Adoption of committee rules for the joint Senate and House Grid Reliability Legislative Oversight Committee.
Chair Hunter moved to adopt the committee rules with no objections.
Creation of the Grid Reliability Legislative Oversight Committee by House Bill 1500 to review legislation related to electricity market regulation by the 87th and 88th legislatures.
Significance of collaboration between House and Senate to maintain and enhance the electric grid's reliability and resiliency.
Impact of Senate Bill 3 post-Winter Storm Uri, which strengthened the Texas power grid reliability.
Last legislative session's focus on new dispatchable generation and market operation improvements with Senate Bill 2627 and House Bill 1500.
Prioritization of system hardening and planning with House Bills 2555 and 5066.
Hurricane Beryl highlighted shortcomings in the electric infrastructure and renewed focus on resiliency.
Anticipation of insights from industry leaders on recent reforms and future priorities.
Acknowledgments and appreciations from Chairman Hunter and other members towards each other and their collaborative work.
Updates on Texas Energy Fund Loan program, including staff recommendations for replacing 1200 megawatts from a denied project, with accelerated background checks.
Reliability plan for the Permian Basin approved by commissioners, with analysis on extra high voltage transmission options and stakeholder engagement underway.
Publication of the Severe Weather Preparedness and Response Investigation Report and two proposed rulemakings: outage tracker maintenance and emergency communications.
Challenges with mass transfer of customer emergency contact information and options for voluntary enrollment in TDU outage notifications.
Recommendations for customer communications improvements, including information about service restoration and vegetation hazard reporting.
Proposal for a framework and penalty structure to assess utility service quality during major outages.
Legislative recommendations in the upcoming agency biennial report for improving commission efficiencies and infrastructure standards.
Invitation for legislative input and readiness to answer questions from the commission members.
▶️ - Woody Rickerson, SVP and COO, ERCOT, Invited Testimony
ERCOT's forecasting models have been updated to include TSP load forecasts, with a significant increase to 150 gigawatts by 2030 due to House Bill 5066.
The Regional Transmission Plan considers upgrading from 345-kV to 765-kV due to unprecedented load growth, similar to a historical upgrade in the 1960s.
The Permian Basin Reliability study also explores transmission upgrades with 345-kV and 765-kV options included in ERCOT's overall plan, with decisions expected from PUC in May.
Large load growth is occurring with 63 gigawatts tracked, 6.3 gigawatts approved to energize, and 3.6 gigawatts energized, posing unique challenges for grid stability.
Battery and solar energy account for 83% of new generation interconnection, with a total of 371 gigawatts in the queue, alongside 26 gigawatts of gas-fired projects.
ERCOT's system weatherization and reliability efforts, including 3,000 inspections since winter storm Uri, are recognized as leading initiatives by the NERC winter reliability assessment for 2024.
Panel 1 Q&A
▶️ - Senator Schwertner to Connie Corona, PUC's Plan for Mobile Generation Misuse
Discussion on PUC's investigation of hurricane Beryl and preparedness, focusing on mobile generation misuses.
Recommendation for utilities to pre-identify site characteristics requiring backup generation.
Suggestion for utilities to measure needed mobile generation in advance for efficient deployment during storms.
Inquiry about potential reimbursement plans for ratepayers who paid for unused or misappropriately sized mobile generation.
Mention of legislation filed for making ratepayers whole and possible redeployment of unused units to San Antonio.
References to legislation proposed by Senator King and others regarding ratepayer protection.
Acknowledgment of the need for balancing new wind and solar generation to maintain grid reliability.
▶️ - Senator Schwertner to Woody Rickerson, Impact of Co-Located Generation on Grid Stability
The growth of large load requires an additional 150 gigawatts by 2030, raising concerns about grid stability.
Co-located generation and large loads raise policy issues, especially regarding transmission cost allocation.
Even if load is behind a generator, it still consumes the same amount of power, posing questions about its impact on the grid.
There is a challenge in outage coordination with co-located large loads since ERCOT loses some control when it becomes a private use network.
The main issue is transmission cost allocation, socialized across all rate payers, not accounting for loads behind the meter.
Transmission system stress has shifted due to solar power, making traditional peak hours obsolete.
A review of the cost allocation method is needed due to changes in resource mix, with stress occurring more often outside traditional peak hours.
The Market Analysis Division agrees with recommendations from the independent market monitor to revisit transmission allocation policy in 2025.
No initial fees are currently imposed on large loads when they plan to add to the grid.
▶️ - Representative Hunter to Connie Corona, Transparency in Utility Bill Charges
Highlighted public's concern about undefined charges on utility bills labeled as 'miscellaneous', 'delivery', and 'other'.
Requested Connie Corona and her agency to investigate these charges for transparency before the legislative session.
Emphasized the need for public awareness about why charges are applied.
Connie Corona agreed to review and update the committee on utility billing charges & welcomed requests from committee members on specific bills needing investigation.
Rep. Hernandez Discussed the legislative appropriations request for more resources due to increased caseloads, especially regarding transmission line processing.
Chairman inquired into penalties for utility service quality during major outages.
Discussed inclusion of major events in existing penalty measures for service interruptions.
Senator Zaffirini discussed codifying customer rights to information about service restoration times and emergency contact with providers.
Explored potential methods for customers to report vegetation hazards, suggesting phone lines and tech-friendly solutions.
▶️ - Senator Zaffirini to Connie Corona, Emergency Communication Plans for Utilities
Importance of utilities conducting annual emergency drills involving neighboring utilities and local governments.
Recommendation for pre-emergency communication plans to be required by the legislature or PUC.
Need for dedicated communication paths and shared plans among partner entities during emergencies.
Most generation and transmission facilities met the weatherization inspection requirements, with a few exceptions rectified for winter or summer seasons.
Lessons from international use of 765 equipment include efficient land use and existing U.S. supply chain.
Efforts to increase public awareness of ERCOT's website and mobile app through expanded social media presence.
Lack of prepared metrics to demonstrate improved public usage of the website and app; intention to provide them upon request.
▶️ - Senator Nichols to Woody Rickerson, Power Allocation for Data Centers with Dedicated Generation
Discussion of the growth in power consumption, driven by data centers.
Some data centers are contracting for their own power generation.
Two scenarios for supplying power to data centers: co-located behind the generator or via the grid.
Behind-the-meter generation is subtracted from grid capacity, not adding load to the grid.
Generation contracted through the grid keeps the generation apparent in reports but can be misleading about availability.
Concerns about potential congestion in transmission lines and cost allocation.
Emphasis on the need for improved separation of resources used off-grid and their impact on grid capacity.
Data centers' power draw can be calculated during peak hours using shift factors and 4CP method.
▶️ - Senator Schwertner to Woody Rickerson, TDU Projection Models and Uniformity
The current methodology for projecting load can be manipulated, prompting discussions on improving this system.
Issues with 4CP reductions are noted during the critical months from July to September.
TDUs use different projection models, highlighting concerns about their accuracy and the lack of uniformity.
A voluntary large load interconnection process is in place for reviewing loads reported by TSPs.
Duplications of loads within Texas have been detected and removed, but global duplications remain challenging to address.
No fees are required for foreign loads during interconnection, pending TSPs' input.
Concerns exist over the artificial scarcity introduced by current grid management methodologies affecting ancillary services.
There was an improvement due to process changes in ERCOT's management for summer 2023 and further updates are planned for next year.
Discussions on large load connections and their impact on the grid show concerns over cost burden on ratepayers without universal benefits.
Currently, there is no ability to differentially manage or curtail large loads connected to the grid.
A voluntary registration program exists only for crypto mines.
▶️ - Representative Hunter to Connie Corona, Simplifying Electric Bill Transparency for Consumers
Representative Hunter expressed concern about electric bill charges being passed to consumers without clear explanations.
ERCOT has made efforts to educate consumers by providing resources on social media, but Hunter feels this indicates complexity in understanding bills.
Hunter suggested many consumers, especially those less technologically savvy, might struggle with accessing online resources for bill explanations.
The primary concern discussed was the burden of costs and lack of transparency in passing costs to Texans.
There was a discussion about the absence of a 'no harm' certification in Texas to ensure that new projects do not reduce grid megawatts or negatively affect grid function.
Corona acknowledged the potential benefit of a 'no harm' certification policy for Texas and mentioned a possible legislative solution for data centers to switch to backup power during grid scarcity.
It was clarified that ERCOT and Transmission Service Providers (TSPs) look at projects from a transmission adequacy standpoint, but Texas lacks a generation adequacy or resource adequacy standard.
The panel transitioned to include speakers from the Office of Public Utility Council and Potomac Economics to discuss related regulatory and economic issues.
Jeff McDonald, representing IMM for ERCOT and Potomac Economics, discussed reliability focus in Texas.
Texas utilizes a market-based approach to reliability, aiming to provide price signals that encourage performance and new investment.
McDonald has been in his role for nine months and offers a fresh perspective on reliability issues.
Emphasis on two reliability approaches: enhanced resiliency and development of market reliability products.
Recent assessments focused on ERCOT's operational reliability through studies and reports with the PUC.
Involvement in developing a new product (DORS) to address forecast timing gaps.
Worked on improving shortage reserve curves for the upcoming real-time co-optimization market framework for next year.
Goal is to align procurement and pricing of reliability services with their value to Texans.
Extended focus over the past two years on these market instruments for increased reliability.
Positive outcomes from the ECRS process, with ERCOT now better positioned to avoid false scarcity conditions.
Identified potential for reduced procurement of reserves and lower costs for consumers, working with ERCOT to further reduce these procurements.
Panel 2 Q&A
▶️ - Senator Schwertner to Chris Ekoh, Cost Allocation for Non-Residential Load Growth
Discussion on overprocurement and reserves impacting Texas electricity costs, noting adjustments post-Winter Storm Uri to maintain affordability.
Focus on non-residential load growth driven by data centers, crypto mining, oil and gas, and new commercial operations.
Concerns about resource adequacy, interconnection, cost allocation, and cost causation in ERCOT and PUC programs.
Mention of House Bill 5066 and NPRR1180, related to substantiated load definitions and visibility in load forecasts.
Emphasis on the need for accurate load forecasting and potential overforecasting risks leading to overinvestment.
Concerns raised about lack of standardization in methodologies used by TDUs for load forecasting.
Discussion on possible financial commitments for large loads before grid connection to address phantom load issues.
▶️ - Senator Zaffirini to Chris Ekoh, Strategies to Prevent Load Shedding
Chris Ekoh discussed the strategy for avoiding load shedding by focusing on avoiding a 'watch' trigger, which is a precursor to Energy Emergency Alerts (EEA).
Current operations aim to prevent grid loading close to 3000 megawatts, at which point EEAs and ancillary services are triggered.
IMM modeling suggests that reducing the procurement of ancillary services can allow the grid to run effectively.
Concerns were raised about potential overbuilding of transmission infrastructure if the NPRR 1180 is passed, which could lead to unnecessary costs.
Overbuilding risk is high due to a provision allowing utility officers to request infrastructure based on forecasted load needs.
Chris Ekoh emphasized the importance of balancing reliability and affordability of the grid, noting the necessity of evaluating cost implications before implementation.
He highlighted the high cost of some ERCOT programs, such as ECRS, which was more expensive than initially anticipated.
▶️ - Senator Zaffirini for Jeff McDonald, Understanding 4CP and Its Impact on Utility Bills
Mr. McDonald provided a high-level overview of 4CP, a technique used in transmission cost allocation.
4CP was first applied in 1966 for transmission allocation based on coincident peak load driving the need for new transmission.
Current transmission investments are driven by factors other than peak load, such as demographic shifts, industrial use, and new resources.
Costs of transmission are currently allocated broadly across Texas ratepayers, which may not be efficient.
Exploring a more localized cost allocation to avoid broad distribution of costs across all Texans.
Discussion on expanding coincident peak measures to 12 times per year or from 15 minutes to one hour.
Increasing the time from 15 minutes to an hour might reduce inefficiency and difficulty predicting peak periods.
Acknowledgment that 40% of utility bills are tied to transmission costs, with an expectation for this percentage to grow.
No specific forecast was provided for the future percentage of transmission costs on utility bills.
Panel 3 Invited Testimony
▶️ - Katie Coleman, TAM, TCC, TxOGA, Invited Testimony
Representatives for Texas Association of Manufacturers, Texas Chemistry Council, and Texas Oil and Gas Association are concerned about large load issues, fearing negative impacts on industrial development.
There's a need to scrutinize numbers related to electric usage and data center development, especially if they don't align with national expectations.
Proposals include additional fees for interconnection studies, security requirements, and disclosure of alternative service facilities.
Stressed the need to differentiate between transmission planning forecast and generation adequacy analysis.
Emphasized that transmission planning must account for maximum capacity needs, unlike generation adequacy which considers expected peaks with a reserve margin.
Called for reevaluation of cost allocation methods in transmission investment to ensure they reflect current system needs better than the traditional 4CP method.
Advocated for consideration of peak demand using a broader definition and for including winter months in analysis.
Highlighted importance of aligning cost allocation methodology with cost causation.
Discussed historical colocation practices, emphasizing that industrial support for on-site generation could enhance resource adequacy.
Expressed readiness to participate in discussions to ensure favorable industrial backed generation development.
Julia Harvey represents Texas Electric Cooperatives, which comprises 76 member-owned electric co-ops in Texas.
Electric Co-Ops are not-for-profit utilities focused on serving member needs, involvement includes retail distribution, wires, transmission, and generation.
Appreciation was expressed for the PUC efforts on legislative implementation around SB2627 and HB1500.
The main priority is maintaining affordability and dealing with cost allocation since Co-Ops have no shareholders and are accountable to the people served.
Concern about cost escalation impacting end users, particularly amidst significant load growth in rural and metropolitan areas.
Stressed the need for accurate ERCOT load forecasting to support infrastructure development, especially for large loads.
Emphasis on adjusting transmission cost allocation to prevent disproportionate financial burden on residential end users due to infrastructure serving businesses.
Acknowledged the obligation to serve large loads despite associated risks, particularly with flexible loads that may avoid transmission costs.
Highlighted the need to revisit cost allocation under the current consumption-based paradigm.
Expressed commitment to addressing cost issues and infrastructure build-out collaboratively in the upcoming session.
Kathryn Webking represented TEAM, an industry association of retail electric providers, offering perspectives on serving residential and small commercial customers in Texas.
Highlighted the benefits of competitive retail service, such as transparency, options, and fixed price contracts for customers.
Discussed the importance of maintaining the ability for customers to choose the terms of their contracts without speculative pricing for future costs, like the DRRS service.
Emphasized the need for a one-time adjustment to cover any new costs without burdening current contracts.
Mentioned the commission's efforts on legislative implementations, particularly customer communication during emergency events.
Supported the commission's approach to making the communication responsibilities of utilities clear to customers, especially during outages.
Stressed the importance of the public outage tracker and the need for reliable information to help customers make health and safety decisions.
Mentioned Senate Bill 3's power alert system and the potential for legislative adjustments to allow broader communication.
Concluded with appreciation for the opportunity to testify and a willingness to answer questions.
▶️ - Walt Baum, Powering Texans, Invited Testimony
Walt Baum expressed that the grid is more reliable than at the start of the last session.
Acknowledged contributions of the legislature, PUC, and ERCOT in improving reliability.
Mentioned progress on implementing bills passed in 2021 and 2023.
Highlighted the Texas Energy Fund's role in supporting new dispatchable generation.
Praised the PUC's adoption of a reliability standard following House Bill 1500.
Emphasized the need for ancillary services tools to meet the new reliability standard.
Powering Texans member companies are advancing in the Energy Fund's due diligence phase.
Concern about the Energy Fund's potential impact on the competitive market if it continues indefinitely.
Stressed the need for stability and caution against numerous changes that might slow current developments.
Recognized the importance of encouraging data center development in Texas.
Believes data center development can coexist with grid reliability and benefit the local economy.
Sees energy market signals as aligned with supporting new generation developments due to load growth.
Mark Bell represents the Association of Electric Companies of Texas (AECT).
Acknowledgement of efforts by the PU), ERCOT, and stakeholders in implementing legislative measures.
House Bill 1500 continues the PUC until 2029 and introduces various industry changes, including new transmission requirements and market operation changes.
Introduction of the Dispatchable Reserve Reliability Service (DRRS) to encourage new and existing thermal plant operations.
House Bill 2555, the Texas Resiliency Act, enables utilities to plan for grid resiliency investments.
The first resiliency plan under House Bill 2555 is approved by the PUC.
House Bill 5066 revises electric growth evaluation and requires a transmission plan for the Permian Basin.
Senate Bill 2627 establishes the Texas Energy Fund (TEF), with ongoing application reviews by the PUC.
The TEF includes $1 billion in grants for non-ERCOT utilities and $1.8 million for the Texas Power Promise Program.
Overall legislative actions aim to enhance grid reliability and resilience.
Panel 3 Q&A
▶️ - Senator Zaffirini to Cathy Webking, Mandating Emergency Plans by Statute or Rule
Cathy Webking discussed the necessity of communication plans.
She supports mandating communication plans by statute or rule.
Believes the Commission should have statutory authority for these plans.
Would support clarification or codification if needed.
▶️ - Senator Zaffirini to Katie Coleman, Expanding on Net Peak Analysis
Discussion on the difference between absolute maximum demand and net peak load, with net peak load affected by low renewable output.
Transmission planning now considers net peak load more than absolute peak demand.
Congestion-related projects are often geographically constrained, exemplified by Houston's electricity import needs due to strict emissions restrictions and water constraints.
Cost allocation in transmission, such as the postage stamp allocation, aims to avoid disadvantaging economically significant areas like Houston.
New factors, including net peak demand, are driving transmission development beyond just absolute peak demand.
4CP methodology's economic impact is about 5% of the 85 gigawatt system, benefiting companies but not significantly affecting total demand costs.
4CP response and transmission cost avoidance are often practiced by various customers, including commercial entities and municipally owned utilities.
There are reliability benefits from the 4CP regime because it incentivizes demand reduction during scarcity periods.
Suggestion to consider non-coincident peak basis cost allocation to ensure equitable transmission cost distribution.
▶️ - Senator Zaffirini to Walt Baum, Requiring Data Centers to Provide Their Own Energy
Mr. Baum mentioned some data centers are providing their own energy.
Consideration of the state requiring data centers to provide their own energy.
Flexibility is needed in structuring deals for data centers providing their own energy.
Concern that over-prescription by the state could drive demand to other states.
Importance of ERCOT's visibility into the energy provisions of data centers.
Discussions are ensuring ERCOT is involved before decisions are made.
Consideration of large loads like cryptocurrency mining in energy requirement discussions.
The PUC and ERCOT have been working on defining and managing large flexible loads.
▶️ - Senator Schwertner to Walt Baum, Position on No Harm Certification for Co-Located Generation
Discussion on the position regarding no harm certification for co-located generation with large load.
Senator Schwertner asked about any negative effects on overall grid reliability or net loss of dispatchable generation due to co-located generation.
No firm position was stated; concerns about maintaining Texas's image as open for business were noted.
Mention of the importance of establishing standards for new load requirements.
Acknowledgement that determining these standards falls within the appropriate jurisdiction.
Glenn Lyons, an ExxonMobil retiree, spoke about challenges faced by the ERCOT committee.
Lyons noted that ERCOT's market design assumed all key parameters were known, leading to issues with adapting to new parameters.
Compared to more flexible markets, the electricity sector's slow adaptation is problematic, especially with rapid changes such as the rise of data centers.
Lyons proposed Consumer Regulated Electricity (CRE) as a solution for rapid growth issues, particularly for data centers.
CRE utilities could operate independently from the regulated grid, offering faster adaptation without adding costs or reliability concerns to existing grids.
This proposed model would not require Public Utility Commission (PUC) oversight, allowing for quicker implementation.
Lyons provided a written testimony, a one-page introduction to CRE, and a draft bill concerning this idea.
