After Winter Storm Uri devastated the ERCOT grid, calls for industry reform rang out across the state of Texas. For the past few months, public hearings and floor debates have considered wide-ranging proposals to harden the ERCOT system against extreme weather events and address the financial consequences of the storm. The Legislature considered numerous bills dealing with issues such as energy and ancillary services repricing, market rules and price formation, generation weatherization, ERCOT and Texas Public Utility Commission (“PUCT”) reform, debt securitization, and the appropriate role and accountability of renewable resources in securing reliability of the grid. Below we provide an overview of the most significant energy legislation proposed during the recent Texas legislative session, both related and unrelated to Winter Storm Uri fallout. The Legislature passed bills that will affect all segments of the Texas energy economy, which collectively will prompt significant change in the years ahead. We have described bills that “passed” as those that have been enrolled or have already been signed into law by the Governor (Bills that have an asterisk in this article have been signed by the Governor.). We note that the veto period extends for 20 days post-session, which ended May 31st , so as of this writing it remains possible the Governor may veto some of these bills, though we have no indication he intends to do so. We will update this post after the veto period expires to note any such vetoes.
Continue Reading A Legislative Session in Review: Taking a Look at Key Energy Bills that Did (and Did Not) Pass During the 87th Regular Session

In the wake of winter storm Uri, ERCOT market participants are grappling with the resulting financial fallout. Many are now familiar with actions the Texas Public Utility Commission took during the February weather event with the intent to bring and maintain as much generation online as possible – notably ordering ERCOT to implement a temporary adjustment to the scarcity pricing mechanism designed to result in real time prices reaching the system-wide high offer cap at the statutory maximum of $9,000/mWh during the height of the generation forced outages.

Now, more than two months removed from the storm, the resulting financial impacts are having serious repercussions across the ERCOT market. Several retail electric providers have filed for bankruptcy, lawsuits are underway against a wide swath of market participants and regulators (ERCOT, the Public Utility Commission, generators, REPs, gas utilities, etc.), and countless market participants are faced with paying record-high bills for a range of reasons, including the need to procure energy in the real-time market during scarcity conditions, to obtain high priced gas supplies, to cover positions when their resources incurred outages, or exposure to uplift of default amounts owed to ERCOT. Complicating that, ERCOT has failed to pay many who did perform during the storm due to the short payment of some market participants, which means those who performed may not soon realize revenue associated with that performance. Additionally, the higher prices for power and ancillary services prompted ERCOT to substantially increase Counter-Party collateral requirements. Last month, the Public Utility Commission issued an order in Docket 51812 extending the deadline to dispute ERCOT invoices related to the winter event from 10 business days (under the current ERCOT Protocols) to six months. Since this order, the Commission has taken no additional action to address issues related to settlement invoices resulting from the storm.
Continue Reading ERCOT Unveils Plan for Invoicing Default Uplift Charges