New Texas power rules raised cost $12 billion, watchdog says

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A watchdog for the Texas electric grid has estimated that new rules implemented this year have resulted in over $12 billion in additional costs, up from a previous estimate of $8 billion. These figures relate to reserves that have been set aside by the Electric Reliability Council of Texas (ERCOT) to respond quickly to power shortfalls, resulting in cheap power generation sitting idle during hot summer days. This has led to artificial scarcity and soaring real-time power prices. ERCOT officials have disputed parts of the analysis and defended their method for procuring backup resources, claiming that the $12 billion figure represents an estimate of potential savings rather than direct costs.

The increased costs for the wholesale market are expected to eventually impact consumers, with critics arguing that ERCOT’s methodology for procuring backup reserves is based on unsound reliability criteria. However, proponents of the new rules believe that the ERCOT Contingency Reserve Service (ECRS) was essential in enabling the grid to cope with a historically hot summer. A majority of stakeholders have endorsed ERCOT’s method for procuring services like ECRS, but further review is expected before next summer. ERCOT’s board is set to vote on the approach later this month.