The Electric Reliability Council of Texas may no longer allow market participants to use unsecured credit for transactions, if the Public Utility Commission of Texas on Sept. 15 approves a rule change previously accepted by the ERCOT Board of Directors.
The board on Aug. 16 unanimously approved ERCOT staff’s language for Nodal Protocol Revision Request 1112, Reduction of Unsecured Credit limits, which eliminates unsecured credit, and rejected the ERCOT Technical Advisory Committee’s language, which would have reduced the cap for any individual market participant from $50 million to $30 million.
The Technical Advisory Committee is ERCOT’s top-level stakeholder panel. Since June 2021 as a consequence of legislation responding to the deadly mid-February 2021 winter storm’s energy emergency, ERCOT rule changes must be approved by the PUCT in order for them to be implemented. PUC Chairman Peter Lake sits on the ERCOT Board of Directors as a non-voting member.
During the Aug. 16 board meeting, Darrell Cline, Garland Power & Light general manager and CEO, said that while one user of unsecured credit has failed to provide collateral for costs associated with the February 2021 energy emergency, 10 counterparties who did not receive unsecured credit “still owe just under $420 million” and he did not “have much hope that the market is going to be receiving those dollars.”
Campbell Faulkner, senior vice president and chief data analyst at OTC Global Holdings, an interdealer commodity broker, has indicated that the rule change could “greatly reduce liquidity and the ability for counterparties to [redistribute] risk to willing trading entities.”
Ancillary service changes
The PUC on Sept. 15 will also consider the following rule changes approved by the ERCOT board:
- NPRR 1085: requiring quicker updates by market participants regarding resources’ operational status, high sustained limits and other information relevant for maintaining ERCOT’s minimum Physical Responsive Capability
- NPRR 1131: allowing controllable load resources to participate in the Non-Spin Responsive Service ancillary service
- Other Binding Document Revision Request 040: adjusting the Operating Reserve Demand Curve calculation to accommodate use of controllable load resources in NSRS ancillary service
The PUC on Sept. 15 also may discuss Southwestern Public Service’s request to convert the 1-GW Harrington Generation Station from coal to natural gas at an estimated cost of $75 million.
Another topic may be an update on efforts to facilitate ERCOT market participation by aggregated distributed energy resources, for which a task force was meeting the afternoon of Sept. 12.
