Big-ticket electricity users will receive payments for quickly reducing their power consumption under an expanded program that received the go-ahead last week.

The program is a test project only, and is similar to other programs already overseen by the operator of the state’s power grid. The project is not open to individual households, but rather to aggregated groups of customers or larger volume customers who can reduce their power consumption by at least 100 kilowatts, which is roughly the same amount consumed by 20 homes during a summer afternoon.

The board of the Electric Reliability Council of Texas, which is the organization that operates the power grid, approved the pilot project during its June meeting. It was authorized under earlier action by the Texas Public Utility Commission, and is part of a larger effort to meet the state’s growing energy needs.

“The pilot project gives us a chance to run a meaningful test of this service before we commit to it,” said ERCOT Board Chairman Craven Crowell. “We certainly appreciate the (Public Utility) Commission giving the ERCOT Board the opportunity to consider such projects.”

Under the program, known as the “30-Minute Emergency Response Service Pilot,” eligible participants will have a half hour to respond to ERCOT requests to reduce electricity usage. Customers would have to enroll in the project in advance, and could be called upon to reduce consumption during the first stages of an energy emergency, which is typically characterized by dwindling supplies and high usage. According to information provided by ERCOT, the project will continue on a quarterly basis for up to nine months.

Concerns have grown in Texas that the state will not have sufficient generation supplies to keep up with its future needs. Separately, the Public Utility Commission last week authorized a controversial increase in a price cap in the electricity wholesale market, under the theory that increasing wholesale energy prices will lead to more investment by generation companies.

The Story of ERCOT

Consumer groups, including the Texas Coalition for Affordable Power, have warned that the market change could lead to higher electricity prices with no clear payoff in terms of reliability.  Several lawmakers and newspaper editorial writers also said the PUC first should have conducted an analysis of consumer costs.

In other news, the ERCOT board in June  approved a $170.6 million 2013 budget that includes $123.5 million in operating expenses, $18.9 million in debt service coverage and $6 million in project spending for next year. You can find out more about the Texas grid operator in The Story of ERCOT, a report sponsored by TCAP and the Steering Committee of Cities Served by Oncor.
— R.A. Dyer

Who is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.

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