By: Harris of Williamson H.B. No. 5190
A BILL TO BE ENTITLED
AN ACT
Designating the Electric Reliability Council of Texas (ERCOT) as
the entity responsible for the reliable supply of electricity in
its interconnected area of responsibility, establishing a fund
under ERCOT's control to fund a net 5,000 MWe of "dispatchable"
"peaking unit" generating capacity owned by "Independent Power
Producers", establishing the payment structure to such
"Independent Power Producers" to fund the 5,000 MWe of
"dispatchable" "peaking unit" generating capacity, establishing
the criteria of operation and performance of the "peaking unit"
generating capacity under ERCOT's direct control, and establishing
criteria for review of ERCOT's performance in its duty to assure
reliability of electricity supply.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
PUBLIC UTILITY REGULATORY ACT
TITLE 2 - TEXAS UTILITIES CODE
CHAPTER 35. ENERGY PROVIDERS
SUBCHAPTER A. COMPETITION AND TRANSMISSION ACCESS IN THE WHOLESALE
MARKET
(new subsection)
SEC.35.0022. RELIABILITY OF ELECTRICITY SUPPLY FROM
GENERATORS
a) Definitions:
(1) Baseload Unit - A generating unit which operates
continuously for lengthy periods of time such as a month operating
at or near its maximum output throughout each day and night.
Baseload Units are considered Dispatchable Units. Baseload Units
often require lengthy startup periods. Baseload Units are generally
coal-fired, nuclear, or geothermal steam-cycle plants.
(2) Dispatchable Units - Units which can be commanded
to run at a specified time.
(3) Duel Fuel - Generating units which can run equally
of two different type fuels such as natural gas or fuel oil.
(4) ERCOT - Electric Reliability Council of Texas
(5) Independent Power Producers - An entity that is
not required to supply electricity to a specific set of customers.
The entity generally supplies electricity to the ERCOT grid for
whomever offers the best price for the electricity.
(6) Intermediate Duty Unit - A generating unit which
operates daily to meet increased loads or to replace output from
Baseload Units which are out for maintenance. Intermediate Duty
Units are considered Dispatchable Units. Intermediate Duty Units
are generally natural-gas fired combined-cycle units, oil fired
units, hydro powered units, and waste-fired units.
(7) Non-Dispatchable Units - A unit that can not be
commanded to run at a specied time. Non-Dispatchable Units are sun
powered and wind powered generating units.
(8) Peaking Unit - A generating unit which operates
less than 15% of the year and is held in reserve to satisfy
electricity demand during periods of extreme weather, during
periods of high demand, during maintenance outages of normal
generating units, during losses of critical transmission
facilities, during sudden loses of generating units, during
periods of low wind, during periods of lack of sunshine, and
duringother unforeseen circumstances. A peaking up must be able to
produce its full output of electricity within 10 minutes of
receiving the call for operation. Peaking Units are considered
dispatchable units.
b) ERCOT shall have the principal responsibility for
assuring reliability of electricity supply.
(1) ERCOT shall control the operational dispatch of up
to 5,000 MWe of Peaking Unit capacity operated by Independent Power
Producers to assure reliable, cost effective supply of electricity
during high demand and emergency periods of time.
(2) The 5,000 MWe of Peaking Unit capacity shall be
dispatched to cover electricity generating shortages during
weather emergencies, high demand periods, loss of electrical
generation caused by the lack of wind and sun, and sudden loss of
generating units.
c) ERCOT shall establish an "Electricity Supply Reliability
Fund".
(1) The "Electricity Supply Reliability Fund" will
commence operation on September 1, 2024.
(2) ERCOT shall add and collect a $2.00 per MWH
surcharge to the output charge for all generating sources in the
ERCOT area of control as measured at the transmission or
distribution grid level starting September 1, 2024.
(3) Such generating sources shall include Independent
Power Producers, generating units of Municipal Utilities,
generating units of Electric Cooperatives, affiliated wholesale
supplier generating units, distributed natural gas generating
facilities, or any other type generating source on the ERCOT
controlled transmission and distribution grid.
(4) ERCOT shall add and collect an additional $2.00
per MWH surcharge to the output charge for all non-dispatchable
units such as wind and solar powered generating units in the ERCOT
area of control as measured at the transmission or distribution
grid level starting September 1, 2024.
(5) ERCOT will report monthly the accumulation of
funds and the sources of the revenue to the Texas Public Utilities
Commission.
d) ERCOT shall contract for up to 5,000 MWe of new Peaking
Unit generating capacity from Independent Power Producers.
(1) ERCOT shall use the accumulated income from the
"Electricity Supply Reliability Fund" to fund the contracting for
new Peaking Unit capacity.
(2) Starting September 1, 2023, ERCOT shall start
offering a capacity payment of $10.00 per KWe per month ($10,000
per MWe) of net capacity at the transmission or distribution level
for a ten year contracted period of supply of new Peaking Unit
capacity.
(3) The contracted Independent Power Producer shall
retain the Energy Pricing for its new Peaking Unit MWH output at a
minimum $150 per MWH.
(4) ERCOT shall guarantee a minimum of $60,000 per net
MWe for energy pricing per year because the Peaking Units may only
be called to run sporatically during a low-event year.
(5) Capacity payments will start at the end of the
month in which output from the generation unit(s) meets ERCOT's
operational commands.
(6) ERCOT shall be responsible for meeting the costs
of transmission or distribution utilities' requirements at the
electrical substation at which the generating units supply their
electrical output to the ERCOT grid.
(7) ERCOT shall assist the Independent Power Producer
in obtaining firm commitments for fuel to the new Peaking Unit(s).
(8) The contracted Independent Power Producer's new
Peaking Unit(s) shall be operated at the sole direction of ERCOT.
e) Operational conditions required by ERCOT for the
Independent Pwer Producer to receive monthly capacity payments for
the contacted new Peaking Unit(s).
(1) Each Peaking Unit shall respond to ERCOT calls for
operation and reach 100% output within 10 minutes.
(2) Each Peaking Unit shall not be called to operate
more than 1,000 hours per year except in declared cases of
emergency.
(3) Each Peaking Unit shall be capable of responding
daily to multiple calls to operate.
(4) ERCOT shall attempt to balance calls across its
dedicated fleet of generating capacity related to total hours of
operation and total amounts of energy charges received by the
Independent Power Producer per installed MWe per year.
(5) Each Peaking Unit shall be allow a two month
maintenance period every three years which can occurring during
the months of March, April, May, October, and November without
receiving an elimination of Capacity Payment for the period of
outage.
(6) Each Peaking Unit which is called to operate by
ERCOT but does not operate shall be penalized after two failures in
a year. The penalty shall depend upon the critical electricity
supply situation at the time of failure to run and can result in
loss of a monthly capacity payment for such Peaking Unit.
(7) Each Peaking Unit shall operate on two different
type fuels such as natural gas and fuel oil with the backup supply
being sufficient for 48 hours of operation at full output or shall
have a guaranteed fuel supply for 96 hours of operation at full
output after an emergency declaration by ERCOT.
(8) An Independent Power Producer which operates one
or multiple Peaking Units under ERCOT control may notify ERCOT of a
temporary outage of a unit for ERCOT to remove the unit from the
call rotation.
f) The Texas Public Utilities Commission shall review
ERCOT's performance on establishing Peaking Unit capacity to
increase the reliability of electricity supply. Areas of quarterly
review which shall include reporting to the Texas Legislature and
Governor are:
(1) ERCOT's "Electricity Supply Reliability Fund"
income and expenditures,
(2) The amount of ERCOT's new Peaking Unit capacity
under contract, the Independent Power Producer ownership, and the
status of the capacity,
(3) The operation use of ERCOT's new Peaking Unit
capacity.
(4) The operational effect of ERCOT's new Peaking Unit
capacity on energy costs.