Texas regulators have used performance credit in the market recovery process, along with lawmakers.

Brief Description:

  • The Public Utility Commission of Texas on Thursday voted unanimously to adopt a robust market, but the controversial and complex Performance Credit Mechanism approach, or PCM, they chose is likely to spark more debate.
  • Texas lawmakers ordered in 2021, through Senate Bill 3, to ensure line reliability and encourage intergenerational transmission. But the author of the law says that the PCM “is an expensive and complicated plan” and promises consultation with the necessary laws to improve the PUCT “unacceptable” decision.
  • The document was approved by the commission Thursday recommend doing PCM but need the Electric Reliability Council of Texas to develop specifications. According to the Chairman of the PUCT, Peter Lake, the decision also “delays any action in the legislature.”

Dive Light:

The Senate Bill was passed during Winter Storm Uri, which devastated the Texas line in February 2021 and it caused the death of almost 250 people in the state. The organizers spent 2022 to evaluate the market improvement before landing at PCM in November.

The debt, tested by the consulting company E3, will found by generators in ERCOT based on their availability during the system’s most risky hours. But there is concern that the debt will seriously prevent older plants from closing, but it will take years to implement.

E3 calculation of PCM consumers spend about $460 million annually.

Energy analyst Doug Lewin calls PCM “a blank check” for fire engines and said it would lead to “more powerful markets.

After the commission’s decision, Sen. Charles Schwertner, R, is a co-author of SB3, the resolution. unacceptable.” Schwertner is also the chairman of the Texas Senate Business and Commerce Committee.

“To be clear: SB 3 did not direct the PUC to change the state’s market-only market to a disruptive, exploitative design that puts the competitive market at risk without ensuring the delivery of media generation,” Schwertner said in a letter to the PUCT immediately after their election. He said workers can look to smooth the way.

“In the coming weeks, the Texas Senate will make announcements and consider whatever legislation is needed to right this wrong and fulfill our responsibility to the people of Texas,” he said. wrote in a tweet.

The PCM model is there support from Texas Gov. Greg AbbottR, who says that generators are committed to the construction of thousands of new megawatts of production that can be sent “if the PCM is accepted and implemented.”

And the Texas Competitive Power Advocates group, which represents electric generators and wholesalers in ERCOT, said that the PCM “builds credibility in the competitive market in Texas, paying for the loyalty ERCOT needs.”

Other industries and conservation groups in the state still have concerns, however, and they say it is likely that they will depend on how the implementation is carried out by ERCOT.

The Texas Oil & Gas Association said they have questions “about the PCM’s able to maintain a competitive edge that earns customers trust and affordability.”

The discussion before the commission’s vote included talk of “pay for performance which is encouraging but not sufficiently defined and untested to understand the full cost to consumers,” of said Todd Staples, president of the Texas Oil & Gas Association. in a statement.

And tThe Texas Association of Manufacturers said that “concerned about today’s action by the PUC to confirm a new proposal that is not well understood, and has not been tested, but seems to be designed to ensure a level of profit for the current generation.”

The manufacturer said it wants to see market competition maintained “while improving incentives for additional advertising.”

The Sierra Club said it is concerned that PCM will “provide additional funding to long-standing oil reserves and will fail to ensure the integrity or new investment that all Texans are seeking.”

“There is the potential for a lot of customer value and risk through this process, which is a significant change from our current market,” said Cyrus Reed, director of conservation of the Sierra Club Lone Star Chapter, in a statement.

Reed added that it allows accountability of needs, energy and distribution of resources to participate ”will is the key to reducing costs and ensuring that Texas does not build for a few hours a year to actually use PCM.

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