Energy Market Update

• Summer in Texas reached a regularly scheduled benchmark of Dallas reaching 100 F by July 4^th holiday weekend. Well Dallas reached 101 F on July 7^th where it took to the third week of July last year to reach 100F. Houston only reached 96 F last week so not all Texas got to 100F yet. Wind was strong last week and solar was robust so that limited real time prices.
• So, while we hit 100F last week in Dallas, Mother Nature is putting a pause on things this week so get outside as a cold front moves in. Rain and thunderstorms will continue to keep temperatures below normal across Texas for the next few days. The pattern begins to dry out toward the end of the week, leading to a warmer setup next week, with temperatures returning to near seasonal normals or slightly above normal. This trend continues into the end of July, with temperatures running a little above normal. This could bring low 100s to Dallas and middle to upper 90s for Houston and San Antonio, though the models do not show strong heat.

ERCOT Real Time Prices

 Source: ERCOT

• Real time prices saw some negative congestion in the West zone that sent LMP to $0/MWh for a few hours on July 8^th & 10th but not as much as in previous weeks  Real time prices were in the mid $20’s/MWh so generation was abundant last week.

Recent Solar, Wind and Battery Milestones:

• July 4^th saw a new battery charging record set of 10,522 MW on July 4^th at 9:05 CT, breaking the record set on July 3^rd of 9,277 MW.  On July 8^th ERCOT set a new discharge record for batteries of 11,674 MW breaking the record of 10,372 MW set back on March 13^th.
• June 25^th saw a new record output for combined renewables of 51,974 MW, the second this week and breaking the previous record of 47,919 MW on May 14^th.  ERCOT set a new wind record last week at 28,928 MW on May 17^th at 11:50 PM CT as winds were strong overnight.  The previous maximum wind record of 28,715 MW set on 3/14 at 10:55 pm CT. ERCOT also set a maximum renewables output of 47,919 MW on May 14^th at 3:15 pm CT. This was ~900 MW higher than the previous record from last June. The solar record output was set May 2^nd at 11:25 am CT with output reaching 33,975 MW/ 4/20. It’s the first new solar record since March 21^st at 33,452 MW.  

Generator Outages

• Thermal generation outages in ERCOT were down below 9 GW last week and appear to be holding steady as we roll into mid-July.

https://www.gridstatus.io/graph/ercot-outages?iso=ercot&outageType=thermal

Source: ERCOT & Grid Status

TX Legislature, PUCT, & ERCOT News:

PUCT Moves to Replace 4 CP with 12 CP – At it s July 7^th open meeting the PUCT approved rule 58000 to replace ERCOT’s current four coincident peak, or 4CP cost-management mechanism with a 12 CP methodology.  The PUCT also voted to remove an exemption for wholesale battery/storage operator from transmission costs.

In the current structure of 4 CP, ERCOT will report the four highest systemwide demand peaks during June-September which are defined as the summer months in ERCOT. The average demand during these four 15-minute peaks determines a facility’s transmission service provider charges for the following calendar year.  A 12 CP methodology would switch to a 30-minute interval for each month.  PUCT staff also recommended other changes such as eliminating cost allowances for large load customers, amending commission rules to require annual updates to allocation factor values, and requiring new large load customers served by investor-owned utility distribution service providers to pay retail transmission rates based on minimum billing demand via reporting by RTO Insider.

Texas Senate Business & Commerce Committee Public Hearing - The Senate Committee on Business and Commerce will hold a public hearing on 7/29, chaired by Senator Charles Schwertner, to hear testimony on interim charges related to the Texas electric grid and transmission siting.  The grid topics include SB 6 implementation, large load interconnection, transmission cost allocation, ERCOT load forecast improvements, prior reliability reforms, and ERCOT market competitiveness.  The transmission topics address proposed 765-kV transmission line routes and their impacts on homes and communities, as well as whether current processes sufficiently protect landowner rights, account for long-term land use, property value, and environmental impacts.

PUCT Publishes Draft Rules Changing Transmission Cost Allocation - Senate Bill 6 directed the Public Utility Commission of Texas (PUCT) to evaluate whether the current four coincident peak (4CP) methodology used to allocate transmission costs ensures that all loads appropriately contribute to transmission system costs.  In response, PUCT staff has proposed a framework that would shift transmission cost recovery toward a "take-or-pay" model for large loads.  Under the proposal, large load customers would begin paying for reserved transmission capacity once it becomes available, regardless of actual usage, and would remain subject to a minimum billing obligation for at least 20 years.  The proposal also allows utilities to flow through over-recovery from large load customer classes to other customer classes, likely benefiting residential customers.  In addition, the proposal replaces ERCOT's current 4CP methodology with a Twelve Coincident Peak (12CP) methodology based on the monthly ERCOT system peak in each month of the year.  The PUCT is seeking stakeholder feedback on several significant policy questions, including whether data centers and other large computational loads should receive separate rate treatment, whether transmission interconnection costs should include transmission upgrades identified through ERCOT batch studies, and how reserved but unused transmission capacity should be reflected in resource adequacy assessments and transmission planning studies.  Comments on the proposed rule and the commission's questions are due 8/11.

PUCT Approves ERCOT DRRS Rule - The PUCT has approved NPRR 1309, which establishes ERCOT's new ancillary service, Dispatchable Reliability Reserve Service (DRRS), as required by the Texas legislature to procure dispatchable reserves, address operational uncertainty, and reduce ERCOT's reliance on Reliability Unit Commitment.  DRRS will be co-optimized with energy and other ancillary services and requires participating resources to be dispatchable within two hours and capable of sustaining output at their High Sustained Limit for four hours.  The PUCT’s final rule excludes ESR participation and does not include a release factor, although ERCOT indicated both issues could be reconsidered in future revisions.  ERCOT estimates implementation will take approximately 20 to 30 months following PUCT approval.

• Mandatory reporting framework: Require data centers and similar high-load digital infrastructure facilities to report annual water use, water source, cooling technology, electrical load, energy source, and behind-the-meter generation information.
• Enforcement for nonresponse: Strengthen enforcement of existing water-use survey requirements, including clearer consequences for facilities that fail to provide required data.
• Direct and indirect water accounting: Develop a state methodology that evaluates both direct water used for cooling and indirect water used by power generation serving data center load.
• Cooling technology standards or incentives: Consider requirements or incentives for cooling systems that reduce total water impact, including closed-loop, air-cooled, reused-water, or other water-efficient technologies.
• Agency coordination: Improve coordination among TWDB, PUCT, ERCOT, TCEQ, local governments, and groundwater conservation districts so water, power, wastewater, and siting impacts are evaluated together.
• Interconnection or development disclosure: Require data center developers to provide water-use and water-source information before or during electric interconnection, local development approval, or other state review processes.
• State and regional water planning: Ensure projected data center water demand is separately identified and incorporated into regional and state water planning, including the 2032 State Water Plan methodology.
• Local authority and siting review: Evaluate whether counties or local governments need additional authority over siting, land use, utility impacts, or temporary moratoriums for data center development.
• Public water and wastewater review: Examine whether public water systems and wastewater treatment plants serving large data center loads need additional review, permitting, or capacity analysis.
• Groundwater oversight: Address gaps in areas without groundwater conservation districts where large facilities may be able to withdraw groundwater with limited local oversight.

PUCT Awards Fifth TEF Completion Bonus Grant and Eighth TEF In-ERCOT Loan - The Public Utility Commission of Texas (PUCT) approved its fifth Texas Energy Fund (TEF) Completion Bonus Grant that will provide up to $17.5 million to Tejas Power Generation, a subsidiary of Shell Energy.  The funding supports a 146 MW expansion of the Friendswood Energy Center near Houston which came online on 5/21.  The PUCT also finalized its eighth TEF In-ERCOT Generation Loan.  This loan supports an 860 MW natural gas expansion at Vistra’s Permian Basin Power Plant in Ward County.  The project is expected to come online in 2028.  Five additional applications remain under review, representing another 2,356 MW of potential new generation for the ERCOT.