Austin. The Texas Public Utilities Commission did not vote on the new market restructuring at its meeting on Thursday, instead indicating that it is ready to accept additional feedback.
During the public comment period, the agency received over 1,000 pages of comments and feedback on various potential market developments presented in a report by consulting firm Energy and Environmental Economics, or E3, last year.
PUCT Chairman Peter Lake said that while there is no vote, he remains committed to the Performance Credit Mechanism, or PCM model. This redesign option differs from the recommendation of the E3 report.
PCM creates an additional revenue stream for electricity operators by allowing them to earn “performance credits” for electricity available during peak hours.
Power system executives have said they prefer this method because it provides an incentive for generation and innovation as companies compete to provide the most energy at the lowest cost. They also said they believe the model will reduce costs because by making the grid more reliable, it reduces the number of days electricity prices rise sharply.
“I continue to believe that PCM is the best mechanism to fulfill our obligation under (Senate Bill 3) to ensure ERCOT reliability during periods of low dispatchable power,” Lake said. “(PCM) is an all-in-one solution that sets a clear standard for SB 3 reliability. It’s not an aid, it’s not pampering around the edges here, it’s touching the side of the mesh. This ensures the reliability of the entire system.”
The model was also backed by Gov. Greg Abbott, who said in a letter earlier this week that PCM should be given “serious consideration.”
“PCM is the best fit for this requirement because it is based on a reliability standard, stimulates a new manageable generation, and supports the energy-only Texas market,” Abbott said in the letter.
However, PCM will be a new concept. It’s not used anywhere else in the world, so Texas would have to start from scratch, and it can be hard for potential marketers to understand.
Some market participants have previously told lawmakers that when evaluating the model, they do not believe it will work as agency executives predict.
PUCT is only required under SB 3 to make a recommendation to legislators regarding a potential market reorganization. Lawmakers, who just entered the 88th Legislative Session on Tuesday, will be tasked with giving the agency further direction.
If PCM is ultimately chosen, the cost estimate will be between $2 million and $4 million, officials said.