PUCT Adopts Reliability Standard for ERCOT Market

Aug. 29—AUSTIN—The Public Utility Commission of Texas (PUCT) voted Thursday to adopt a reliability standard for the Electric Reliability Council of Texas (ERCOT) region. Establishing a reliability standard within ERCOT will allow for regular assessment of the grid’s ability to meet customer demand and will help PUCT and ERCOT determine what market or reliability improvements may be needed in the future.

“The ERCOT grid is more reliable today than it has ever been, and we know our system must continue to evolve to meet the growing demand for electricity in our state,” PUCT Chairman Thomas Gleeson said in a press release. “As we improve our grid to support Texas’ future, it is critical that we clearly define the standard by which we expect the market and system to operate. By establishing a reliability standard for the ERCOT region today, we are setting strong expectations for the market and charting a clear path to further ensure electric reliability.”

The adoption of the reliability standard meets the requirements set forth in Senate Bill 3, passed by the 87th Texas Legislature and signed into law by Governor Greg Abbott. The final rule adopted today will be filed in PUCT Docket No. 54584.

Under the rule adopted today by the commission, the ERCOT grid must meet three criteria to remain in compliance with the reliability standard:

— Frequency — In the ERCOT region, a grid outage resulting from inadequate power supply to meet demand is not expected to occur more than once every ten years on average.

— Duration — A potential grid outage resulting from inadequate power supply to meet demand must last less than 12 hours.

— Magnitude — The amount of electricity lost during any hour of a potential outage resulting from inadequate electrical supply to meet demand shall be expected to be less than the amount of electricity that can be safely produced during an outage.

Detailed explanations of these criteria can be found in the regulations.

The rule also establishes a process for regularly assessing the reliability of the ERCOT region. Beginning January 1, 2026, ERCOT must conduct a probabilistic assessment every three years to determine whether the electric system meets the reliability standard and is expected to continue to meet the standard for the next three years. If ERCOT determines that the system does not meet the reliability standard, it must include in its report to the commission recommended changes to the ERCOT market design that could address the deficiency and describe the potential cost of those changes. The PUCT would then provide 30 days for the public to comment on ERCOT’s assessment.

If ERCOT’s assessment shows that the system does not meet the reliability standard, the Independent Market Monitor (IMM) must conduct an independent review and Commission staff must provide its own recommendations on potential market design changes and associated costs. The Commission will then consider ERCOT’s assessment, the IMM review, Commission staff recommendations, and public comments to determine whether market design changes may be necessary.

At Thursday’s public meeting, commissioners also approved a Value of Lost Load (VOLL), which is an estimate of the value of electric reliability to consumers, for the ERCOT region. Based on the results of a survey of ERCOT consumers and an ERCOT analysis, commissioners approved a VOLL of $35,000 per megawatt-hour. This value will also help the PUCT assess potential market or reliability improvements.

Further information regarding the development of the reliability standard is available in PUCT Docket No. 54584. Further information regarding the VOLL and the consumer survey is available in PUCT Docket No. 55837.