FERC recently issued a Notice of Proposed Rulemaking (NOPR) that would eliminate the need for electric power sellers with market-based rate authority who sell into certain independent system operator (ISO) and regional transmission organization (RTO) capacity markets to file two screens—the pivotal supplier screen and wholesale market-share screen—with FERC, which would simplify the horizontal market
Husch Blackwell partners with the Texas Renewable Energy Industries Alliance (TREIA) once again to present a five-part webinar series focused on the Texas renewable energy industry. The final installment in the New Directions webinar series will discuss the upcoming 2019 regular session of the Texas Legislature and what’s in store for renewable energy.
Potomac Economics, the Independent Market Monitor (IMM) for the ERCOT market, released its “2017 State of the Market Report for the ERCOT Electricity Markets,” which contains several important insights for market participants and offered seven recommendations for market improvements.
Prices and Demand Move Higher in 2017
First, the IMM found that energy prices increased 14.7% over 2016, to $28.25 per MWh. This price is still significantly less than 2011’s average annual price of $52.23 per MWh and even 2014’s average annual price of $40.64 per MWh. The 2017 price increase correlates with a 22% increase in the cost of natural gas, the most widely-used fuel in ERCOT, as fuel costs represent the majority of most suppliers’ marginal production costs. The IMM also found price convergence to be very good in 2017, with the day-ahead and real-time prices both averaging $26 per MWh. However, the absolute difference between day-ahead and real-time prices still increased from $7.44 per MWh in 2016 to $8.60 per MWh in 2017.
Average demand also increased, rising 1.9% from 2016, with demand in the West Zone seeing the largest average load increase at 8.3% (possibly due to oil and natural gas production activity in that zone). Despite this increase in average demand, peak demand in ERCOT reached 69,512 MW on July 28, 2017, which is lower than the ERCOT-wide coincident peak hourly demand record of 71,100 MW, set on August 11, 2016. Even with general price and demand increases, market conditions were rarely tight as real-time prices didn’t exceed $3,000 per MWh and exceeded $1,000 per MWh for just 3.5 hours in all of 2017.
Congestion Costs Skyrocket
Surprisingly, the IMM found congestion in the ERCOT real-time market increased considerably, contributing significantly to price increases in 2017 with total congestion costs equaling $967 million – a 95% increase from 2016. The IMM stated that this increase is due to three main factors: (1) limitations on export capacity from the Panhandle; (2) planned outages associated with the construction of the Houston Import Project; and (3) the aftermath of Hurricane Harvey.
While congestion was more frequent in 2017 than in 2016, congestion on the North to Houston constraint declined after June due to the completion of a new 1,200 MW combined cycle generator located in Houston. The completion of the Houston Import Project in 2018 should reduce congestion in this area even further.
Continue Reading ERCOT’s State of the Market Report
It appears the Texas Legislature has taken note of the several news articles and industry insiders sounding the alarm bells for ratepayers to brace for record high electricity prices this summer in a market applauded for its consistently low prices. The Committee convened because the Lt. Governor charged it to study/respond to the reserve margin
The Texas Commission on Environmental Quality (TCEQ) is in the process of renewing its General Permit to Discharge under the Texas Pollutant Discharge Elimination System Permit, Permit No. TXR150000, issued on February 19, 2013 and effective on March 5, 2013, which authorizes discharges from construction sites into surface water in the state. The new permit will go into effect March 5, 2018 and will expire five years from the effective date.
Developers and other parties that currently hold an authorization to discharge stormwater under the existing permit will want to take note of the provisions in the new permit for obtaining renewed authorization to discharge; for large construction activities:
Continue Reading Texas Developers, Mark Your Calendars for March: Changes Coming for Texas Stormwater Permit
On October 25, 2017, Commissioner Keith Anderson of the Texas Public Utility Commission (PUCT) released a memo regarding the draft Preliminary Order in which he expresses concerns over the application submitted by Sempra Energy to purchase Oncor Electric Delivery (the state’s largest utility) for $9.45 billion. The memo, which results from Commissioner Anderson’s continued concern regarding the financing of the deal, requested that the Commission add to their preliminary order in order to require Sempra to clarify several issues during the hearing on the merits.
In the memo, Commissioner Anderson states
Continue Reading Texas Regulators Seek Additional Clarification on Sempra/Oncor Deal
On September 1, 2017, after two years of extensive studies conducted by multiple stakeholders, Lubbock Power & Light (“LP&L”) submitted its formal application to the Public Utility Commission of Texas (“PUCT”) requesting to leave the Southwest Power Pool (“SPP”) and join the Electric Reliability Council of Texas (“ERCOT”). Because the City of Lubbock is one of the largest municipalities ever to leave another power region and attempt to join ERCOT, the transition has been an important topic in Texas since its introduction in 2015.
Continue Reading LP&L Files Formal Application to Join ERCOT
As you are all aware, hurricane Harvey had a major impact on Texas and has left many residents without power. On August 28th, in order to facilitate the monitoring of the effects of the hurricane, the PUCT opened PUC Project 47552 – Issues Related to the Disaster Resulting From Hurricane Harvey. At
Part 4: Lessons from Existing Storage Applications
Parts I, II and III of our examination of the Texas energy storage market review various operating technologies in the state, including compressed air energy storage, battery storage, thermal storage, and flywheels. Perhaps, more importantly, is the diverse range of applications of electric storage technology being illustrated at the utility, microgrid and community levels.
Texas has become a leading example of the economic value of storage through innovative applications such as
Continue Reading The Texas Energy Storage Market: A Four-Part Examination
Part 3: Other Innovative Storage Technologies
Part 1 of this examination of the Texas energy storage market reviewed utility-scale applications in the state, while Part 2 highlighted several of the smaller-scale microgrid and community applications. This post discusses the other innovative storage technologies being used throughout the state.
Continue Reading The Texas Energy Storage Market: A Four-Part Examination