The debate also raised questions regarding a potential mismatch with state law.
The Texas Reliability Entity, an organization that monitors the Texas power grid but reports to the feds, finds itself amid a contract tug of war with state regulators.
Texas Public Utility Commission Chair DeAnn Walker has balked at the price of a pending contract for the organization and last month pushed to reassign its duties — possibly to PUC staff. Her proposal was put on hold, although not before her two fellow commissioners joined Walker in expressing concerns. The debate also raised questions regarding a potential mismatch with state law.
The Texas Reliability Entity — also known as the “Texas RE” — is charged with monitoring and enforcing ERCOT compliance with federal electric reliability standards from the North American Electric Regulatory Corporation. The Texas RE also serves as the PUC’s Reliability Monitor for the ERCOT region.
ERCOT, or the Electric Reliability Council of Texas, operates the state’s primary power grid. An ERCOT fee paid by market participants finances Texas RE operations. Walker said that under the current arrangement, the PUC has only limited budgetary control over the Texas RE.
“We had to go out for a new bid for this contract and to say that it was a difficult process with Texas RE is an understatement,” Walker said during a Sept. 24 PUC meeting. “They provided a new contract price that is a 24.6 percent increase over the last contract price. We raised concerns with it. We raised concerns because other entities had concerns with it, and we were told ‘That’s the price. Those are our actual costs.’ ”
PUC Chair Raises Questions
Walker questioned whether the current contract comported with state law that grants the PUC authority over the ERCOT Reliability Monitor. She also raised questions about the reasonableness of some Texas RE expenditures, including travel costs for NERC meetings. She raised accounting questions.
Walker said that under Texas law, the PUC must have a Texas reliability monitor, and that the PUC has the authority to function in that role itself or it can assign it to an outside entity. One such alternative mentioned during the Sept. 24 PUC meeting is Potomac Economics, which is the outside consulting firm that serves as ERCOT’s Independent Market Monitor. ERCOT itself also could serve in the role, although that arrangement would mean that in some instances it would be called upon to investigate its own activities.
According to information on its website, the Texas RE operates under a delegation agreement with NERC, which is approved by the Federal Energy Regulatory Commission. Under the agreement, Texas RE is authorized to monitor ERCOT with regard to its compliance with NERC reliability standards, develop regional standards and periodically report on the adequacy of the bulk power system.
The Sept. 24 contract debate at the PUC also highlighted a potential mismatch between state law and the Texas RE. The organization answers to federal regulators, but Texas statutes also give the PUC limited jurisdiction over it. Its current ERCOT funding mechanism hampers the PUCs budgetary control over the organization, but reassigning its ERCOT reliability duties elsewhere could require an expenditure of already tight state tax dollars.
Commissioner Arthur D’Andrea appeared to acknowledge the difficult questions presented by the Texas RE contract. He agreed with Walker that it didn’t appear to fit the requirements of state law that the PUC oversee the organization’s operations and budget. He also agreed that the PUC should give notice that it wants a new ERCOT reliability monitor.
Commissioner Shelly Botkin expressed concern about canceling the Texas RE contract before arranging for a replacement.
Is a policy analyst consultant for TCAP, a coalition of political subdivisions in Texas that purchase electricity in the deregulated market for their own governmental use. Because energy costs are typically a significant budget item to our members, TCAP is consistently looking for ways to save our members money, through cost-saving contracts, energy efficiency or demand response programs.