Texas Gov. Declares ERCOT Reform ‘Emergency’; Millions Still Without Power
Devin Hartman, former president of Electricity Consumers Resource Council and an analyst for the Federal Energy Regulation Commission, in comments to POWER said ERCOT needs to take a look at its demand response actions in the wake of the current crisis.
“Enabling demand response and permitting high prices—provided they reflect market fundamentals—are very important,” Hartman said. “The ERCOT and the Public Utility Commission of Texas appealed for voluntary consumption reductions, known as demand response [DR]. This helps during a crisis, but the policy imperative moving forward is to achieve a system where far more low-value electric uses get curtailed—thus protecting reliability for high-value uses—consistent with consumers’ preferences.
“Over the last two years, ERCOT has seen roughly two gigawatts of DR during peak periods in response to price spikes, which has impressed many in the industry. But this week’s event highlights the need to get into far deeper tiers of DR. To keep transactions cost down, DR activity is most efficiently coordinated through preset arrangements where customers express their willingness to pay for continuous service and, when prices exceed these levels, their service is automatically curtailed. Legislators and regulators must resist the temptation to suppress price spikes, which are critical signals to put scarce resources to their best use, and instead focus on how to ensure price movements reflect underlying supply-demand fundamentals and not market manipulation.”
