Electric Reliability Council of Texas

Final Results of Last Sunset Review

Continue

• Continue the Public Utility Commission of Texas (PUC) for six years and remove the Sunset date of the agency’s enabling statute.
• Continue the Office of Public Utility Counsel (OPUC) for six years and remove the Sunset date of the agency’s enabling statute.

Governance and Organizational Best Practices

• Appropriate PUC additional funding for a data analytics team and additional engineering expertise. (Passed in House Bill 1, the General Appropriations Act)
• As a management action, direct PUC to work with the Legislative Budget Board and Sunset Commission staff to update the agency’s General Appropriations Act performance measures to track the agency’s achievement in using any funds appropriated for these items. 
• Authorize PUC to issue directives to the Electric Reliability Council of Texas (ERCOT) through written memos and orders adopted by a majority vote of the commission, and require PUC to use rulemakings and contested cases when directives affect fees and operational obligations on a regulated entity. Authorize stakeholders to formally provide input on these directives. Clarify that PUC can only verbally direct ERCOT outside of these methods in an emergency or urgent situation and require all verbal directives be documented in writing no later than 72 hours after the emergency or urgent situation ends. As a management action, direct the ERCOT chief executive officer to provide an update about any new directive issued by PUC to ERCOT at the first ERCOT board meeting following the directive’s issuance. 
• In addition to the chair of PUC, add an additional commissioner as a nonvoting member of the ERCOT Board of Directors. 
• Amend Texas Utilities Code Section 39.1511(a) to specify that ERCOT may enter into executive session closed to the public only to address risk management or a matter that ERCOT would be authorized to consider in a closed meeting if ERCOT were governed under Texas Government Code Chapter 551 (Open Meetings Act).
• Authorize ERCOT to restrict PUC commissioners’ presence at executive sessions only to address a contested case or personnel matter unrelated to members of ERCOT’s Board of Directors.
• Clarify PUC’s authority over ERCOT protocols to include the ability to reject or remand them. 
• Abolish two and modify four of PUC’s reporting requirements. 
• Update the standard across-the-board requirement related to commissioner training.
• Direct ERCOT to re-evaluate its performance measures, with input from PUC. (Management action — nonstatutory)
• Direct PUC to update its policy guiding the agency’s rule review process to ensure identified deficiencies in the rules are addressed. (Management action — nonstatutory) 
• Direct the commission to develop policies regarding separating commissioner roles and responsibilities. (Management action — nonstatutory) 
• Direct OPUC to formalize and document certain contracting processes for legal expert witnesses. (Management action — nonstatutory)

Electric Industry

• Establish the Grid Reliability Legislative Oversight Committee to oversee PUC’s implementation of recent electric market legislation.
• Establish performance (“firming”) requirements for certain electric generation facilities in the ERCOT region, and require ERCOT to enforce these requirements. 
• Require PUC to annually report to the Legislature on the costs associated with firming generation and building out transmission, and whether implementation of legislation has materially improved the reliability, resilience, and transparency of the electricity market. 
• Establish guardrails on a credit-based reliability program, including an annual $1 billion net cost cap with some flexibility to adjust the cap.
• Require PUC to require ERCOT to procure dispatchable reliability reserve services to account for market uncertainty.
• Require PUC to direct ERCOT to evaluate whether allocating ancillary and reliability service costs differently would result in a net savings to consumers in the ERCOT region. Require PUC to submit a report on the evaluation to the Legislature by December 1, 2026.
• Require PUC to review voluntary mitigation plans at least once every two years and consider adherence to a voluntary mitigation plan when determining whether a violation of market power occurred. Increase the penalty cap for a violation of a voluntary mitigation plan to $1 million.
• Require PUC by rule to require a provider of electric generation service to provide ERCOT with the reason for unplanned service interruptions, which ERCOT will include in a publicly available report published on its website no later than the third business day after service is restored.
• Require PUC to establish a reasonable allowance for costs incurred by transmission-owning utilities to interconnect generation resources to the ERCOT transmission grid. Costs in excess of the allowance must be directly assigned to and collected from the generation resource. Require PUC to review and authorize it to adjust the allowance for inflation or supply chain issues every five years.
• Require PUC to direct transmission and distribution utilities to perform a circuit segmentation study and report the conclusions to PUC no later than September 1, 2024. Require PUC to review the studies no later than March 15, 2025.
• Repeal the renewable energy goal and phase out the Renewable Energy Credit (REC) program, but create a new voluntary REC program and require ERCOT to maintain an accreditation and banking system for awarding and tracking credits.
• Prohibit PUC from restricting the independent market monitor from appearing, speaking, or providing analysis to the Legislature. Prohibit ERCOT from substantially modifying the market monitor’s contract unless approved by a majority of PUC commissioners. Clarify the market monitor’s reporting to PUC and require PUC to annually report to the Legislature on the number of instances of reported market manipulation and other information.
• Expand the definition of “significant” power outage and authorize the Texas Division of Emergency Management, ERCOT, and the PUC executive director to determine any other power outage is a significant power outage. 
• Extend PUC’s authority to hire any consultant, accountant, auditor, engineer, or attorney to represent it in matters involving the Federal Energy Regulatory Commission to align with the Sunset continue date.
• Establish a reporting requirement for retail electric providers.
• Require PUC and ERCOT to conduct a study by December 1, 2025 on whether implementing an alternative to the single market clearing price for energy, ancillary services, and other products would reduce costs to residential and small commercial customers.
• Consolidate the Report on Constraints and Needs with other key information into a new Electric Industry Report. 
• Direct PUC to develop a state reliability standard no later than May 1, 2023. (Management action — nonstatutory)
• Direct PUC, in coordination with ERCOT, to approve assumptions used in electric industry reports. (Management action — nonstatutory)
• Direct ERCOT to include appropriate funding in its budget for qualified economic planning staff to conduct robust economic analyses for transmission planning and other market or planning studies requiring economic analysis. (Management action — nonstatutory)

Public Communications

• Require PUC to develop and regularly update a strategic communications plan.
• Require PUC to allow public testimony at commission meetings on agenda items.
• Direct PUC and ERCOT to create a guidance document to better coordinate public communications. (Management action — nonstatutory)
• Direct PUC to provide up-to-date, easily accessible information as part of its current website redesign efforts. (Management action — nonstatutory)
• Direct PUC to prepare minutes of commission meetings and provide them on its website. (Management action — nonstatutory)

Water Regulation

• Appropriate PUC additional funding to cover its costs to regulate water and wastewater utilities efficiently. (Passed in HB 1, the General Appropriations Act)
• As a management action, direct PUC to work with the Legislative Budget Board and Sunset Commission staff to update the agency’s General Appropriations Act performance measures to track the agency’s achievement in using any additional funds appropriated for water-related items. 
• Amend statute to extend the length of an emergency temporary manager appointment.
• Direct PUC to comprehensively review its water and wastewater rules, processes, and guidance documents to identify and address areas for improvement. (Management action — nonstatutory)

Contract and Data Management

• Direct PUC to develop a plan to prioritize improving its case data collection and analysis. (Management action — nonstatutory)
• Direct PUC’s Legal Division and Office of Policy and Docket Management to develop comprehensive policies and procedures. (Management action — nonstatutory)
• Direct PUC to create and maintain a precedent manual, prioritizing rulings related to water and wastewater regulation. (Management action — nonstatutory)
• Direct PUC to update its contract manager guide and handbook. (Management action — nonstatutory)