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The Texas Public Utility Commission has proposed redesigning the grid in the Lone Star State in a bid to make it more resilient to extreme weather events.
Among the elements of the proposal is a stipulation that electricity retailers pay power generators to stand by in case of an emergency, which, according to the Commission, would encourage the construction of more generation capacity, Reuters has reported.
Another element of the redesign proposal is a requirement for ERCOT, the state’s grid operator, to "develop bridging options to retain existing power plants and build new generation resources until the PCM can be fully implemented."
PCM stands for performance credit mechanism, which is at the heart of the PUC’s proposal, which in turn follows the passing of a law for the weatherization of the Texas grid and energy system that followed the so-called Texas Freeze from two years ago.
Texan rulemakers recently had a chance to remember how vulnerable any energy system is. Storm Elliott, which swept through most of the United States during the Christmas holidays last year, strained gas and power supplies, froze wells, and showed once again that utilities vastly underestimated the power demand during the huge storm.
“ERCOT is keeping up with demand, but it looks like ERCOT way underestimated how much power Texans would use in the freeze. They were off by about 10,000 megawatts tonight - enough electricity to power 2 million homes,” the Houston Chronicle reported on December 23.
So, Texas, which is the only state with no electricity import-export links to other states, does indeed make sure its grid is resilient in the face of storms. Yet not all are on board with the PUC’s proposal.
The PCM is "an unnecessarily complex, capacity-style design that puts the competitive market at risk without guaranteeing the delivery of new dispatchable generation," one of the sponsors of the weatherization law, Senator Charles Schwertner, said as quoted by Reuters this week.
The president of the Texas Oil and Gas Association, for his part, said there is a worry that risk will be shifted from power generators to consumers with the PCM.
By Charles Kennedy for Oilprie.com
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Charles is a writer for Oilprice.com