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
The Public Utility Commission of Texas (Commission) plays a vital role in regulating the Electric Reliability Council of Texas (ERCOT) wholesale market, and retail energy markets throughout all of Texas. This article identifies key projects and initiatives at the Commission that are ongoing in 2022 and have a major impact on the electric power grid and energy markets in Texas. The Commission continues to move rapidly as it implements the 2021 post-Uri legislative mandates, and we expect it to continue changing regulations affecting a wide swath of the market and the ERCOT system to bolster reliability. Everyone engaged in the ERCOT market should continue to pay close attention to these reforms. Husch Blackwell is following these key matters at the Commission and represents or advises clients on many of them. We are happy to answer any questions related to any item outlined below.
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.
On Friday, May 1, 2020, President Trump issued a new Executive Order (the Bulk-Power Order) to prohibit transactions within the U.S. for the acquisition or installation of certain “bulk-power system electric equipment” which is sourced from foreign adversaries. In the Bulk-Power Order, President Trump expressed a determination that “the unrestricted foreign supply of bulk-power system