ERCOT, the state’s primary electric grid operator, may move soon to increase the current reserve margin target — a move favored by generators, but sure to raise electricity prices.
This was just one of the recent revelations from the state’s Senate Business & Commerce Committee, which received testimony Oct. 15 from the CEO of the Electric Reliability Council of Texas, as well as a new Public Utility Commissioner.
Trip Doggett, ERCOT’s CEO, explained that the current reserve margin target is 13.75 percent. That percentage represents how much electricity capacity the organization believes Texas should have available, above peak electricity demand, in order to maintain a reliable system. But Doggett said the organization likely would entertain recommendations to increase the reserve margin target.
Doggett did not quantify that potential increase, although the organization’s stakeholders recently recommended a 16.1 percent target. A separate analysis has put the cost of such a change at more than $3 billion over 10 years. Such a change has drawn opposition from consumer groups and some lawmakers.
Doggett also said ERCOT likely would dramatically increase its assumptions for the contributions of wind power to the state’s generation output. For planning purposes, ERCOT currently assumes that less than 9 percent of wind’s nameplate capacity is available to meet the state’s reserve margin target. ERCOT uses this relatively low percentage due to the variability of wind power. But Doggett said under potential new assumptions, ERCOT may soon begin using a 14.2 percent assumption for West Texas wind, and 32.9 percent for coastal wind.
Doggett’s comments came in response to questions from senators about the state’s electricity future and a plan favored by some generation companies to create expensive subsidies to encourage generation development. Consumer groups oppose the subsidies, which could cost more than $4 billion annually.
Newly appointed PUC Commissioner Brandy Marty, in some of her most extensive comments to date on the issue, said that the PUC was waiting for more precise generation forecasts from ERCOT before ruling on the issue. She said the agency would probably make some broader determination about the capacity subsidies early next year. “I (want) to make sure we have a more sophisticated picture as to what our needs are,” she said.
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.