cybersecurity (Feb. 2013) and S. 1353 (July 2013), which has garnered some industry support.   To read more, please subscribe to Texas Electric Watch. If you are interested in purchasing this TEW issue (including the supplemental issue), please click here. If you are interested in subscribing the Texas Electric Watch, please click here or call Competitive Assets at 512-581-0151. 

PUCT Open Meeting 10/3/13
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At its 10/3/13 open meeting, the Commission ruled on three customer complaints, finalized the SWEPCO rate case, and approved a Proposal for Publication in Project No. 41659 (Rulemaking to Implement Cease and Desist Authority under PURA Chapter 15 as Required by HB 1600 (83rd Regular Legislative Session)).  As was reported earlier, the Commission also asked for additional comments in Project No. 40000, related to resource adequacy. To read more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151.

PUCT Requests More Comments in Project No. 40000
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At the 10/3/13 open meeting, the Commission asked interested parties to comment on the questions asked in a CPS 10/1/13 filing (485) in Project No. 40000, related to resource adequacy.  The deadline for comments is 10/11/13.  The Commission is also holding a workshop in this project on 10/8/13.

Market for Electric Vehicles Is Growing
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Navigant Research is reporting that hybrid and plug-in Electric Vehicles (EVs) will reach nearly 7% of the worldwide light duty vehicle market by 2020.  They estimate that nearly 64,000 public-charging stations for EVs have been installed in the world and that EV charging equipment sales will reach 4.3 million units worldwide in 2022.  This information comes in addition to a report that the city of Palo Alto is now requiring all new homes to have EV charging equipment.

Oct 3, 2013
ERCOT Considers Redesigning Ancillary Services

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On 9/27/13, ERCOT staff posted a newly drafted Ancillary Services (AS) Concept Paper v1.0.  The paper proposes a significant redesign of the current ERCOT AS, prompted, in part, by technological change and a desire to be more responsive to the needs of the market.  At this time, the “re-think” of the AS market is limited to three out of the seven existing AS, including: Non-Spin, Responsive Reserve, and Regulation.  These three AS would be replaced with:

  • Synchronous Inertia Response Service (SIR)
  • Fast Frequency Response Service (FFR)
  • Primary Frequency Response Service (PFR)
  • Up/Down Regulating Reserve Service (RR)
  •  Contingency Reserve Service (CR).

The paper explains in substantial detail the characteristics of the new AS and potential implementation issues.  The entire proposal will go through the stakeholder process before any approval, and modifications are possible.  The deliberations are not expected to be easy, as confirmed by a remark from one market participant, who said that he’d “stopped listening after they said that Non-Spin would be abolished.”  The idea to redo AS, however, came partly from market participants, and followed instructions by the Technical Advisory Committee.  A workshop on Future AS in ERCOT has been scheduled for 10/24/13.

Oct 2, 2013
PUCT Considers Several Rulemakings at its 10/3/13 Open Meeting
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At its 10/3/13 open meeting, the Commission will consider several rulemakings, including:

  • Project No. 41404 – Rulemaking Proceeding Concerning Payment in Lieu of Taxes – a Proposal for Publication (PFP) was filed on 9/26/13; and
  • Project No. 41659 – Rulemaking to Implement Cease and Desist Authority under PURA Chapter 15, as Required by HB1600 (83rd Regular Legislative Session) – a PFP was filed on 9/26/13.

In addition, the Commission staff opened several new projects:

  • Project No. 41905 – Rulemaking Proceeding to Amend PUC Subst. R. 25.236, Relating to Recovery of Fuel Costs;
  • Project No. 41904 – Implementation of CCN Revisions Concerning Experimental Generation; and
  • Project No. 41894 – Activities Related to Transfer of Water Program from TCEQ to PUCT.

 

ERCOT Continues to Work on Implementing the Operating Reserve Demand Curve
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The Resource Adequacy Task Force is meeting for the second time, on 10/4/13, to discuss the details of the Operating Reserve Demand Curve (ORDC) and Nodal Protocol Revision Request NPRR568 (Real-Time Reserve Price Adder Based on ORDC).  ERCOT staff posted new information for the meeting, noting that the back-cast tool has been updated,with data from 2013 through the end of  July.  In addition, the underlying data from 2011 and 2012, used in the back-cast for determining the mean and standard deviation for the seasonal ORDCs have also been posted at http://www.ercot.com/committees/board/tac/wms/ratf.

Fall 2013 Gulf Coast Power Association Conference in Austin
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The Fall 2013 Gulf Coast Power Association (GCPA) conference opened yesterday in Austin, with a speech by Hunter Hunt, the Chairman and CEO of Sharyland Utilities.  In wide-ranging remarks, Mr. Hunt explored a theme of what role utilities can play in bringing communities closer together and helping to renew America’s spirit.  For the rest of the day, the participants heard presentations on challenges in the electric-retail market, the Value and Lost Load, and fuel supply risks.  In the most informal session, the PUCT Chairman Donna Nelson and two former FERC Commissioners, Pat Wood and Joseph Kelliher, shared stories from their work at the commissions and provided ideas on how best to represent cases.  The conference continues on Wednesday, with an exploration of new technologies and a look at compliance process at the PUCT and Texas Reliability Entity.   Also at the GCPA, the participants took note that Ron Binz had withdrawn his nomination for the FERC Chairmanship “in the face of resistance from conservative and fossil-fuel groups.”  As related by Pat Wood, several former FERC Chairs had sent a letter to Congress in support of the nominee, but the opposition proved too strong to overcome.

Oct 1, 2013
Can Small Nuclear Reactors be Safe and Secured?

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Starting in 2012, the Department of Energy (DOE) proposed to provide $452 million in matching grants to subsidize design and licensing costs for eventual deployment of small, nuclear reactors by 2020.  Recently, however, the Union of Concerned Scientists (UCS) concluded that smaller is not always better: “Nuclear safety and security don’t come cheap,” said Edwin Lyman, UCS senior scientist and author of the report.  “A utility that thinks it can have its own little nuclear reactor at a bargain-basement price may get exactly what it pays for: a plant more vulnerable to serious accidents and terrorist attacks.” “Some small modular reactor concepts may have desirable safety characteristics, but if they are not carefully designed, licensed, deployed, and inspected, they could pose comparable or even greater safety, security, and proliferation risks than large reactors,” said Lyman.  Fierce Energy reports that “experts argue that mass-producing the reactors on an assembly line, instead of building customized reactors on site would cut costs.  Lyman suggests that this is an unproven proposition and warns that any benefits of manufacturing reactors on a production line could be undercut by generic defects that would spread throughout the entire reactor fleet.”

Sept. 30, 2013
Texas Tribune Festival–Fight Over Electricity

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On 9/28/13, the Texas Tribune organized the Texas Tribune Festival, consisting of various tracks, including one on Energy.  The energy track featured panel discussions on regulation, shale boom, energy efficiency, and the “fight over electricity.”  An impressive roster of speakers included the PUCT Chairman Donna Nelson; state representatives, State Sen. Carlos Uresti, Malachi Boyuls of St. Augustine Capital Partners, Sierra Club’s Cyrus Reed, Permian Basin Petroleum Association President Ben Shepperd, John Fainter, Peter Fox-Penner, Becky Klein, Suzi McClellan, and others.  And in the sign of the times, the event was live-blogged, from 10AM until after 4PM.  For example, here is an exchange from the Fight Over Electricity:

by Jim Malewitz Nelson says Texas has some interesting energy challenges because of the heat, but the state is working on it, trying to strike the appropriate balance between reliability and costs. “When we turn our air conditioner on, we want it to work,” Nelson says.
by Jim Malewitz Fainter, again, advocates for a shift to a capacity market — one in which companies are paid to build energy capacity rather than for the energy itself. It’s one way, he says, that would incentivize the building of new infrastructure. It’s an an ongoing discussion in Texas, and one that’s somewhat controversial because ratepayers would likely bear the costs of that new construction. McClellan says she hopes Texas will learn from other existing capacity markets. She says she can’t imagine a mechanism that can guarantee 100 percent reliability, but the state needs to investigate ways to move toward that goal.  by Jim Malewitz The panel is now talking about the role of water — of course, a scarce resource in parched Texas — in energy production. He says voters’ upcoming decision on whether to fund the state’s water plan will be essential in ensuring that Texas has enough water to meet its energy needs.

Sept. 27, 2013
ERCOT Stakeholders Working on Implementing Real-Time Reserve Price Adder Based on Operating Reserve Demand Curve

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On 9/19/13, the ERCOT staff filed Nodal Protocol Revision Request NPRR568 (Real-Time Reserve Price Adder Based on Operating Reserve Demand Curve (ORDC)), as requested by the PUCT at its 8/29/13 open meeting.  The NPRR was discussed by stakeholders for the first time at the 9/26/13 Resource Adequacy Task Force (RATF) meeting.  The participants reviewed NPRR568 in great detail and developed a list of “outstanding” issues that need to be addressed further (the list was emailed and may be posted later).  While consensus was reached on many of the issues under discussion, some remain to be resolved (e.g., Should the ORDC curve be changed every month).  Another meeting of RATF is planned for 10/4/13, to continue the debate and/or refine the list.  Parties who do not agree with the resolution of an issue may make a presentation at the 10/4/13 RATF meeting.  After that, the NPRR will be considered at the 10/17/13 meeting of the Protocol Revision Subcommittee (PRS).  Additional comments may be filed at ERCOT before the PRS meeting.  Under the preliminary Impact Analysis, the NPRR will cost $150K-$250K and take four-to-six months to implement.  

FERC Held a Technical Conference on Capacity Market
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On 9/25/13, FERC held a technical conference on capacity markets; specifically, “to consider how current centralized capacity market rules and structures are supporting the procurement and retention of resources necessary to meet future reliability and operational needs.”  A free live webcast was available for this meeting, and the webcasts remain archived for three months.

Sept. 26, 2013
Potential Energy Efficiency Participation in ERCOT Market
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Among the comments filed on 9/23/13, in Project No. 40000, related to resource adequacy, several noted the role of energy efficiency, in addition to revised building codes and appliance standards, in driving the growth of demand lower.  On 9/27/13, ERCOT’s Demand Side Working Group (DSWG) will be discussing a proposal/white paper on the “Potential for Energy Efficiency Participation in ERCOT Markets.”  The proposal is being made by the South-Central Partnership for Energy Efficiency as a Resource (SPEER).  The paper states, in part: “If a capacity market of any kind is created in Texas, efficiency should be allowed to bid directly against transmission upgrades and new and existing generation resources.  The capacity markets give us several years of experience to draw from.  A forward market should be adopted that allows sufficient time for generation, demand response, and passive efficiency investments to be put in place for the anticipated delivery year.  Passive efficiency measure capacity would be defined based on its reliable capacity reduction contribution throughout the hours of peak demand in the summer, and perhaps the winter seasons, and be paid accordingly.”   

At the same meeting, DSWG will be discussing Senate Bill 385 (83rd Regular Session), which creates Chapter 399 of the Local Government Code, and authorizes municipalities and counties to provide a financial payment structure, enabling commercial, industrial, and multi-family (five or more dwelling units) property owners to improve their existing lots with energy or water efficient retrofits.”  In addition, the group will review a draft Nodal Protocol Revision Request, establishing rules for participation in the Emergency Response Service (ERS) by Loads, with demand response capabilities that are highly sensitive to weather conditions.

Reserve Margin Comments in Project No. 40000
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The latest issue of the Texas Electric Watch (TEW) provides a summary of all 24 comments filed in Project No. 40000 on the Commission’s questions related to setting the planning reserve margin (PRM) and reliability standard.  While a few parties offered suggestions on the PRM, most commenters expressed support for a capacity market, including renewable and Demand Response providers.  Find out also about the TIEC’s alternative to a capacity market. After the 9/23/13 filings in Project No. 40000, two additional filings were made by a Demand Response provider, supporting a capacity market in ERCOT, and by the Texas  Public Policy Foundation, which vehemently opposes such a market.  A Supplemental TEW offers a brief summary of the new comments. To read more, please subscribe to Texas Electric Watch. If you are interested in purchasing this TEW issue (including the supplemental issue), please click here. If you are interested in subscribing the Texas Electric Watch, please click here or call Competitive Assets at 512-581-0151. 

Sept. 24, 2013
More Comments filed in Project No. 40000 Related to ERCOT Resource Adequacy

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On 9/23/13, a number of parties filed comments in Project No. 40000, related to resource adequacy.  The filings came in response to questions the Commission posed at the 8/29/13 open meeting, and which focused on the planning-reserve margin and potential improvements to load forecasting.  While many commenters expressed support for a capacity market, a few noted that demand response, energy efficiency, passive-load response, renewables, revised building codes, and distributed generation are all affecting demand.  For example, HEB stated that it has reduced demand at its stores by 11% in the last few years, and its newest store in Austin is designed to be 50% more efficient than the most efficient current facility.  This and other, similar developments could explain why the traditionally direct correlation between the economic and load growths seems to be diminishing.  These issues will be further explored at the 10/8/13 PUCT workshop.

Sept. 23, 2013
Effects of EPA’s Proposed New Pollution Standards

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Forbes is commenting on the new pollution standards, announced by the Environmental Protection Agency (EPA) on 9/20/13: “The EPA has announced that new coal fired and natural gas plants will have to meet CO2 emission standards, before they gain a license to build and operate.  What seems to be missed in the commentary on this is that this is a wonderful gift to those who already operate coal-fired generation plants.  For they’re now almost entirely free from the competitive threat of someone building a more efficient coal plant: they’re protected now.”  After noting that some economists have said that such regulation is the wrong way to deal with climate change, the article concludes by stating that, “[t]he correct way to look at this is a huge victory for those who currently own coal-fired generating plants.  All potential coal-fired competition against them has just been banned.”

Sept. 20, 2013
ERCOT Proposes Protocol Revisions For ORDC B+ Implementation

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On 9/19/13, ERCOT filed Nodal Protocol Revision Request NPRR568 (Real-Time (RT) Reserve Price Adder Based on Operating Reserve Demand Curve (ORDC)), including a preliminary Impact Analysis (IA) and Methodology for Implementing ORDC (a similar filing was made in P.U.C. Project No. 40000 – Proposed Protocol Revisions for ORDC/B+ Implementation). The NPRR requires ERCOT to implement an ORDC in the Real-Time Market (RTM) to determine the RT price adder for RT Settlement Point Prices (RTSPPs).  The RT price adder reflects the price for reserves available in the ERCOT System, based on the Loss of Load Probability (LOLP) at that reserve level.  The addition of this price adder to the RTSPP ensures that the RTSPP reflects the opportunity cost of reserve scarcity.  A new Other Binding Document (OBD) describes the methodologies for developing the ORDC and determining the reserve price adder, using the ORDC.

In addition to various revisions, the 62-page NPRR creates a new Protocol Sec. 6.7.4, RT Ancillary Service (AS) Imbalance Payment or Charge.  The filing explains that in the absence of RT Co-optimization, an AS imbalance settlement will be performed “to ensure that Resources are indifferent between providing energy and reserves in RT.”  Moreover, “Reliability Unit Commitment (RUC) Resources and Reliability Must-Run (RMR) Units are removed from this AS imbalance payment for their online capacity in RT, since making the payment and clawing it back would result in the same financial outcome, but with significant changes to the Protocols.” The IA estimates the cost of implementing the NPRR at $150K-$250K, with a four-to-six-month timeline.  The ORDC was first proposed in November 2012, and has been extensively discussed since then, both at the PUCT and ERCOT.  On 9/26/13, the Resource Adequacy Task Force at ERCOT will discuss the newly-filed NPRR.

Sept. 19, 2013
PUCT Staff Proposes to Revoke a REP Certificate and Levy Over $2 Million in Fines

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On 9/18/13, the PUCT staff filed a petition to revoke the Retail Electric Provider (REP) certificate of Proton Energy, Inc., and assess a hefty penalty.  The staff are alleging more than 1,000 violations since 2011, and in a strongly-worded language explain that: “Proton’s violations outlined above are among the most egregious violations that a REP can commit and demonstrate an utter disregard for compliance with PURA and the Commission’s substantive rules.  These violations pose serious risks to the health, safety, and economic welfare of the public.  Proton also committed violations of numerous other Commission rules designed to protect customers and to allow the Commission to monitor compliance with P.U.C. Subst. R. 25.107, related to certification of REPs.  Proton’s violations are also the subject of a Notice of Violation (NOV), in which the Commission is seeking administrative penalties totaling $2,180,700.” 

The most serious alleged violations include disconnections without proper notice or during extreme-weather events, improper switch-holds, and “reckless indifference” in responding to communications from the PUCT staff.  While there have been instances in which NOVs got settled, more recently, the Commissioners had expressed disapproval of settlements and a reluctance to accept them. 

News Flash Archive

Sept. 18, 2013
ERCOT Starts Assessing Drought Impacts on Generating Plants

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At the 9/17/13 ERCOT Board meeting, the ERCOT CEO reported that this year’s milder weather has caused the organization to collect $2.6 million less in system administration fee than was expected.  Drought conditions, however, persist around the state, with 88% of Texas in moderate, or worse, drought.  ERCOT is now working with a consultant to develop a long-term drought impact analysis and a model that will be used to assign levels of risk for individual generating plants going forward.

Sept. 17, 2013
Shaping the Future of Cybersecurity Education Workshop

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The National Initiative for Cybersecurity Education (NICE) will host its annual “Shaping the Future of Cybersecurity Education Workshop” at the National Institute of Standards and Technology (NIST) location in Gaithersburg, MD.  The workshop takes place on 9/17-19/13, with certain sections available for online streaming (at http://csrc.nist.gov/nice/2013workshop/webcasts/index.html).  The final agenda has been posted, and includes a section on “Resources for Teaching Physical System/SCADA Security” to be discussed on 9/19/13.

Sept. 16, 2013
ERCOT Resource Adequacy Issues Might Get Resolved?

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A 9/14/13 article in the Austin American Statesman discusses how the questions of resource adequacy in ERCOT might get resolved.  It refers extensively to the Charles River Associates study, filed by NRG, which put the cost of a capacity market at $400 million more than the energy-only market, but also projected savings of $14 billion over 15 years.  The author writes: “Bottom line:  NRG’s study claims the higher costs of a capacity market ‘are more than offset by the projected savings, reduced outage costs and statewide economic benefits of more reliable electric generation.’  The study puts the savings to the Texas economy at $14 billion over 15 years.  ‘It more than pays for itself,’ Ragan says.  I assure you the opponents won’t agree.  I won’t venture a guess whose economist is right, but I’ll add a little context.  The $14 billion over 15 years pales when you consider that the Texas economy’s gross domestic product is about $1.4 trillion.”

California PUC Proposes a Mandatory Buying of 1.3 GW Electricity Storage by 2020
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

San Francisco Chronicle is reporting that the California PUC proposed requiring the state’s utility companies to buy more than 1.3GW of electricity storage by 2020 – enough electricity to supply 993,750 typical homes at any given instant.  The article states that this “storage would help ensure that the lights stay on as California adds large amounts of solar and wind power – both highly variable – to its grid.  Big energy storage projects would also cut the number of new fossil-fuel power plants built in the state. And they would make the aging grid more reliable.”

Sept. 13, 2013
PUCT Instructs ERCOT How to Proceed with the Implementation of the Operating Reserve Demand Curve

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At the 9/12/13 open meeting, the Commission instructed ERCOT staff to use the following inputs, when drafting Protocol language for the implementation of the Operating Reserve Demand Curve (ORDC):

  • Value of Lost Load (VOLL) – $9,000MWh
  • Value of X (i.e., minimum contingency level) – 2000MW
  • Remove the existing Ancillary Services offer floors
  • The curve to be a continuous one, generated by the cumulative distribution function method.

ERCOT staff said that the draft Protocol revision may be ready by the end of next week, and the Commissioners noted that they see no reason to delay consideration of the ORDC by ERCOT stakeholders.  In further developments:

  • Comments on the reserve margin questions/issues may be submitted by 9/23/13;
  • A workshop on the reserve margin is scheduled for 10/8/13;
  • ERCOT staff may be able to “shadow” the ORDC by publishing a non-binding adder in about three-to-four weeks;
  • The Brattle Group will be working on an analysis of the economic equilibrium reserve margin; and
  • ERCOT staff were asked to do a cost/benefit analysis of the Real-Time Co-optimization (RTC) (with one Commissioner commenting that the ORDC may provide 85% of the benefits of RTC).

Report: PUCT Open Meeting 9/12/13
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

At its 9/12/13 open meeting, the Commission finalized decisions in the SWEPCO rate case, provided guidance on the rulemaking on “Concerning Payment in Lieu of Taxes,” and gave directions to ERCOT staff on how to proceed with the Operating Reserve Demand Curve (ORDC).  A number of items were consented, including several violations cases and rulemakings. To read more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151.

Sept. 12, 2013
ERCOT Considers Adding a Thirty-Minute Emergency Response Service

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At the 9/11/13 meeting of the Wholesale Market Subcommittee (WMS) at ERCOT, participants discussed Nodal Protocol Revision Request  NPRR564 (Thirty-Minute Emergency Response Service (ERS) and Other ERS Revisions).  The NPRR would add a 30-minute product to the already existing 10-minute one, while staying within the $50 million annual cap.  ERCOT staff plan to take the NPRR to the ERCOT Board in November for approval.  In spite of a workshop held on 9/4/13, several members of WMS said they still had substantive questions and referred the NPRR to a working group for further study.  The action, however, does not prevent ERCOT staff from taking the NPRR to the Protocol Revision Subcommittee later in September.

Sept. 11, 2013
ERCOT Considers Shortening Settlement Timeline

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At the 9/10/13 ERCOT workshop on the shortening of the settlement timeline, participants considered several options for a shorter timeline, including a draft revision request that would have settlement on day one.  Most agreed that going to a six- or five-day settlement would be possible and relatively easy, but anything less than that could pose problems because of the availability and accuracy of data, and with costs outweighing benefits.  The effort to shorten settlement is driven by concerns that increasing offer caps expose the market to a significant default. Another meeting was scheduled for 9/23/13 to finalize a proposal.

Sept. 10, 2013
Sales of Plug-in Vehicles Are Increasing in US

Copyright 2013 by Competitive Assets, LLC.  All rights reserved

Navigant Research has published a report on the growth of plug-in electrical vehicle (PEV) sales.  The analysis projects that California, New York, Washington, and Florida will lead the way in PEV sales in the United States.  By 2022, Hawaii is expected to have the highest concentration of annual PEV sales, followed by California and Oregon.  Los Angeles, San Francisco, and New York City are anticipated to have the largest sales of PEVs through the forecast period.  Navigant Research forecasts PEVs will reach 416,153 annual sales in the United States and 230,479 in Canada by 2022.

Sept. 9, 2013
ERCOT’s Technical Advisory Committee Meeting 9/5/13

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At the 9/5/13 meeting of the Technical Advisory Committee (TAC), the participants approved 16 revision requests, including two on greater participation of loads in the market.  They also agreed to study improvements to the load-forecasting process, re-evaluate Ancillary Services, and look at market rules for the development of the Congestion Revenue Right (CRR) model.  Discussions about possible revisions to TAC procedures and further shortening of the settlement timeline will continue, and may be voted on in October. For more about this meeting, please click here.

Canada’s Energy Chief Heads To DC Amid Keystone Push
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The Hill is reporting that the “Canadian Minister of Natural Resources Joe Oliver will meet in Washington, D.C., Monday with U.S. Energy Secretary Ernest Moniz,” to discuss the Keystone XL pipeline. The visit comes at a time when Canadian officials are pressing the Obama administration to approve the pipeline.  A couple days earlier, the Hill noted that the “Canadian Prime Minister Stephen Harper recently wrote to President Obama proposing joint steps to curb oil-and-gas sector carbon emissions if that would gain approval of the Keystone XL pipeline, according to a published report.”  The article continues by quoting from a CBC report that: “Sources told CBC News the prime minister is willing to accept targets proposed by the United States for reducing the climate-changing emissions and is prepared to work in concert with Obama to provide whatever political cover he needs to approve the project.”

Sept. 6, 2013
ERCOT Files its Impact Assessment (IA) of the implementation cost and time of the Real-Time Energy and Ancillary Services Co-optimization with PUCT
C
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On 9/5/13, ERCOT filed its Impact Assessment (IA) of the implementation cost and time of the Real-Time Energy and Ancillary Services Co-optimization, as requested by the Commission in July.  Two scenarios were evaluated – a minimum one (co-optimization of Responsive Reserves (RRS) only) and a maximum one (co-optimization of RRS, Online/Offline Non-Spin, and Regulation, plus other features).  The former would cost about $25 million and take 3-4 years; the latter would cost $42.5 million, with a 3-to-5-year timeline.  To these estimates, ERCOT added several caveats, including that: (a) additional features or changes would add to cost/time; (b) timelines for other projects would be impacted; (c) market participant costs have not been assessed; and (d) necessary revision requests may require additional time.  Further, the staff noted that extensive testing would be required, and potential impacts on the Day-Ahead Market, business processes/staffing, and future system support have yet to be evaluated.  The Commission may discuss the IA and related issues at its 9/12/13 open meeting.

Former PUCT Commissioner Smitherman’s Campaign Message Regarding Texas’ Energy Resources and Independence
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

As the race for the Texas Attorney General gets more competitive, the former PUCT Commissioner Barry Smitherman is making a name for himself by highlighting the state’s energy resources and independence.  In a recent interview, he said, ““We are uniquely situated because we have energy resources, fossil and otherwise, and our own independent-electrical grid.  Generally speaking, we have made great progress in becoming an independent nation, an ‘island nation’ if you will, and I think we want to continue down that path so that if the rest of the country falls apart, Texas can operate as a stand-alone entity with energy, food, waterand roads as if we were a closed-loop system.”

Sep. 5, 2013
ERCOT Starts Examining its Load-Forecasting Process

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At its 9/5/13 meeting, ERCOT’s Technical Advisory Committee (TAC) has formally acknowledged the need to look at the load-forecasting process and has referred the issue to the Wholesale Market Subcommittee for further work. Recently, concerns have been raised – including by Commissioner Anderson – that the current process does not reflect what seems to be a changing correlation between economic and load growth.    A load forecast is one of the major inputs into the ERCOT’s Capacity, Demand, and Reserves (CDR) Report.

How Advanced Solar Cells Work
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The MIT Technology Review has posted a presentation explaining how advanced solar cells work.  Flexible, efficient solar cells will make solar power cheaper. Integration into building components during construction is anticipated to be a factor in lowering the cost.

Disruptive Technologies and Change in the Electric Industry
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

While Texas stakeholders discuss resource adequacy concerns and solutions, the electric industry is undergoing a profound transformation, driven by technological change.  The latest issue of Texas Electric Watch looks at two recent reports, which evaluate the impact of the so-called “disruptive technologies” on the production and delivery of electricity, and also at the role of “micro-grids” in incorporating renewables and improving reliability. To read more, please subscribe to Texas Electric Watch. If you are interested in purchasing this TEW issue, please click here. If you are interested in subscribing the Texas Electric Watch, please click here or call Competitive Assets at 512-581-0151.

ERCOT Credit Working Group Meeting 8/28/13
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At the last meeting of the ERCOT credit groups, the members approved several protocol revision requests, raised the Point-to-Point Obligation discount, and heard a preview of revisions to the Exposure Calculations for Non-Load/Non-Generation Counter-Parties.  In spite of a long discussion, there was no agreement on how to calculate seasonal-adjustment factors; instead, additional comments will be drafted by NRG and others. To read more, please subscribe to ERCOT Monitor Reports. If you are interested in purchasing this ERCOT Monitor Reports issue, please click here. If you are interested in subscribing ERCOT Monitor Reports, please click here or call Competitive Assets at 512-581-0151

Sept. 4, 2013
ERCOT’s Fall Seasonal Resource Adequacy Assessment

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On 9/3/13, ERCOT issued its Fall Seasonal Assessment of Resource Adequacy (SARA), noting that it expects “to have enough power available to serve peak demand needs this coming fall and winter, even if extreme weather or an unusually high number of forced generation outages dip into its planning reserves.”  In the follow-up, the staff stated that drought is still a significant concern, as 85%-90% of the state is under moderate, or worse, drought conditions.  Additionally, they discussed a question that was recently also raised by Commissioner Anderson – i.e., “whether we need a better way to do load forecasts?”  It seems that Texas is not the only state, in which economic growth has not corresponded to load growth, as has been the case in the past.  ERCOT staff agreed that the previous “strong correlation” between non-farm employment and load growth has been changing now.  Consequently, they’ve been working on an update of the load-forecasting process, which will be included in the December Capacity, Demand, and Reserves (CDR) Report.  More research into this phenomenon, however, is needed, as not all of the causes are clear (with energy efficiency and demand response accounting for some).  Depending on the results, this could lead to “external adjustments” to the forecast (e.g., the use of 4 CP or other measures).  On a media call, the ERCOT staff also covered several other topics of interest: (a) a noticeable “changed market dynamic,” related to the growth of oil and gas industries; (b) the coming completion of CREZ lines (Competitive Renewable Energy Zones), which may lead to new wind farms in one-to-two years (Panhandle Study); and (c) the expectation for a mild winter.  The next resource assessments will be the Winter SARA in November and CDR Report in early December.

Sept. 3, 2013
Rapid Development of Renewable Energy

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“Solar is growing so fast it is going to overtake everything,” said FERC Chairman Jon Wellinghoff in an interview published a few days ago.  Those are strong words from one of the country’s top energy regulators.  “That’s what is happening in solar.  It could  double every two years,” he said.  Also Greentechmedia reported that on 8/29/13, the White House signed an executive order, calling for an additional 40GWs of combined heat and power (CHP) systems by 2020.  The order will provide incentives for industrial facilities to deploy CHP, also known as cogeneration, and waste heat recovery technology, and will also expand the Better Buildings, Better Plants program at the Department of Energy.  Combined heat and power systems recover wasted heat and reuse it as electricity in a single, closed system.

August 30, 2013:
PUCT Decides Steps to Move Forward in Addressing Resource Adequacy at ERCOT
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At the 8/29/13 open meeting, the Commission laid out a path for how to proceed in Project No. 40000, related to resource adequacy:
•Direct ERCOT staff to draft Protocol language for the implementation of the Operating Reserve Demand Curve (ORDC), with the specific inputs decided later
•Stakeholders to file comments on the following questions by 9/23/13:

  1. Should the Economically Optimal Reserve Margin (EORM) be a mandate;
  2. What standard is to be used in deciding the above question (e.g., one-in-ten years);
  3. Are we using correct assumptions/inputs in the Capacity, Demand, and Reserves (CDR) report;
  4. What is the most effective way to meet the EORM (using a cost/benefit analysis (CBA));
  5. Do we need to do a formal CBA?

•A workshop on the reserve margin issues on 10/8/13;
•Discuss ORDC inputs either at the next meeting or whenever Commissioner Marty has completed her review of the relevant materials and is ready to make decisions. 

Report: PUCT Open Meeting 8/29/13
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

At the 8/29/13 open meeting, the Commission decided most of the SWEPCO rate case, ruling that the coal-fired Turk plant was prudently built, but deferred several issues, including a possible adjustment to the Return on Equity.  The Commission also laid out a path for the implementation of the Operating Reserve Demand Curve. To read more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151.

DOE Issues Two New Energy Efficiency Rule Proposals
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On 8/29/13, the Department of Energy issued two new energy efficiency rules, stating that: “Today, the Energy Department is taking steps towards achieving this new goal by issuing two proposed rules that could cut energy bills by up to $28 billion and cut emissions by over 350 million metric tons of CO2 over 30 years. This reduction in CO2 emissions would be the equivalent of taking nearly 109 million new cars off the road for one year.  Or put another way, the energy saved from these proposed rules would be equal to the amount of electricity used by 50 million homes in a year.”

August 29, 2013
Alert: PUCT decides to Move Forward With ORDC

Updated 12:36 pm, Copyright 2013 by Competitive Assets, LLC.  All rights reserved

At the 8/29/13 PUCT open meeting, the Commission agreed to ask ERCOT staff to start drafting a Nodal Protocol Revision Request (NPRR) to implement the Operating Reserve Demand Curve (ORDC).   In addition, the Commission discussed doing analysis on the inputs into the reserve margin, including how ERCOT calculates load growth.  Commissioner Anderson’s states that “something is changing” in relation to load growth, not the reserve margin, as stated in the earlier Alert (although, clearly, the two are closely linked). The details of these decisions will be finalized after the lunch break today.

 PUCT Commissioner Anderson’s Memos For Today’s Resource Adequacy Discussion
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For the 8/29/13 open meeting, Commissioner Anderson filed two memos in Project No. 40000, related to resource adequacy.  The first one includes several recent articles on the shortcomings of capacity markets.  One of the articles takes on the recently filed Charles River Associates cost/benefit analysis of a likely capacity market vs an energy-only market, and points out that, while it is based on unproven assumptions, the real story in this analysis is the projected cost of a capacity market in Texas.  The cost – at $4.7 billion annually – is significantly higher than the previously calculated number of $3.6 billion.  The second memo reiterates the Commissioner’s previous statements on the benefits of the Operating Reserve Demand Curve (ORDC) – e.g., relative low cost and fast implementation, year-round reliability incentive, self-correction, pay-for-performance concept, and ability to hedge.  Moreover, an ORDC would not preclude changes to the market design, if those are determined to be necessary.

Workshop To Investigate Impacts of Higher System-Wide Price Cap at ERCOT
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

On 8/28/13, the PUCT staff filed a workshop notice in Project No. 41641, Project to Investigate Potential Impacts of an Increase of the System-wide Offer Cap to Retail Markets.  Prior to he workshop, scheduled for 10/17/13, the staff ask for comments on a variety of issues, including: mitigation of credit impacts, potential changes to the Retail Electric Provider (REP) certification rules, and impact on customer rates during peak events.  The comments are due in early October.

August 28
NRG Study to Support a Capacity Market for ERCOT

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In anticipation of a PUCT decision in Project No. 40000, related to resource adequacy, on the Hogan/B+ solution and/or potential market re-design, NRG filed a study by Charles River Associates titled “Economic Impact of Inadequate Generation in ERCOT – Comparison of Resource Adequacy Scenarios.”  NRG states that the results of the study show “the benefit of a required reserve margin to the state, net of the incremental cost of a capacity market, is estimated to be $14 billion over the next 15 years,” saving over 58K jobs in an extreme-weather year, such as 2011.”  The company then calls on the Commission to approve a mandatory reserve margin.

Solar Energy Powers Rural Texas Ranches
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An article in the Renewable Energy World.com cites an estimate by the Department of Energy’s National Renewable Energy Laboratory that Texas could produce up to 127GWs of electricity just from the solar power on clear days.  For various reasons, its current capacity is only 115MW.  The article, titled “Solar Energy Powers Rural Texas Ranches,” describes efforts by some rural folks to change those numbers: “I installed the system to lighten the load on the power plant, thereby reducing peak demand events.  I also did it to reduce my carbon footprint on the atmosphere, however minute that reduction will be.  I installed solar because it is plain cool to convert sunlight to electricity.  And I did it as a statement to my neighbors and community that installing solar is in fact doable and advisable.  I am an early adopter of a new energy technology and hope to inspire others to do the same,” said one rancher.

Could Wind and Solar Electricity Generation Become Cost Competitive without Federal Subsidies?
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

“A new Energy Department study, conducted by the National Renewable Energy Laboratory (NREL), indicates that by 2025, wind and solar power electricity generation could become cost-competitive without federal subsidies, if new renewable energy development occurs in the most productive locations.”  The report, “Beyond Renewable Portfolio Standards: An Assessment of Regional Supply and Demand Conditions Affecting the Future of Renewable Energy in the West,” compares the cost of renewable electricity generation (without federal subsidy) from the West’s most productive renewable energy resource areas—including any needed transmission and integration costs—with the cost of energy from a new natural gas-fired generator built near the customers it serves. “The electric generation portfolio of the future could be both cost effective and diverse,” said NREL Senior Analyst David Hurlbut, the report’s lead author.  “If renewables and natural gas cost about the same per kWh delivered, then value to customers becomes a matter of finding the right mix.”

August 27
Earthquakes Caused by Increased Oil Extraction?

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Houston Chronicle quotes from a new study by researchers at the University of Texas at Austin   that “earthquakes in the Eagle Ford Shale region — including a 2011 quake felt in San Antonio — are likely being triggered by increased oil extraction.”  “A two-year survey of seismic activity links small earthquakes in South Texas largely to the upswing in the production of oil and brackish water that flows up alongside hydrocarbons;” however, the study “concluded the quakes were not related to hydraulic fracturing, the process of pumping water, sand and chemicals at high pressure to crack open dense shale rock.”  The UT study will be published online this week in the journal Earth and Planetary Science Letters.

August 26
Mild Summer Discouraging New Electricity Generation

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The Houston Chronicle is highlighting yet another report that looks at this year’s mild summer in Texas, and consequent lower energy prices and reduced investment incentives.  While the report urges a capacity market for ERCOT, the article also points out that “Texas power bills dwarf electricity use in other states” – in a link that states that “Texans use about 26% more electricity than the national average.”

ERCOT Monitor Reports-Retail Market Subcommittee (RMS) Meeting 8/21/13
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

At its 8/21/13 meeting, the Retail Market Subcommittee (RMS) discussed implementation steps for the new, smart-meter opt-out rule, and heard updates on the Smart Meter Texas development efforts and Sharyland transition steps.  Also, it acted on only one out of three voting items. For more highlights of this meeting, please click here.

August 23, 2013
The Texas Gas Bubble Massacre–Root Cause of TXU’s Fall?

Copyright 2013 by Competitive Assets, LLC.  All rights reserved

In the buoyant times before the bubble burst, the 2007 takeover of TXU by a private hedge fund hardly seemed unreasonable.  In retrospect, however, the transaction ought to have raised obvious concerns.  As David Stockman describes in his recent book, not the least of such concerns should have been the temporary bubble of the natural-gas prices.  In spite of historical evidence, the purchase was based on the assumption that these high prices would continue.  As we now know, it is not quite how it turned out….

NRG Energy’s New Acquisition
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Yahoo is reporting that “NRG Energy Inc. (NRG) has acquired Energy Curtailment Specialists (ECS), one of the largest, private demand response (DR) providers in North America.  ECS offers business customers ways to contribute to energy load reduction during times of peak demand” and it currently manages more than 2,000MW of DR across the country for over 5,000 customers.  The company’s headquarters will remain in the Buffalo, NY, area.

August 22, 2013
Perry Appoints Third Member-and Tie-breaking Vote-to PUCT
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The Austin American Statesman reported yesterday (8/21/13) on the appointment of Brandy Marty as the third PUCT Commissioner.  She is expected to be a tie-breaking vote on the resource adequacy issues, including a possible market redesign.  “Marty has worked on many policy issues for Perry, but officials within the power industry said she is an unknown on the electricity issue,” said the Statesman, and continued: “By reputation, she is a person who digs into stuff and decides things by the merits,” said John Fainter Jr., president and CEO of the Association of Electric Companies of Texas.  “I just don’t think she’ll come on board and vote aye.  I think she’ll want to study the issue.”  Marty previously worked as the Governor’s Chief of Staff; she was also the policy director for his 2010 primary campaign for governor.

Mild Weather Leads to Price Drop
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Mild weather across the country is leading to a price drop, according to Bloomberg News: “Prices headed lower for a third day on the PJM Interconnection LLC network, the largest U.S. grid, as the forecasts for the lowest daily peak demand in two months.  Usage also slumped on the two Northeast grids.”  Also, “spot prices in Dallas dropped as demand on the state’s main grid operated by ERCOT Inc. slid below the day-ahead forecast.  ERCOT’s North hub fell $3.92, or 9.1%, to $38.94/MWh during the hour ended at 2PM local time from a day earlier.”

Japan Asks for Help to Deal with Contaminated Water Leak
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The leaking Fukushima plant has Tepco asking for help from overseas, reports Bloomberg News: “Tokyo Electric Power Co. is grappling with the worst spill of contaminated water since the March 2011 earthquake and tsunami caused a meltdown at the Fukushima Dai-Ichi plant.  The call for help from Zengo Aizawa, a VP at the utility, follows a leak of 300 metric tons of irradiated water.  Japan’s nuclear regulator labeled the incident “serious” and questioned Tepco’s ability to deal with the crisis.”

August 21, 2013
Report: Load Participation in the ERCOT Market
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Efforts to increase load’s participation in the ERCOT market are finally bearing fruit, with the running of several pilots and proposed implementation of Loads in SCED (Security Constrained Economic Dispatch) for the summer of 2014.  These efforts go back more than a decade, but gained greater urgency with the recent resource adequacy concerns.  The latest issue of TEW looks at load participation programs currently in operation at ERCOT.

Would the Impact of the Keystone XL Pipeline on Wildlife be Temporary?
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In an interesting development, reported by the Guardian, the U.S. Department of Interior sent a letter to the State Department criticizing as “inaccurate the State Department’s draft conclusions that the impact of the Keystone XL pipeline on wildlife would be temporary, and has warned instead that it could have long-term, adversarial effects.”  Although written in April, the letter was only recently posted.  TransCanada Keystone Pipeline, LP, proposes to construct and operate a new 36-inch buried crude oil pipeline from Hardisty, Alberta, Canada, to the Port Arthur and east Houston areas of Texas.  The project is 1,704 miles long (approximately 329 miles in Canada and 1,375 miles in the United States).

August 20, 2013
US Investigates JPMorgan of Manipulating US Energy Markets

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The Wall Street Journal reported last night, followed by Financial Times this morning that “US prosecutors are investigating whether JPMorgan Chase manipulated US energy markets, people familiar with the matter said, in another sign that authorities have increased scrutiny over the embattled bank.”  FT states that: “The investigation into the energy markets by the US attorney’s office in Manhattan, which was first reported by The Wall Street Journal, raises the stakes for the bank. JPMorgan is being scrutinised for oversight of its traders and risk management in the $6bn “London whale” trading loss as well as its underwriting and securitisation of mortgages.”.

Challenges of Carbon Capture
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A lengthy article on HuffPost describes challenges of carbon capture, which some scientists have proposed as a way to deal with the changing weather: “Inside the offices of MIT’s Energy Initiative, a campus-wide program with the ambitious goal of helping to “transform the global energy system,” Howard J. Herzog, a senior research engineer, pulled out a fresh yellow legal pad and began sketching a line graph. He was responding to a straightforward question: In a world so addicted to fossil fuels, and yet so threatened by the planet-warming carbon dioxide they produce, why has one seemingly elegant and elementary solution – blocking that CO2 from entering the atmosphere in the first place – proved so elusive?”  The article says that as many as 1,200 new coal power plants are currently in the planning stages worldwide. At the same time, “the Paris-based International Energy Agency has estimated that in the absence of carbon capture and storage (CCS), the cost of addressing climate change may be as much as 70% higher by mid-century.  And the Intergovernmental Panel on Climate Change, the transnational body charged with assessing the scientific, technical and socioeconomic dimensions of the global warming problem and its potential solutions, considers CCS an essential part of any effort to de-carbonize the planet’s economies over the next century.”  But the technology is not without its detractors and challenges are significant.

August 19, 2013
ERCOT
 Wholesale Market Subcommittee (WMS) Meeting  8/14/13
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At its 8/14/13 meeting, the Wholesale Market Subcommittee (WMS) approved a Nodal Protocol Revision Request on Loads in Security Constrained Economic Dispatch (SCED).  A proposal by Luminant to alter staff’s submission was not voted on.  The WMS members also discussed a number of upcoming workshops and considered possible ways of improving Congestion Revenue Right modeling. For more highlights of this meeting, please click here.

A Third Answer to Solve Power Shortages in Texas?
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On 8/17/13, Laylan Copelin, of the Austin American Statesman, voiced environmentalists’ concerns about a capacity market in an article titled Environmentalist offers a third answer to power shortages (subscription).  He states that: “Many environmentalists, however, fear the “capacity payments” would be a reverse “cash-for-clunkers” government program.  Instead of taking the clunkers off the street, the environmentalists argue that the payments would only encourage the owners of old coal plants to tune up their clunkers for another ride around the block.  After all, those plants have the advantage of being built at 1960s and 1970s prices.” 

The article continues that Jim Marston, a vice president with the Environmental Defense Fund, “is advocating a third way – a “capabilities” market, an idea he borrowed from a group of former regulators.  Other environmentalists, such as Tom “Smitty” Smith with Public Citizen, have signed on as well.  Under that approach, Marston said, ratepayers would only pay for new plants that fit the needs of the ERCOT market.  In other words, fast-starting technologies that could be deployed on hot summer afternoons when air conditioning is testing the limits of the power supply.  That would mean ratepayers would be subsidizing demand response programs, renewable energy with storage capabilities, and natural gas.  Coal would be the odd man out.”

August 16, 2013
ERCOT
 Commercial Operations Subcommittee (COPS) Meeting  8/13/13
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

On 8/13/13, the Commercial Operations Subcommittee (COPS) discussed further shortening the settlement timeline, eventually agreeing to hold a workshop at the end of August to evaluate potential impacts.  A proposal was also made to review distributions from the Congestion Revenue Right Balancing Account. For more highlights of this meeting, please click here.

Texas REPs Ranked High in Customer Satisfaction
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J.D. Powers & Associates published its annual ranking of Texas Retail Electric Providers (REPs), with Champion, Ambit, Amigo, Bounce, and Brilliant topping the list.  The REPs are scored on the overall satisfaction, enrollments, billing, price, communications, corporate citizenship, and customer service.  At least 24 companies comprise the list, which Champion also won in 2012.

August 15, 2013
ERCOT Load Resource Participation in Security Constrained Economic Dispatch (SCED)
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After an extensive debate at the Wholesale Market Subcommittee (WMS) on 8/14/13, Nodal Protocol Revision Request NPRR555 (Load Resource Participation in Security Constrained Economic Dispatch (SCED)) was endorsed and will be considered by the Protocol Revision Subcommittee on 8/22/13.  ERCOT staff would like to have it in place for next summer.  Not all agreed with the proposal, as it seemed too limiting, but others thought that “we have to walk first, before we can run.”  There was also an agreement that discussions on improving the concept ought to start very soon.

August 14
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Yucca Mountain Dispute Continues – As reported in a FoxNews article, “the U.S. Energy Secretary Ernest Moniz plans to meet with Nevada’s governor on Tuesday to discuss an escalating dispute between the state and the federal government over where to dump hundreds of canisters of radioactive waste.”  The Nevada officials have fought for more than three decades to block federal plans to ship and dump radioactive waste that has been piling up at nuclear power plants around the country to Yucca Mountain.

From AP Wire – New mission for nuclear weapons plant – “America’s only plant for disassembling and assembling nuclear weapons on Tuesday became a construction site for what will soon be home to the largest federally owned wind farm.  Ground was broken for a wind farm that will have five turbines on 1,500 acres east of the Pantex plant, about 18 miles northeast of Amarillo in the Texas Panhandle.  The project is expected to be completed by July.  A news release from the plant said the turbines will generate about 47 million kWh of electricity annually, or enough to power nearly 3,500 homes and supply more than 60% of the plant’s annual electricity needs.”  The wind farm will help the plant to achieve the President’s directive that the federal government get 20% of its electricity from renewable sources by 2020.

Energy Reform in Mexico – Earlier this week, President Enrique Peña Nieto unveiled the ruling party’s plan to reform the energy sector in Mexico, but as this Forbes article reports, the effort left some observers unimpressed.

A Solution to Fukushima Troubles?  The Bloomberg News (and others) are describing an effort in Japan to contain radioactive leaks at Fukushima by building an “ice wall.”  “The latest idea for stopping the flow of contaminated water into the sea is to freeze the soil around the reactor buildings to create a mile-long barrier to stop more groundwater from becoming radioactive, a plan that could cost upwards of $400 million.”  “There is no precedent in the world to create a water-shielding wall with frozen soil on such a large scale.  To build that, I think the state has to move a step further to support its realization,” Chief Cabinet Secretary Yoshihide Suga told reporters.”

August 13
Breaking News
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by Competitive Assets, LLC.  All rights reserved

A U.S. federal appeals court ruled on Tuesday that the Nuclear Regulatory Commission has been violating federal law by delaying a permitting decision for the proposed nuclear waste project at Yucca Mountain, Nevada. A three -judge panel of the U.S. Court of Appeals for the District of Columbia Circuit in a 2-1 vote ordered the Commission to promptly decide to license the project or reject the application.  (More at Washington Post.)

Shortening Settlement Timeline at ERCOT
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In light of the rising system-wide offer caps in the ERCOT market, Commissioner Anderson has been pressing for the market to shorten the existing settlement timeline.  The purpose would be to lessen potential impacts on credit and collateral requirements.  On 8/1/13, the timeline became seven days – after the eight-day timeline showed few problems.  At the Commercial Operations Subcommittee meeting today, 8/13/13, participants discussed a possible market-wide workshop to review issues related to shortening the timeline even further – anywhere from five to two days.  A tentative date for the workshop has been set for 8/29/13.

August 12, 2013
Heated Discussion and Postponed Consideration of ORDC/B+ Implementation at PUCT

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The 8/9/13 PUCT open-meeting discussion on resource adequacy inspired two articles in the Austin American Statesman (AAS) (Divided utility commission debates policy, waits for Perry’s appointee (8/9) and Two years and counting on looming-power shortages (8/10), subscription).  The long, and at times heated, debate resulted in the Commission postponing consideration of the proposal to implement an Operating Reserve Demand Curve (ORDC)/B+ until the end of August, including whether it ought to be done through a rulemaking.  The first AAS article suggests that before the meeting, Commissioners were “lobbied” by Senator Fraser, who is on record as opposing a capacity market (the start of the meeting was delayed by almost an hour).  The apparent tie on this issue will be broken once the third Commissioner is appointed, which may happen between now and 8/31/13, when the PUCT sunset bill becomes effective.  Commissioner Anderson only reluctantly agreed to the delay, noting that he knows of more than 1,000MW in new fast-starting, gas-fired power plants that could finalize their financing this fall if there were certainty on the ORDC. 

On the morning of the meeting, Chairman Nelson filed a memo (447), which recounted the resource adequacy history of the last three years, presented decision points, reiterated support for a capacity market, and harshly evaluated the ORDC: “As many of the stakeholders noted in their comments, ORDC B+ will encourage inefficient use of resources; artificially high prices will incent generators to come on line to capture the higher price and incent customers to reduce their consumption at a time when we have healthy reserves.  This economic inefficiency is not captured in the cost scenarios above.  REPs also indicated in their comments that it will be extremely difficult and expensive to hedge against such price volatility.”

 One advantage of the ORDC, stated Commissioner Anderson, is the speed and a relatively low cost of its implementation.  In addition, he argued that his “proposal would target the revenue when it is needed most – when electricity is most scarce.”  The AAS further reports that: “Several owners of power plants worry that adopting the GDF Suez idea [i.e., the ORDC] would delay – or kill – their hopes for a capacity market.  Most of these debates break down into what kind of power plants you own.  Minter [senior VP with GDF Suez] admits the GDF Suez proposal would favor his company’s fleet of gas-fired plants that can ramp up and down better than its competitors’ technologies, whether it is coal, nuclear, or wind.  Some, including generators with older-power plants, counter that any solution should be technology neutral.  Others say the GDF Suez proposal won’t solve the long-term projections of dwindling electricity reserves. … Minter argues that it also buys the state time.  He said it could be an intermediate step while the utility commission contemplates a capacity market – a much more rigorous exercise that could take years to design and for investors to respond.”  And even Prof. Hogan commented that the ORDC ought to be implemented regardless of which market structure eventually prevails in ERCOT.

Report: PUCT Open Meeting 8/9/13
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The 8/9/13 PUCT open meeting was mostly taken up with two items: a review of additional conditions in the Entergy/ITC/MidSouth Transco transmission assets transfer case and a lively debate about how to proceed on resource adequacy issues.  The former was dismissed, leaving open the possibility that Entergy would refile, and the latter was delayed. To read more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151.

August 9, 2013
ALERT:  Commission Delays ORDC
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At the 8/9/13 open meeting (OM), the Commission discussed potential approval of the Operating Reserve Demand Curve (ORDC) implementation.  The proposal was subject to several PUCT workshops and numerous stakeholder comments (many in opposition), but Chairman Nelson suggested that she would prefer to accomplish this through a rulemaking. 

On the other side, Commissioner Anderson listed at least four advantages in considering the ORDC, including the speed and low cost of implementation and its ability to self-correct.  Moreover, he added that he knows of several projects that would be able to finalize their financing this fall, given the certainty of the ORDC.  He said that a rulemaking would unnecessarily delay the decision and keep the market “frozen.”

Chairman Nelson disagreed about the delay, noting that the stakeholder approval process at ERCOT would be even longer.  She had filed a memo for the OM (447), in which she stated, among other points: “As noted in the previous discussion, ORDC B+ results in both price and reserve margin volatility.  It has been noted, however, that ORDC B+ would add money to the market, but require no commitment from generators to be there when they are needed.  My concern is that when all is said and done, we end up where we started: a market that is designed to operate at a planning reserve margin of eight percent.” 

The OM discussion, which at times turned quite contentious, resulted in the Commission agreeing to postpone the item until the next OM, on 8/29/13.  Before agreeing to this delay, Commissioner Anderson reiterated his view of capacity markets by stating that “there is a fundamental mistake in equating installed capacity with reliability,” as there is no “direct connection.”

ERCOT Loads in SCED (Security Constrained Economic Dispatch) Project
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On 8/8/13, ERCOT staff held a workshop on “Loads in SCED” (Security Constrained Economic Dispatch).  The project, which the staff plan to have in place for next summer, would enable load resources, capable of following five-minute SCED base point instructions, to participate in the ERCOT markets and contribute to price formation.  Nodal Protocol Revision Request NPRR555 (Load Resource Participation in SCED) will be considered by the Protocol Revision Subcommittee on 8/20/13, and the staff asked for any comments to be submitted early next week.  They also explained that NPRR532 (Performance Measurement and Verification and Telemetry Requirements for Load Resources Providing Non-Spin) is related and needs to be approved at the same time.

August 8, 2013
Wind and Solar Power in Texas

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On 8/7/13, the Austin American Statesman reported that “Texas led the way last year in helping wind become the No. 1 source of new U.S. electricity generation capacity for the first time, according to the U.S. Energy Department.  In 2012, wind accounted for 43% of all new electric additions nationwide.  Texas added about 1,826MW, raising the state’s total installed wind generation to 12,214MW.  Texas has more than twice as much wind power capacity as the next-highest state and more than all but five countries worldwide.”  According to a new report, however, Texas ranks 13th in the nation in the amount of solar power.  On 8/7/13, Environment Texas Research and Policy Center released Lighting the Way: What We Can Learn from America’s Top 12 Solar States, a new report highlighting the “Dazzling Dozen,” states leading the solar energy boom across the country.  In spite of a great potential, though, with only 139MW of solar installations, Texas lags behind such states as Arizona, California, Colorado, Delaware, Hawaii, Maryland, Massachusetts, Nevada, New Jersey, New Mexico, North Carolina, and Vermont.

Ending the System Benefit Fund
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On 8/6/13, Jim Marston, director of the regional office of the Environmental Defense Fund, wrote an editorial bemoaning the shuttering of the System Benefit Fund which, through a small charge of $0.65/MWh, provided an electric discount for low-income customers and was agreed upon in the 1999 deregulation bill.  He uses the occasion to stress the need to add to renewable sources of power, as that would also make electricity more affordable for customers.

August 7, 2013
Energy Policy Changes in Mexico
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In the last few months, there has been a lot of discussion about energy policy changes in Mexico.  This Reuters article notes a “sweeping-reform proposal,” filed last week by the opposition conservative party, which is expected to work with the ruling party to push through the changes.  “Overall, the PAN’s proposal would reform Articles 25, 27, and 28 of the constitution. It would eliminate public-sector exclusivity over the generation, transportation, as well as distribution of electricity, and strengthen the country’s energy regulatory bodies by making them autonomous. The bill would create a new national petroleum fund to administer the country’s energy riches, but still keep all oil and gas resources under public ownership.”  The reforms, initiated by the new president Enrique Pena Nieto, have been called “epic” by some observers, with the ruling party expected to file its own proposal in time for a September start of the congressional session.

August 6. 2013
PUCT Staff’s Proposed Advanced Metering Alternatives Rule

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On 8/2/13, the PUCT staff filed a proposal for adoption in Project No. 41111, Rulemaking Related to Advanced Metering Alternatives.  The rule proposes to have customers pay a one-time fee and be able to choose from three alternatives to an advanced meter: (1) an analog meter; (2) a digital, non-communicating meter; or (3) an advanced meter with its communications disabled. In addition to signing an acknowledgement, customers taking service under this rule will continue to pay the non-bypassable, advanced metering service (AMS) surcharge and a monthly fee.

Pending ERCOT Nodal Protocol Revision Requests (NPRRs)
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There was no regular Technical Advisory Committee meeting on 8/1/13; instead we’re bringing you an overview of all Nodal Protocol Revision Requests (NPRRs) that are still pending (39).  There are several newer NPRRs that deal with credit/Counter-party issues; NPRRs on Loads in SCED, with an 8/8/13 workshop, and Emergency Response Service (ERS); and several clean-up or clarifying revisions. If you are interested in purchasing this report, please click here. If you are interested in subscribing the ERCOT Monitor Reports, please click here or call Competitive Assets at 512-581-0151

August 5
Stakeholders Weigh in on the ORDC Options and Analysis

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The previous 30 days brought a number of developments in P.U.C. Project No. 40000, on resource adequacy, including a memo with options from Commissioner Anderson, an open-meeting discussion and a request for ERCOT to analyze several Operating Reserve Demand Curve (ORDC) options, discussions at the Resource Adequacy Task Force (RATF), and the filing of comments by stakeholders and the Independent Market Monitor (IMM).  A new issue of Texas Electric Watch looks in greater detail at the proposed options, analyses, and comments. If you are interested in purchasing this TEW issue, please click here. If you are interested in subscribing the Texas Electric Watch, please click here or call Competitive Assets at 512-581-0151

Energy Shows on PBS
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The Austin American Statesman is reporting (subscription) that PBS has signed up Dr. Michael E. Webber, a UT professor, to do sequels to a pilot TV show, “Energy at the Movies: 70 Years of Energy on the Big Screen,” which has already been broadcasted.  (To visualize an intersection of the two, just remember China Syndrome, released 12 days before the Three Mile Island incident.)  In addition, “more than 29,000 people worldwide have signed up for Webber’s fall online course, Energy Technology and Policy, which is sponsored by edX, a nonprofit governed by Harvard University and the Massachusetts Institute of Technology, but which also is bringing courses from other major institutions, including the University of Texas at Austin.” (Registration at: https://www.edx.org/course/utaustin/ut-1-01x/energy-101/667.)

August 2
ERCOT Demand Over 65 GW Yesterday
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The ERCOT forecast for over 65GW in peak demand came true yesterday, as 8/1/13 was the first day this year that the number was exceeded.  In the hour ending at 17:00, the demand in all zones added up to 65,796.47.  The peak forecast for today is expected to top 66GW (i.e., 66,217MW). 

Rulemakings PUCT Will Discuss on 8/9/13
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At the 8/9/13 open meeting, the Commission is scheduled to discuss three rulemakings: (a) Project No. 41277, Rulemaking to Amend PUC Subst. R. 25.43 Relating to Provider of Last Resort (POLR); (b) Project No. 41614, Rulemaking Regarding Disconnection of Electric Service to Multi-family Dwellings; and (c) Project No. 41111, Rulemaking Related to Advanced Metering Alternatives.

Breakthrough in Energy Storage Technology
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A recent story on the DOE website is highlighting Urban Electric Power, a small New York City start-up, working on what it hopes will be the next big solution in energy storage: “Formed last May by researchers from the City University of New York (CUNY) Energy Institute, Urban Electric Power is taking breakthroughs in battery technology from the lab to the market – technology that was initially developed with funding from the DOE. The company’s low-cost, lead-free, zinc anode rechargeable batteries are designed for a wide range of applications in the growing energy storage market – from reducing peak energy demand in urban areas to storing variable renewable energy for future use.”  The article goes on to explain how the researchers solved zinc’s main problem, dendrite formation, to create a zinc battery with the round-trip efficiency of 85%, and ability to be charged/discharged more than 5,000 times.

August 1, 2013
Higher Electricity Prices Due to Hot Weather and High Electricity Demand

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The hotter weather across the state is contributing to higher electric prices, as Businessweek reported on 7/31/13.  Demand at 5PM on 7/31/13, hit 64,773MW – highest to-date, but still below the 65,000MW threshold. Today, however, ERCOT expects demand to exceed 65GW, as several utilities are declaring heat advisories.  A similar situation occurred in late June, with heat advisories and ERCOT forecasts for over 65GW in demand, but the number was not reached.  The TDSPs and retailer electric providers (REPs) are not allowed to disconnect customers during a heat advisory.

July 31, 2013
The Need of Developing More Micro-grids
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The 7/31/13 Forbes article “Micro-grids – very-expensive, seriously-necessary” discusses a recent decision by “the state of Connecticut to build nine icro-grids to deliver reliable power,” at a cost of $18 million.  It says that: “A micro-grid is a lot more than just backup power, … it is a system that blends Power from the utilities with local power whether there is an outage or not.”  Given the damage caused by Hurricane Sandy, the state’s decision is hardly surprising (some grants will be provided).  A micro-grid project is also starting in Chicago.  Research by Navigant/Pike indicates that the annual market for distributed generation will reach $12.7 billion in about three years.  In addition, Fitch Ratings recently found that it is not only expected to grow rapidly in the next ten years, but may even pressure margins for utilities and slow investment in new transmission projects.

July 30, 2013
Additional Comments Filed on the Operating Reserve Demand Curve/B+

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On 7/29/13, several ERCOT market participants, including NRG, GDF Suez, Austin Energy and CPS, Luminant, Competitive REPs, TIEC, and ERCOT Reliability Advocates, filed additional comments in Project No. 40000 on the Operating Reserve Demand Curve/B+ and the analyses of various scenarios by ERCOT staff and the Brattle Group.  One of the concerns expressed was that the analyses do not (or cannot) account for the possible differences in the market response and, therefore, do not accurately reflect the impact on the reserve margin.  In fact, most of the comments seem to call into question the efficacy of the B+ solution.

FERC’s Case Against JP Morgan of Market Manipulation
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Late on 7/29/13, Reuters reported that FERC has outlined its case of market manipulation against JP Morgan Chase & Co., as industry sources said a final settlement on the issue should come on Tuesday.  “Traders used improper bidding tactics in California and the Midwest to boost profits, officials said in a statement that brought to light some details of an extensive investigation,” the article explained. Today, FERC and JP Morgan Unit Agree to $410 Million in Penalties, Disgorgement to Ratepayers as stated in its News Release, Commissioners’ Statements: Clark and Stipulation and Consent Agreement.

July 29, 2013
US Power Plants May Need Stricter SO2 Controls
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On 7/26/13, Platt’s reported that the “US power plants may need stricter controls under the new SO2 rule.  This was based on the news that theEPA completed the initial round of SO2 non-attainment designations, covering 16 states (Texas is not included in this round).  The new EPA head, Gina McCarthy, signed a 54-page rule on 7/25/13, which “designates 29 areas in 16 states as being in “non-attainment” with national ambient air-quality standards (NAAQS) for SO2,” said Platt’s.  This is expected to have adverse effects on the coal industry in those states.  More information is at “The court upholds sulfur dioxide standards and http://www.epa.gov/so2designations/

July 26, 2013
ERCOT IMM’s Comments on the Analyses of ORDC Additional Scenario
s
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On 7/25/13, the Independent Market Monitor (IMM) filed comments (438) on ERCOT’s filing of supplemental analyses of the Operating Reserve Demand Curve (ORDC) additional scenarios.  Based on the discussions at the 6/27/13 PUCT workshop, these scenarios included a new input – i.e., the Value of Non-Market Actions (VNMAs) – to account for emergency operator actions.  After analyzing possible costs of VNMAs, the IMM concluded that “there is no economic efficiency justification for further augmenting the ORDC B+ curves (with the Value of Lost Load at $9,000 and minimum contingency levels at 1,375MW) to account for the value of potential non-market actions.”

July 25, 2013
Rapid Development of Solar Energy Market
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Three years ago, at an energy conference organized by Prof. Ross Baldick at UT, a participant mentioned that a time would come when we’d be able to print our own solar cells/panels.  While seemingly implausible in 2010, research into this area has continued and expanded.  And now there are printers capable of producing solar panels and cells.  The effort to grow the use of solar power is also documented in a 7/23/13 Bloomberg article on “solar-skinned buildings,” with predictions that this market could more than triple by 2015.  “Building integrated solar in office buildings and factories, which generate energy consistently during daylight hours, whilst not requiring additional expensive land space or unsightly installations, is seen as the most obvious energy solution,” said Gavin Rezos, principal of Viaticus Capital Ltd., an Australian corporate advisory company that’s one of the private-equity funds putting money into the technology.

July 24, 2013
ERCOT Filed Results of Additional Analyses on Operating Reserve Demand Curve

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At the 7/19/13 open meeting, the Commission asked ERCOT staff to perform additional, back-cast analyses of four scenarios for the Operating Reserve Demand Curve  (i.e.,varying inputs for contingency levels and the Value of Non-Market Actions (VNMA), with the Value of Lost Load (VOLL) at $9000), including their effect on the reserve margin.  Yesterday, the staff filed the results in Project No. 40000.  All scenarios show additions to the Peaker Net Margin (although for 2011, the additions exceed $200K even at the lowest inputs).  For the reserve margin, the analysis shows a range of 9.9%-12.6%, with the contingency level at 1375MW, VNMA at $7K, and VOLL at $9K.  The range is provided because of uncertainty in the market response; with a “full market response” and same inputs, the  reserve margin could reach 15.4%.

July 23. 2013
Monitor the Actual Hourly Load at ERCOT
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ERCOT.com is highlighting a functionality on its public website that lets the user monitor the actual, hourly load in each of the eight weather zones.  Additional information may be gleaned from “Today’s Outlook” on ERCOT’s home page, which provides forecasted and actual hourly demand and available capacity across ERCOT.  The two reports are part of an effort to increase the public’s awareness of the state’s electrical system.  While a year ago, ERCOT logged three successive demand records as early as June, at the end of July 2013, we have yet to reach 65,000MW in demand.  And at the recent ERCOT Board meeting, the Independent Market Monitor showed that in 2013, the three threshold demand levels (50GW, 55GW, and 60GW) were all reached much later than in previous years.  Of course, we still have August and September ahead of us….

July 22, 2013
Easier For Commercial and Industrial Customers to Conserve
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On 7/21/13, the Austin American Statesman highlighted Senate Bill 385 (Carona), which could make it much easier for owners of commercial/industrial properties to conserve electricity and water (Business/state set-up to finance conservation, subscription only).  The bill, promoted by Keeping pace in Texas, creates a voluntary program to give the owners access to long-term financing, up to 20 years, to retrofit inefficient energy and water systems, and was partly motivated by concerns about the Texas’ expected population growth.  An earlier article on the program appeared in the Austin Business Journal.

July 19, 2013
Report: PUCT Open Meeting 7/19/13
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The Commission held a brief discussion about resource adequacy, noting Commissioner Anderson’s memo with proposed options for the Operating Reserve Demand Curve (ORDC) inputs.  The Commission asked for additional comments from parties, with specific numbers, as well as further data and analyses of several ORDC scenarios and the timing and cost of real-time co-optimization. The Commission also heard oral arguments in the SWEPCO rate case, discussed the need for a stringent review of attorney fees in rate case expenses, and laid out preliminary legal questions for the Entergy’s transmission assets transfer case. To read more, please subscribe to Texas Electric Policy News. If you are interested in purchasing this TEPN issue, please click here. If you are interested in subscribing the Texas Electric Policy News, please click here or call Competitive Assets at 512-581-0151.

Significant Filings Concerning Generation Adequacy
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In preparation for the 7/19/13 PUCT open meeting, three new filings were made: (a) Commissioner Anderson’s memo in support of B+ solution, with proposed inputs and an outline of how to proceed on the Operating Reserve Demand Curve (ORDC); (b) ERCOT’s analysis of implementing Real-Time Energy and Ancillary Services Co-optimization (RTEASC); and (c) supplemental joint comments by Direct Energy, Austin Energy, and CPS on the value of the ORDC.  ERCOT staff note that RTEASC would require major changes to the ISO’s settlement systems and, depending on the features, implementation will vary in time and cost.  They then propose two differing approaches: Minimum Real-Time Co-optimization (RTC) or Maximum RTC.  The Joint Commenters highlight support for an ORDC built on first principles, as they conclude that it would not aid resource adequacy: “The concept of an efficient, first-principle ORDC that accurately reflects scarcity conditions is incompatible with the concept of an ORDC that is designed to increase prices artificially and thus potentially incent additional generation investment.” Stay tuned for an update later today after the PUCT’s Open Meeting concludes.

July 18, 2013:
In Energy Case, A Fresh Tactic by JPMorgan: A Push to Settle

JPMorgan Chase, the Wall Street giant whose reputation in Washington has eroded in a matter of months, is now moving to avert a showdown over accusations that it manipulated energy prices. The nation’s largest bank, which has previously clashed with its regulators, is seeking to settle with the federal agency that oversees the energy markets, according to people briefed on the matter. The regulator, the Federal Energy Regulatory Commission, found that JPMorgan devised “manipulative schemes” that transformed “money-losing power plants into powerful profit centers,” a commission document said (in the news article JPMorgan in Talks to Settle Energy Manipulation Case for $500 Million)

July 17, 20103
ERCOT Board Discussed Change to Reserve Margin and Effective Load Carrying Capability for Wind
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At the 7/16/13 ERCOT Board meeting, the agenda listed a proposal to change the reserve margin to 16.1% (from 13.75%) and Effective Load Carrying Capability (ELCC) for wind to 14.2% (West) and 32.9% (coastal).  The Board Chair, however, made a statement that such a change could make the work of the PUCT on resource adequacy more difficult, and asked to postpone the item.  He also noted questions by some parties (including the Texas Industrial Energy Consumers) about the methodology of ERCOT’s Loss-of-Load Probability study, including how Demand Response and wind are counted and forced outages being too high at peak.  He said that it is prudent to get a second look at the data, and that the issue may come back in September.  Below are links to the recent correspondence between Senator Fraser and Craven Crowell: 

Sen. Troy Fraser Letter to ERCOT Board 7/15/13 
Chairman Craven Crowell letter to Sen. Troy Fraser 7/16/13

July 16, 2013

Alert!!—This Morning, the ERCOT Board Chair Declined to Bring Up Increasing the Reserve Margin for a Vote

The ERCOT Board had on its agenda a vote on increasing the reserve margin from 13.75% to 16.1%. The Board Chair declined to bring up the matter for a vote. He then noted that there have been questions about the way the Loss of Load Probability Study was done, and asked for an update on the matter at the September meeting.

ERCOT To Increase the Reserve Margin?
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Today, the Austin American Statesman has a front-page story about the upcoming vote by the ERCOT Board on increasing the reserve margin from 13.75% to 16.1% (ERCOT May Go for More Reserves, subscription only). The increase had been approved by an ERCOT subcommittee and the Technical Advisory Committee.  But not everybody agrees; Sen. Fraser is quoted as saying: “With the makeup of the ERCOT board heavily weighted in the electric industry’s favor, any vote to drastically increase the reserve margin appears to be self-serving and could increase electric costs for all customers.” The article then goes on to mention that this issue had gotten attention from NERC, electric prices this year dropped to about $28/MWh, and the Independent Market Monitor’s assessed that many power plants cannot make a profit with mild weather.  Ultimately, the decisions on how to address resource adequacy, including a potential switch to a capacity market, rests with the Commission, which currently lacks its third member.

Changes to System Benefit Fund
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Pursuant to House Bill 7 (HB7), approved by the 83rd Legislature, Regular Session, the Commission is slated to approve a low-income discount of 82% for Sept. 2013 and May-Aug. 2014, at its 7/19/13 open meeting (previous discounts were typically between 10-20%).  At the same time, the System Benefit Fund (SBF) fee will go down to $0, starting on 9/1/13, once the Commission approves a draft order (it was $0.65/MWh before).  In Jan. 2013, the fund had about $800 million, but was often used to balance the budget.  To solve the issue, the legislature decided to give most of the money to low-income customers, do it quickly, and then shutter the fund.  And while the discount in 2014 is expected to be about $170/month, the question remains of what will happen to these customers in the summer of 2015 and thereafter.  Moreover, the Commission paid for its customer education and several other items out of SBF; now, however, it is not clear how these will be funded.

July 15, 2013
Renewable Energy Development in Texas
Copyright 2013 by Competitive Assets, LLC.  All rights reserved

On 7/14/13, the Austin American Statesman published two articles on energy issues in Texas (both subscription).  Harnessing the Wind is an excerpt from the recently published book Great Texas Wind Rush (by Kate Galbraith and Asher Price), which documents the history of wind power development in the state.   UT Research Aims to Spread Solar Energy Use describes a federal program to use big data and advanced analytics to make solar energy more affordable.  Participants include the University of Texas and six other institutions.  “This project will support the mission of the Sun Shot Initiative – to make solar energy cost-competitive with other forms of energy by the end of the decade,” said Varun Rai, a professor at the LBJ School of Public Affairs.

July 12, 2013
Impact to the Energy Sector From Climactic Conditions

Copyright 2013 by Competitive Assets, LLC.  All rights reserved

On 7/11/13, the U.S. Department of Energy released a report on Impacts to the Energy Sector from Climactic Conditions.  It assess vulnerabilities of the country’s critical energy and electricity infrastructure to the effects of changing climate, including high temperatures, droughts, wildfires, floods, and fierce storms.  Of particular interest to Texas is the impact on the Gulf coast, as the “fuels production and processing may be most affected in the Gulf of Mexico and along the coasts, due to an increase in the intensity of storm events and relative sea level rise.”  The report identifies additional risks of plant shutdowns, damage to power lines and distribution systems, disrupted fuel transport, and higher demand for power, and calls for a strategy to be developed to address these risks.

July 11, 2013
The Sierra Club Commends CPS Energy for its Promotion of Clean Energy

Copyright 2013 by Competitive Assets, LLC.  All rights reserved

On 7/10/13, the Lone Star Chapter of the Sierra Club issued a press release  (http://www.texas.sierraclub.org/press/newsreleases/20130710CPS.pdf) commending CPS Energy for its promotion of clean energy.  The utility has focused on at least three areas: faster phasing-out of the JT Deely coal plant, greater investment in solar power (to provide 400MW at full implementation), and saving 317MW of load through the Save for Tomorrow Energy Program (STEP).  The CPS’ goal is to avoid 771MW of load by 2020, through residential and commercial energy conservation, demand reduction, and solar rebates.  These efforts have also reduced carbon emissions by 9% in 2012 (as compared to 2011).

July 10, 2013:
Should Voters Decide Fate of Austin Energy?

Copyright 2013 by Competitive Assets, LLC.  All rights reserved

Today, the Austin American Statesman published an editorial (Voters Should Make Energy Decision, subscription only) supporting the right of Austin voters to decide whether the governance of Austin Energy is switched to an unelected board.  Recently, Senator Carona (R-Dallas) asked for an opinion from the Texas Attorney General on whether the change may be done without the voters’ input.  The request, supported by Austin’s Senator Watson, cites the interests of 15 large industrial customers in Central Texas in resolving this question.  The city’s legal department, however, maintains that Austin’s charter requires a public vote to alter AE’s governance.  (Earlier this spring, the City Council could not reach a consensus on this issue and did not vote on it.)

July 9, 2013:
ERCOT Pushing to Implement Loads in SCED
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On 7/8/13, ERCOT staff led a meeting of the subgroup on Loads in SCED (Security Constrained Economic Dispatch) to discuss the recently filed Nodal Protocol Revision Request NPRR555 (Load Resource Participation in SCED) and a related draft Business Practice document.  The concept of Loads-in-SCED has been debated for several years now, but was pushed back because of potential complexity and cost.  The new emphasis on load participation, as part of an effort to address resource adequacy, has brought the idea back, with ERCOT hoping to implement it by next summer.  At the upcoming meeting of the Wholesale Market Subcommittee, stakeholders will consider, and possibly vote on, both documents.  Depending on how long it takes to work out the details and develop a consensus on the proposal, the staff may have to fast-track it to make their June 2014 target date.

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