The Texas Public Utility Commission (PUCT) filed a proposal on August 6 that would revise the outdated process currently being used by the Electric Reliability Council of Texas (ERCOT) to “monitor compliance [by market participants] with wholesale market reliability requirements.”
One of the main catalysts for the draft rule, PUCT said, was the phase-out of ERCOT’s own Compliance Office in 2010, and the displacement of its services to the Texas Reliability Entity established the same year. Because the existing contract with the Texas RE expires on December 31, 2015, the PUCT must have a contract for a Reliability Monitor in place by no later than year-end.
As amended, §25.503 (Oversight of Wholesale Market Participants) would require the PUCT and ERCOT to contract with a third party selected by the commission to serve as the Commission’s Reliability Monitor for the ERCOT Region. While ERCOT will continue to fund the operations of the Reliability Monitor from the system administrative fee, the amendments clarify that the Reliability Monitor will work under the direction and supervision of the commission. The revisions also outline the criteria to be used by the commission in selecting the Reliability Monitor.
The duties and responsibilities of the Reliability Monitor may include, but are not limited to:
- Monitoring, investigating, auditing and reporting to the commission regarding compliance with reliability-related ERCOT procedures;
- Providing reliability-related subject-matter advice, expertise and assistance to the commission in the conduct of the commission’s oversight and enforcement activities; and
- Offering expert advice, analysis, reports and testimony services relating to the Reliability Monitor’s analysis and findings as part of the commission staff’s case in enforcement proceedings.
Among the “prohibited activities” for which the Reliability Monitor will provide scrutiny are: “Acts and practices that have been found to cause prices that are not reflective of competitive market forces or to adversely affect the reliability of the electric network.”
However, activities will not be considered prohibited if, “The market entity establishes that its conduct served a legitimate business purpose consistent with prices set by competitive market forces; and that it did not know, and could not reasonably anticipate, that its actions would inflate prices [or] adversely affect the reliability of the regional electric network….”
If, in the course of its investigation of a reported incident of noncompliance, the PUCT determines that a formal enforcement action is not warranted, the commission may work with the market entity to ensure that any issues of concern are addressed and that appropriate remedial actions have been taken.
However, if the PUCT finds that a market entity is in violation of compliance rules or guidelines, the commission may seek or impose “any legal remedy it determines appropriate for the violation involved, provided that the remedy of disgorgement of excess revenues shall be imposed for violations and continuing violations of Public Utilities Regulatory Act (PURA) §39.157 and may be imposed for other violations.”
The proposal is set to be discussed at the PUCT’s Open Meeting this week on August 14.