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By Cyrus Reed, Legislative and Conservation Director, Sierra Club Lone Star Chapter
"Long Hike" is the title we are giving to blog posts that go deeper into policy, rulemaking, and other inner-workings of the energy world.
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Last week, the Lone Star Chapter of the Sierra Club filed two important sets of comments in separate but related “dockets” or projects intended to implement legislative requirements.
Reliability Standards Update
The Sierra Club filed initial comments related to the establishment of a reliability standard, which is a requirement – or at least a strong suggestion – related to both SB 3 from the 2021 legislative session and HB 1500 (the Public Utility Commission of Texas, or PUCT, Sunset bill) from the 2023 legislative session.
As we pointed out in our comments filed on May 22, legislation is clear that the PUCT must establish reliability standards to weatherize generation and transmission, which it has done. But it must also establish a separate reliability standard or standards to ensure there is sufficient supply to meet electric demand throughout the state.
Sierra Club also pointed out that while there is a requirement that the PUCT establish a new standard, the statutes do not state which metrics must be used and allows flexibility on how the PUCT and ERCOT will ensure the standard is met.
Sierra Club believes that a combination of supply strategies, demand reduction, and so-called ancillary services should be utilized, but we are concerned that some generation companies are arguing that a reliability standard should be met mainly through extra payments for generators called the PCM (Performance Credit Mechanism). Generators like Vistra, NRG, and Calpine, along with the Lower Colorado River Authority which owns both gas and coal plants, are the main promoters of the PCM.
We believe that the PUCT must set a reliability standard that is flexible and can be met through a variety of resources, but principally in a way that utilizes our electric market and does not put exorbitant costs on consumers. For example, paying entities simply for having available capacity will drive costs up without assuring performance.
It appears that the Commissioners will consider adopting a “Proposal-For-Decision” on or around their June 13 open meeting, meaning stakeholders would have until mid-July to make comments on any proposed reliability standard.
Separately, the Commission also filed a memo asking stakeholders for answers to 10 questions on the implementation of a proposed PCM in Project No. 55000. The staff memo detailing the questions – which is very technical – can be found here.
Finally, ERCOT is holding a stakeholder meeting on the creation of a new ancillary service called the Dispatchable Reliability Reserve Service (DRRS) on June 3. Their current version of the “protocol” is only open to offline generation - think big coal and gas plants - even though a previous version included online battery storage and demand response from larger consumers. All of these issues - the PCM, DRRS, reliability standard, and indeed demand response and energy efficiency - all at some level are related.
Energy Efficiency and Demand Response Update
After years of advocacy, the PUCT opened a new project – 56517 – which includes review of utility energy efficiency and demand response programs, and the implementation of SB 1699, which requires the PUCT to set new ERCOT-wide goals for residential demand response.
Our comments reiterated the need to grow utility energy savings programs by setting new goals, such as a 1% energy savings goal, a 1% peak demand reduction goal, increasing cost caps, and also beginning a rulemaking on establishing new statewide demand reduction goals required by SB 1699 – such as 5% through residential demand response programs.
Other stakeholder groups submitted comments as well, including the Coalition for Equity, Environment and Resilience (CEER), the South-Central Partnership for Energy Efficiency as Resource (SPEER), the City of Houston, retail electric providers, Octopus Energy, the American Council for an Energy Efficient Economy (ACEEE), and many others.
It’s worth noting this section from ERCOT’s comments: “ERCOT believes that a renewed focus on demand-side measures will be necessary to ensure a reliable grid in the future. ERCOT is therefore supportive of Commission efforts to establish and promote measures that cost-effectively provide additional long-term demand reductions-potentially including energy efficiency programs administered by Transmission and Distribution Utilities (TDUs) – or short-term demand reductions – i.e., demand response.” To see all of the comments filed, go here.
While most stakeholders supported expanding the energy efficiency programs and goals to make our grid more resilient and save consumers money, there was one group that didn’t - the utilities that actually run the programs.
While the utilities suggested some small changes that the Sierra Club supports, on the fundamental issue of whether to raise goals, Oncor and TNMP – as well as a joint filing by all the utilities – were pretty clear that they like the current very modest goals. And they also love the performance bonus – in which utilities get to earn a bonus for exceeding the extremely modest peak demand goals we have – and don’t really want to see changes.
Centerpoint Energy, however, was at least open to the ideas of increasing goals, though they believed conducting a potential study first was important before setting new goals.
Reminder: Texas is dead last among states that have an energy efficiency goal in its spending and achievements. It is also worth noting that even while Oncor called for the status quo on energy efficiency and demand response programs partially because of concerns of the costs going up on consumers, they recently filed a new “resiliency plan” that proposes spending more than $3.5 billion in new transmission and distribution upgrades over the next several years, even while they complain about spending more than $50 million on energy efficiency programs.
Still, as we told the Commission during their open meeting in oral comments, there is no time like the present, and we hope that despite opposition from well-entrenched utilities, the Commission will open up rulemakings to expand energy savings and demand response programs.
Here’s where you can help. With the utilities largely opposed to our efforts, we continue to call on Governor Abbott to direct the Commission to take steps to fix the grid with consumer-friendly, cost-effective solutions. To add your name to our plea to the governor, click here.