TEXAS, USA — Texas's grid operator Tuesday punted debate over a new tool designed to prevent blackouts, pausing a saga that's demanded board members attention this fall.
Disagreement centered on whether the new backup power service drove up wholesale electricity prices by roughly $8 billion compared to prior year prices.
The tool helped prevent rolling outages on tight days during the summer, but ERCOT's watchdog criticized the service, called ECRS, as inefficient.
"It's had a profound impact on the market outcomes," Interim Independent Market Monitor David Patton said Tuesday.
The grid operator introduced ECRS in June. The move marked the first time in two decades ERCOT added such a resource to its toolbelt.
Under the system, some power suppliers are paid to stay offline, available to fire up within ten minutes of any potential electricity shortage. Keeping those plants on standby for emergencies prevents them from bidding in the general electricity market, effectively cutting the pool of generators competing to keep prices low.
In the fall, interim market monitor Carrie Bivens issued a report that blamed higher wholesale electricity prices mostly on the new ECRS method. In a strongly-worded response, ERCOT disagreed with Bivens assertion. The grid operator acknowledged higher prices, but refuted claims that ECRS was mostly to blame.
Bivens later stepped down from her position as ERCOT's watchdog, though she did not cite the public debate in her resignation from the position.
"I think the truth is somewhere between them," said Doug Lewin, an energy consultant and author of the Texas Energy and Power Newsletter. "There's a lot of cost driven by (backup) service procurement, but probably more cost driven by an incredibly hot summer."
There is no question, he said, retailers paid through the nose for wholesale electricity this summer. Whether the additional ECRS service hiked their costs by $8 billion remains up for debate.
"Regardless of what (higher prices) are attributed to, it was an expensive market. That cost will get to consumers," Lewin said. "There's nobody in the market that's just eating that cost."
Tuesday, ERCOT committed to revisiting the service's design by April. The move allows stakeholders time to compromise.
"It was a bandage on a bullet wound," joked Doug Lewin, . "It was just trying to sort of patch things up to get through the next few months and I think it kind of kicks the can down the road. These bigger questions still need to be answered."
Patton told ERCOT's board there is an "easy fix" to ECRS's efficiency problem and presented a potential solution.
But delaying a decision on the system's design ensures the pricy service remains in place this winter. The grid operator's meteorologist predicts a normal-to-warm season, with potential for severe cold snaps beginning in January.
Such a change in the weather could cause problems, ERCOT warned, which may prove costly to solve.
Still, ERCOT CEO Pablo Vegas said the grid is "as well-prepared as we've ever been to deal with those risks."