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Changes underway to strengthen Texas power grid, overhaul electricity market

Utility regulators announced short and long-term solutions for grid reliability.

HOUSTON — Even with an anticipated record demand for electricity, state utility regulators Thursday said operational changes to strengthen the power grid will keep the lights on this summer for all Texans.

“We all know the heat is coming, but we're ready for it,” said Peter Lake, the newly appointed chairman of the Public Utility Commission of Texas.

Lake and the interim CEO of ERCOT, the grid manager, held a joint news conference to announce new ways of doing business that will increase reliability and accountability.

Short-term changes already underway include increasing the cushion of reserve power available to the system. ERCOT said it’s also has flexed its legal muscle more this summer, using the power of law to force power generators to fire up, rather than wait for higher scarcity prices during tight grid conditions.

"We've directed ERCOT to operate with an abundance of caution,” Lake said. "We have no room for error.”

ERCOT is forecasting a demand of 74,0000 megawatts of power next week, approaching an all-time record high. Interim CEO Brad Jones said the agency would call for conservation if necessary, just as it had done in mid-June when wind power was lower than expected and dozens of thermal power generators experienced mechanical failures.

Still, Jones said ERCOT expects to have enough power for those who need it.

“Please do not panic,” Jones said.

“(Conservation) is something that is used across the country, across the world… it’s a tool that helps keep the grid reliable.”

The PUCT also pledged “once-in-a-generation reforms” that will redesign the state’s electricity marketplace “from scratch.”

“The market needs and will receive a major overhaul,” Lake said.

The chairman said a key component of that overhaul will be moving the market away from the current “crisis-based” model, in which power generators are paid the most when grid conditions are the tightest.

“Our market needs to provide economic incentives for generators to commit to showing up at a certain time and actually show up,” Lake said.

Lake said he hopes market redesign plans would be in place by the end of the year.

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