Generators, renewable developers at odds over Texas transmission cost allocations

Dive Brief:

Transmission system builders and independent power producers in conventional and renewable generation largely agree that the Public Utilities Commission of Texas (PUCT) should not revise the way costs for new transmission are allocated.
In the precedent-setting Competitive Renewable Energy Zone (CREZ) transmission system that facilitated the installation of over 12,000 megawatts of wind, the state grid operator Electric Reliability Council of Texas (ERCOT) identified transmission needs, transmission corridors and allocated costs across the system. However, the PUCT staff recently proposed asking power producers to bear some cost as the result of a debate between conventional and renewables generators about the costs and benefits of ancillary services.
ERCOT estimated the cost of incremental ancillary services from wind, as reflected by the average Day-Ahead Market price of Regulation Up and Down, was $8.76 per megawatt-hour for 37 megawatts in 2012 and $4.56 per megawatt-hour for 36.4 megawatts in 2013. The average Day-Ahead Market price of Non-Spinning reserve requirements of 363.2 megawatts was $3.57 per megawatt-hour.

Dive Insight:

Luminant, Exelon, and Calpine, which produce conventional generation in Texas, suggested regulators look at the cost of ancillary services needed to integrate renewables into the system.

A coalition of renewables developers and advocates, including the American Wind Energy Association, the Solar Energy Industries Association, developers Edison Mission, Iberdrola, AES Wind Generation, and Pattern Energy, said renewables provide more ancillary services than they require.

Transmission builders Oncor Electric, AEP Texas, Electric Transmission Texas, and CenterPoint Energy said the CREZ build-out’s success proved the viability of its present cost allocation method.

The Federal Energy Regulatory Commission Order 1000 affirmed that spreading costs across all beneficiaries is the best way to get new transmission and minimize conflicts. However, FERC jurisdiction does not apply in this exclusively Texas debate.