Photo of Alaina Zermeno

Prior to joining the firm’s Energy & Natural Resources group, Alaina worked in the Oversight & Enforcement Division (O&E) and in the Legal Division of the Public Utility Commission of Texas (PUCT), representing PUCT before the State Office of Administrative Hearings (SOAH) in various matters, including enforcement, as well as in hearings before PUCT administrative law judges. As part of her O&E role, she initiated Commission investigations into regulated entities that violated statute and Commission rules. She also worked in tandem with the Attorney General’s office by referring violations for civil enforcement and serving as a resource for O&E-referred matters. Clients value Alaina’s unique experience and knowledge of regulatory matters as she guides them in navigating permits, power purchase agreements, and shared utility agreements within and beyond Texas.

The Texas Legislature, primarily responding to the unprecedented ERCOT system load shed event during 2021’s Winter Storm Uri, enacted far-reaching system and wholesale market reforms during its 2021 and 2023 legislative sessions. These reforms broadly seek to bolster electric system resilience and reliability while incentivizing, through wholesale market reforms and other out of market actions

In a forty-page opinion issued by Chief Justice Nathan L. Hecht, the Texas Supreme Court held that the Electric Reliability Council of Texas (“ERCOT”) has sovereign immunity regarding allegations of overpricing during Winter Storm Uri and related fraud claims, even though ERCOT is a private corporation. The Court was split 5-4 in its decision with Justices Boyd and Devine writing in dissent, joined by Justices Lehrmann and Busby.

In a rulemaking issued April 6, 2023, the Public Utility Commission of Texas (“Commission”) adopted amendments to market participant registration and certification requirements.[1] The Commission’s rule amendments significantly change qualification and reporting requirements for Retail Electric Providers (“REP”), Power Generation Companies (“PGC”), Self-Generators, and Power Marketers. This article outlines the most significant of these

In the wake of winter storm Uri, ERCOT market participants are grappling with the resulting financial fallout. Many are now familiar with actions the Texas Public Utility Commission took during the February weather event with the intent to bring and maintain as much generation online as possible – notably ordering ERCOT to implement a temporary adjustment to the scarcity pricing mechanism designed to result in real time prices reaching the system-wide high offer cap at the statutory maximum of $9,000/mWh during the height of the generation forced outages.

Now, more than two months removed from the storm, the resulting financial impacts are having serious repercussions across the ERCOT market. Several retail electric providers have filed for bankruptcy, lawsuits are underway against a wide swath of market participants and regulators (ERCOT, the Public Utility Commission, generators, REPs, gas utilities, etc.), and countless market participants are faced with paying record-high bills for a range of reasons, including the need to procure energy in the real-time market during scarcity conditions, to obtain high priced gas supplies, to cover positions when their resources incurred outages, or exposure to uplift of default amounts owed to ERCOT. Complicating that, ERCOT has failed to pay many who did perform during the storm due to the short payment of some market participants, which means those who performed may not soon realize revenue associated with that performance. Additionally, the higher prices for power and ancillary services prompted ERCOT to substantially increase Counter-Party collateral requirements. Last month, the Public Utility Commission issued an order in Docket 51812 extending the deadline to dispute ERCOT invoices related to the winter event from 10 business days (under the current ERCOT Protocols) to six months. Since this order, the Commission has taken no additional action to address issues related to settlement invoices resulting from the storm.