Jeff McDonald, IMM Director, discussed focusing on forward-looking perspectives on ERCOT market design challenges.
Highlighted the need for deliberate actions in market design to achieve resource adequacy and manage significant projected load growth over the next five years.
Discussed concerns over short-term and medium-term resource adequacy, with market outcomes not signaling new investments.
Emphasized that the market needs to experience shortages to provide proper price signals for new investments.
Noted disconnect between the value of loss load for planning ($35,000) and its operational equivalent ($5,000) affecting revenue signals for investments.
Discussed market design issues with emphasis on the need for well-defined products to provide appropriate revenue streams.
Highlighted the potential for excess costs by injecting more revenue into the market without a targeted approach.
Mentioned the different revenue requirements for existing resources versus new investment to prevent retirement and incentivize new generation respectively.
Referenced using Effective Load Carrying Capacity (ELCC) to rationalize contributions of varying resource types in planning, especially concerning intermittent resources.
Confirmed support for ELCC in valuing the capacity of renewable and intermittent resources.
Update presented by Matt Mereness from ERCOT regarding stakeholder readiness for RTC.
Focus on cost of market reconstructions and implications of AS demand curve absence.
Primary focus areas: general program update and explanation of three NPRRs (1268, 1269, 1270).
Discussion on state of charge for batteries in current market transitioning to RTC, led by Jeff Bello under Dan Woodfin.
Program milestones: Major internal test achieved in primary systems including energy management, market management, settlements, and billing.
Market readiness update showed strong engagement with 107 QSEs with most ready for May trials.
New training initiatives for operators and market participants, focusing on demand response and market changes.
ERCOT implementing a production freeze to minimize changes before go-live.
NPRR discussions, emphasizing interconnected changes; trials set to focus on real-time co-optimization starting May.
Specific NPRR discussions: NPRR1268 on AS demand curves improvements, NPRR1270 on ancillary services qualification, and NPRR1269 on various policy changes.
ERCOT proposes a $15 floor for AS demand curves to enhance reliability and ensure appropriate market signals.
Concerns and comments from stakeholders around AS demand curve offer floors with varying opinions on pricing.
Questions addressed about trial timelines related to NPRRs approval.
Conclusion on the reliability significance of implementing AS demand curve floor.
The long-term forecast update covers 2025 to 2031 with methodology changes.
Discussion on planning guide and protocol requirements for using the forecast.
Treatment of data center load growth and ERCOT adjusted load forecast methodology was discussed.
Discussion on energy forecast used for ERCOT system administration fee.
House Bill 5066 implications for the TSP-provided load forecast in evaluating transmission facility needs were considered.
Nodal protocol and planning guide changes allowing TSPs to include load forecasts without interconnection agreements, while adhering to PUC rules, were noted.
ERCOT's reliance on the adjusted load forecast is crucial for resource adequacy reports.
Comparison of the 2024 and 2025 TSP load forecasts with a significant increase seen in officer letter loads.
Adjustments in ERCOT load forecasts include service delay and load reduction percentages to improve accuracy.
The adjusted load forecast aligns with planning reserve margin calculations and regional transmission plan values.
Resource adequacy and annual reports on electric generation resources and load resources are pivotal in planning.
Modifications to ERCOT load forecasts aim to enhance transmission planning and resource outage scheduling.
The methodology for updated load forecasts considers vehicle electrification, rooftop photovoltaics, and TSP information.
Implications for generation capacity additions needed in response to load growth were illustrated.
Discussions on load forecast adjustments for different TSP service territories and load types were introduced.
The process is currently an annual forecast update with flexibility for adjustment based on significant changes.
ERCOT plans to adapt load forecasting and the system administration fee rate setting to ensure reliability and financial planning.
Quality and accuracy of TSPs data submissions are vital in forecasting efforts.
The Texas economy is likely slowing, with pessimistic outlooks. Despite the robust labor market in early 2025, warning signs from Dallas Fed surveys indicate a potential further slowdown.
Tariffs are expected to raise prices, reducing consumption and investment, with additional negative impacts anticipated from decreased immigration and federal spending cuts.
Growth in Texas job sectors like finance, construction, and energy might slow due to various disruptions, higher building costs, and falling oil prices respectively.
Texas maintains a high migration rate, mainly from international sources, supporting labor force and economic growth.
A significant construction boom, particularly in the manufacturing sector, has included large investments in LNG terminals and semiconductor plants, partly driven by federal incentives.
Record oil production continues with improved efficiency, allowing higher output with fewer rigs, but lower oil prices might curb further drilling.
Texas electricity demand grows faster than the national average, driven by population and economic growth, as well as hot weather and electrification needs.
Tariffs pose major risks, with surveys indicating increased costs and uncertainty, potentially leading to project delays and lower demand.
The overall net impact of current economic conditions, tariffs, deregulation, and tax cuts predicts a negative outlook for Texas, particularly due to the global energy market dynamics.
ERCOT serves as the reliability monitor, analyzing state reliability compliance issues for ERCOT market participants and ERCOT Inc.
There has been an increase in the volume of incident reviews and matters referred to the PUC for enforcement.
ERCOT is considering a streamlined review process to handle the backlog of cases efficiently.
ERCOT was designated as the reliability monitor in November 2022, taking over from Texas RE.
Incident reviews are forwarded to the PUC for enforcement, with ERCOT providing support during the enforcement process.
The intake of cases nearly averages 12 matters per month while disposal is less than five, causing an increasing backlog.
There are plans to implement a more streamlined process for lower-risk issues in collaboration with the PUC.
Since last April, ERCOT has referred 75 analyses to the PUC for enforcement, averaging less than 12 referrals per month.
The budget for the upcoming year has increased slightly primarily due to an increase in headcount.
ERCOT maintains a web page inviting market participants to self-report compliance issues.
There is an emphasis on the large number of potential violations compared to the relatively low number of actual incident reviews, indicating overall strong grid performance.
TAC Chair Caitlin Smith provided updates on the February and March TAC meetings where 14 revision requests were recommended for approval, two of which had opposing votes.
Discussion on the rebranding of "goals" to "strategic objectives" with an aim to make them more evergreen and actionable.
The introduction and significance of NPRR1234 and PGRR115 were emphasized as monumental components of the large flexible load task force's work.
Discussion on focusing more on operational issues and rebranding of large flexible load task force to a large load working group, adding a hyperscaler or data center subgroup.
ERCOT Board stakeholder engagement preparation for June with plans to present perspectives on transmission issues from various segments.
Proposal to expand segment membership terms to include new definitions for industrial loads and discussing potential changes to the definitions for inverter based resources and transmission & distribution entities.
Ongoing discussions on the market design framework and the restructuring of large load interconnection group.
Revisions and updates to outage coordination and outage capacity calculation methodologies.
NPRR1190 was outlined with the conflict over high dispatch limit override provision, emphasizing historical context, financial implications, and the need for a compromise.
Mention of Matt Mereness' effective project management on real-time co-optimization and positive stakeholder engagement practices.
Focus on ensuring operational efficiency and aligning TAC and subcommittee goals with board strategic objectives.
▶️12.1.1 - NPRR1190, High Dispatch Limit Override Provision for Increased Load Serving Entity Costs
Motion to approve NPRR1190 as recommended by TAC with alll in favor except for one opposing vote from Ben Barkley (OPUC)
Motion moved to discuss NPRR1269, focusing on RTC+B, three parameters policy issues.
Description of NPRR1269 included discussions of ASDC floor set at $15 per megawatt curve.
There was contention over the ASDC floor, though eventually extended to real-time and day-ahead procurement.
Purpose: Ensure full ancillary service requirement met more frequently and support reliability.
Approval: Supported by TAC but met with opposition, especially from the consumer segment and IRAP segment.
Concerns: High reserve levels shown not needed, discomfort with notion of a floor without supporting data.
▶️12.1.2 - NPRR1269, RTC+B Three Parameters Policy Issues – URGENT
Motion to recommend approval of NPRR1269 passed with one no vote from Ben Barkley.
Discussion about whether to take a lunch break or continue, decision made to continue without a break.
Jeff McDonald from ERCOT's IMM discussed concerns about the $15 price floor in the shortage pricing mechanism, noting it might suppress the real-time market's ability to price shortages effectively.
The discussion highlighted a mismatch between the shortage pricing mechanism and the quantity of reserve procurement, suggesting a possible over procurement of reserves.
McDonald proposed a stochastic and marginal reliability approach for determining reserve procurement, which could resolve issues with current methodologies.
There was opposition to the $15 floor, suggesting it could mute shortage signals that are crucial for inducing necessary market responses from generators.
Concerns were raised about the proxy offer process, advocating for a more explicit requirement for participants to submit offers, accompanied by penalties for non-compliance.
Potential reliability impacts of the $15 floor were debated, with McDonald suggesting the current reserve procurement level might already exceed what's needed for system reliability.
Jeff and other stakeholders discussed whether the $15 floor helps reduce RUC instances, with Jeff indicating mixed short-term benefits and potential long-term drawbacks.
The meeting touched on ongoing discussions and plans for adjusting the ancillary service demand curve methodology, shifting towards a probability-based approach.
There was a brief commentary from a consumer group representative advocating for setting the ASDC demand floor at $0 to observe market responses as an alternative to the $15 proposal.
▶️13 - High-Impact Policy Discussions in the Stakeholder Process
NOGRR245 requirements have been implemented for optimizing voltage ride-through capabilities in new and existing IVRs with deadlines and options for extensions or exemptions.
ERCOT is reviewing exemption requests to ensure no reliability impact and is performing exemption studies, with reliability assessment studies starting in the fall.
A review process for compliance extension requests is underway with ERCOT having a structured timeline for decision-making.
A high response rate to the NOGRR245 compliance request was received, with a significant number of resources committing to maximizing capabilities by December 31. Some requested extensions or exemptions.
New generation and large load interconnection requests are tracked, with ERCOT managing significant levels of interest, particularly in solar and battery storage.
Texas Energy Fund projects are progressing, with substantial new gas generation planned and multiple interconnection requests in process.
The Permian Basin transmission plan is under review due to substantial load growth, with options for 345kV and 765kV import paths being analyzed.
Transmission outage management is challenged by increased grid evolution and load growth, with the need for efficient planning and management to maintain reliability.
Winter weatherization inspections have been completed with positive results in unit performance. Resource adequacy assessments show low emergency event risk.
Review of IBR ride-through event tracking is underway, in response to market participant queries.
Overview of discussions on segment definitions in the bylaws was initially provided under the TAC report.
Opportunity identified to align segment definitions with current participants, as definitions are around twenty years old.
Notice of increased data center and crypto facility participation, categorized under either industrial consumer or large commercial consumer segments.
ERCOT Legal determined data centers and cryptocurrency miners should be in the industrial segment.
Discussions involved representatives from relevant segments before altering segment membership lists.
Three proposals discussed to amend segment definitions, as highlighted by Caitlin.
Proposals from TIEC, ERCOT Steel Mills, and Texas Blockchain Council aim to modernize the industrial segment to include data centers and crypto miners.
Calpine, Constellation, and Vistra propose bifurcating the independent generator segment into thermal and IRR sub-segments.
Proposed changes would not affect voting rights despite additional representation in segments.
Lone Star Transmission and NextEra propose changes to the transmission and distribution entity segment definition.
NextEra seeks participation and voting rights in the independent generator segment.
Response deadline for proposals is April 18 to facilitate ongoing stakeholder dialogue.
Potential bylaw changes include ensuring completion for alignment by the 2026 record date.
ERCOT may present bylaw changes to the HR&G Board in June.
