Proposed Rules Title 16

TITLE 16. ECONOMIC REGULATION

PART 2. PUBLIC UTILITY COMMISSION OF TEXAS

SUBCHAPTER M. PROCEDURES AND FILING REQUIREMENTS IN PARTICULAR COMMISSION PROCEEDINGS

The Public Utility Commission of Texas (commission) proposes amendments to 16 Texas Administrative Code (TAC) §22.251, relating to Review of Electric Reliability Council of Texas (ERCOT) Conduct. The amended rule will modify the appeal process at the commission for ERCOT decisions on exemptions and make other minor and conforming changes. In the same project, the commission proposes new 16 TAC §25.517, relating to Exemption Process for ERCOT Reliability Requirements. The proposed rule will allow ERCOT to promulgate reliability-related technical standards and list general criteria by which ERCOT must decide whether to grant an exemption from those standards.

Growth Impact Statement

The agency provides the following governmental growth impact statement for the proposed rule, as required by Texas Government Code §2001.0221. The agency has determined that for each year of the first five years that the proposed rule is in effect, the following statements will apply:

(1) the proposed rule will not create a government program and will not eliminate a government program;

(2) implementation of the proposed rule will not require the creation of new employee positions and will not require the elimination of existing employee positions;

(3) implementation of the proposed rule will not require an increase and will not require a decrease in future legislative appropriations to the agency;

(4) the proposed rule will not require an increase and will not require a decrease in fees paid to the agency;

(5) the proposed rule will create a new regulation;

(6) the proposed rule will not expand, limit, or repeal an existing regulation;

(7) the proposed rule will not change the number of individuals subject to the rule's applicability; and

(8) the proposed rule will not affect this state's economy.

Fiscal Impact on Small and Micro-Businesses and Rural Communities

There is no adverse economic effect anticipated for small businesses, micro-businesses, or rural communities as a result of implementing the proposed rule. Accordingly, no economic impact statement or regulatory flexibility analysis is required under Texas Government Code §2006.002(c).

Takings Impact Analysis

The commission has determined that the proposed rule will not be a taking of private property as defined in chapter 2007 of the Texas Government Code.

Fiscal Impact on State and Local Government

Rachel Seshan, Attorney, Division of Compliance and Enforcement, has determined that for the first five-year period the proposed rule is in effect, there will be no fiscal implications for the state or for units of local government under Texas Government Code §2001.024(a)(4) as a result of enforcing or administering this section.

Public Benefits

Ms. Seshan has determined that for each year of the first five years the proposed section is in effect, the public benefit anticipated as a result of enforcing the section will be improved grid reliability in the ERCOT power region. There will be no probable economic cost to persons required to comply with the rule under Texas Government Code §2001.024(a)(5).

Local Employment Impact Statement

For each year of the first five years the proposed section is in effect, there should be no effect on a local economy; therefore, no local employment impact statement is required under Texas Government Code §2001.022.

Costs to Regulated Persons

Texas Government Code §2001.0045(b) does not apply to this rulemaking because the commission is expressly excluded under subsection §2001.0045(c)(7).

Public Hearing

The commission staff will conduct a public hearing on this rulemaking if requested in accordance with Texas Government Code §2001.029. The request for a public hearing must be received by February 3, 2025. If a request for public hearing is received, commission staff will file in this project a notice of hearing.

Public Comments

Interested persons may file comments electronically through the interchange on the commission's website. Comments must be filed by February 3, 2025. Comments should be organized in a manner consistent with the organization of the proposed rule. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed rule. The commission will consider the costs and benefits in deciding whether to modify the proposed rule on adoption. All comments should refer to Project Number 57374. In addition to this proposed rule, the commission is simultaneously proposing new 16 TAC §25.517. Interested persons may provide comments to both proposals in a single filing, and the commission will consider the two proposals together.

Each set of comments should include a standalone executive summary as the last page of the filing. This executive summary must be clearly labeled with the submitting entity's name and should include a bulleted list covering each substantive recommendation made in the comments.

Statutory Authority

The amendments are proposed under PURA §14.001, which grants the commission the general power to regulate and supervise the business of each public utility within its jurisdiction and to do anything specifically designated or implied by this title that is necessary and convenient to the exercise of that power and jurisdiction; and §14.002, which authorizes the commission to adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction.

Cross Reference to Statute: Public Utility Regulatory Act §14.001 and §14.002.

§22.251.Review of Electric Reliability Council of Texas (ERCOT) Conduct.

(a) Purpose. This section establishes [~~prescribes~~ ] the procedure by which an entity, including [~~the~~] commission staff and the Office of Public Utility Counsel (OPUC), may appeal a decision made by ERCOT as the independent organization certified under PURA §39.151 or any successor in interest to ERCOT.

(b) Definitions. The following terms, when used in this section, have the following meanings unless the context indicates otherwise.

(1) Conduct--a decision, act, or omission.

(2) Applicable ERCOT Procedures--the applicable sections of the ERCOT protocols that are available to challenge or modify ERCOT conduct, including Section 20 (Alternative Dispute Resolution Procedures, or ADR) and Section 21 (Process for Protocol Revision), and other participation in the protocol revision process.

(1) The scope of permitted complaints includes ERCOT's performance as the independent organization certified under PURA §39.151, including ERCOT's promulgation and enforcement of standards and procedures relating to reliability, transmission access, customer registration, and the accounting of electricity production and delivery among generators and other market participants.

(2) An [~~Any~~] affected entity may file a complaint with the commission [~~complain to the commission in writing~~], setting forth any conduct that is alleged to be in violation [~~or claimed violation~~] of any law that the commission has jurisdiction to administer, [of] any order or rule of the commission, or [of] any protocol, [or] procedure, or binding document adopted by ERCOT in accordance with [~~pursuant to~~] any law that the commission has jurisdiction to administer. [For the purpose of this section, the term "conduct" includes a decision or an act done or omitted to be done. The scope of permitted complaints includes ERCOT's performance as an independent organization under the PURA including, but not limited to, ERCOT's promulgation and enforcement of procedures relating to reliability, transmission access, customer registration, and accounting for the production and delivery of electricity among generators and other market participants.]

(3) An affected entity may file a complaint with the commission appealing a decision by ERCOT on an exemption request under §25.517 of this title (relating to Exemption Process for ERCOT Reliability Requirements) in accordance with subsection (r) of this section.

(d) [~~(c)~~] [~~Requirement of compliance with~~ ] ERCOT Protocols compliance prerequisite. An affected entity must use the [~~Section 20 of the ERCOT Protocols (Alternative Dispute Resolution Procedures, or ADR), or Section 21 of the Protocols (Process for Protocol Revision), or other~~ ] Applicable ERCOT Procedures[,] before filing [~~presenting~~] a complaint with [to] the commission under this section. [For the purpose of this section, the term "Applicable ERCOT Procedures" refers to Sections 20 and 21 of the ERCOT Protocols and other applicable sections of the ERCOT protocols that are available to challenge or modify ERCOT conduct, including participation in the protocol revision process.] If a complainant fails to use the Applicable ERCOT Procedures, the presiding officer ~~official~~] may dismiss [~~the complaint~~] or abate the complaint [it] to afford [~~give~~] the complainant an opportunity to use the Applicable ERCOT Procedures.

(1) A complainant may file a complaint with the commission directly [~~present a formal complaint to the commission~~], without first using the Applicable ERCOT Procedures, if:

(A) the complainant is [~~the~~] commission staff or OPUC [~~the Office of Public Utility Counsel~~];

(B) the complainant is not required to comply with the Applicable ERCOT Procedures;[ or]

(D) [~~where~~] compliance with the Applicable ERCOT Procedures would inhibit the ability of the affected entity to provide continuous and adequate service; or[.]

(E) the commission has granted a waiver of the requirement to use the Applicable ERCOT procedures in accordance with paragraph (2) of this subsection.

(2) An affected entity may file with the commission a request for waiver of the Applicable ERCOT Procedures. The waiver request must be in writing and clearly state the reasons why the Applicable ERCOT Procedures are not appropriate. The commission may grant the waiver for good cause shown. [For any complaint that is not addressed by paragraph (1) of this subsection, the complainant may submit to the commission a written request for waiver of the requirement for using the Applicable ERCOT Procedures. The complainant shall clearly state the reasons why the Applicable ERCOT Procedures are not appropriate. The commission may grant the request for good cause.]

(3) For complaints for which ADR proceedings have not been conducted at ERCOT, the presiding officer may require informal dispute resolution.

(e) [~~(d)~~] Formal complaint.

(1) A formal complaint must [~~shall~~ ] be filed within 35 days of the ERCOT conduct that is the subject of the complaint [~~complained of~~], except as otherwise provided in this subsection. When an ERCOT ADR procedure has been timely commenced, a complaint concerning the conduct or decision that is the subject of the ADR procedure must [~~shall~~] be filed no later than 35 days after the completion of the ERCOT ADR procedure. The presiding officer may extend the deadline, upon a showing of good cause, including the parties' agreement to extend the deadline to accommodate ongoing efforts to resolve the matter informally, and the complainant's failure to timely discover through reasonable efforts the injury giving rise to the complaint.

(2) [~~(1)~~] A formal [~~The~~] complaint must [~~shall~~] include the following information:

(A) a complete list of all complainants and the entities against whom the complainant seeks relief and the addresses, e-mail addresses, and , if available, the facsimile transmission numbers [~~and e-mail addresses, if available,~~] of the parties' counsel or other representatives;

(B) a procedural and historical statement of the case that does [~~ordinarily should~~] not exceed two pages and does [~~should~~] not discuss the facts. The statement must contain the following:

(i) a concise description of any underlying proceeding or any prior or pending related proceedings;

(ii) the identity of all entities or classes of entities that [~~who~~] would be directly affected by the commission's decision, to the extent such entities or classes of entities can reasonably be identified;

(iii) a concise description of the conduct, alleged conduct, or ERCOT decision from which the complainant seeks relief;

(iv) a statement of the ERCOT procedures, protocols, binding documents, by-laws, articles of incorporation, or law applicable to resolution of the dispute; [~~and~~]

(v) whether the complainant has used the Applicable ERCOT Procedures for challenging or modifying the complained of ERCOT conduct or decision [(]as described in subsection (d) [~~(c)~~] of this section[)] and, if not, the provision of subsection (d) [~~(c)~~] of this section upon which the complainant relies to excuse its failure to use the Applicable ERCOT Procedures;

(vi) [~~(v)~~] a statement of whether the complainant seeks a suspension of the conduct or implementation of the decision complained of; and

(vii) [~~(vi)~~] a statement [~~without argument~~] of the basis of the commission's jurisdiction, presented without argument.

(D) a concise statement of the relevant facts, [~~without argument of the pertinent~~] relevant facts, presented without argument. Each fact must [~~shall~~] be supported by references to the record, if any;

(E) - (G) (No change.)

(H) a record consisting of a certified or sworn copy of any document constituting or evidencing the matter complained of. The record may also contain any other item relevant [~~pertinent~~ ] to the issues or points presented for review, including affidavits or other evidence on which the complainant relies.

(3) [~~(2)~~] If the complainant seeks to suspend the conduct or the implementation of the decision complained of while the complaint is pending, and all entities against whom the complainant seeks relief do not agree to the suspension, the complaint must [~~shall~~] include a statement of the harm that is likely to result to the complainant if the conduct or implementation of the decision [~~enforcement~~] is not suspended.

(A) Harm may include deprivation of an entity's ability to obtain meaningful or timely relief if a suspension is not entered.

(B) A request for suspension of the conduct or implementation [~~enforcement~~] of a decision must [~~shall~~] be reviewed in accordance with subsection (i) of this section.

(4) [~~(3)~~] All factual statements in the complaint must [~~shall~~] be verified by affidavit made on personal knowledge by an affiant who is competent to testify to the matters stated.

[(4) A complainant shall file the required number of copies of the formal complaint, pursuant to §22.71 of this title (relating to Filing of Pleadings, Documents, and Other Materials). A complainant shall serve copies of the complaint and other documents, in accordance with §22.74 of this title (relating to Service of Pleadings and Documents), and in particular shall serve a copy of the complaint on ERCOT's General Counsel, every other entity from whom relief is sought, the Office of Public Utility Counsel, and any other party.]

(f) [~~(e)~~] Notice. Within 14 days of receipt of the complaint, ERCOT must [~~shall~~] provide notice of the complaint by email to all qualified scheduling entities and, at ERCOT's discretion, all relevant ERCOT committees and subcommittees. Notice must [~~shall~~] consist of an attached electronic copy of the complaint, including the docket number, but may exclude the record required by subsection (e)(2)(H) [~~(d)(1)(H)~~] of this section.

(g) [~~(f)~~] Response to complaint. A response to a complaint is [~~shall be~~] due within 28 days after receipt of the complaint by the commission.

(1) The response must be confined to the issues or points raised in the complaint and must otherwise [~~and shall~~] conform to the requirements for the complaint established under [~~set forth~~] in subsection (e) [~~(d)~~ ] of this section except for the following items [~~that~~]:

(A) [~~(1)~~] the list of parties and counsel [~~is not required~~] unless necessary to supplement or correct the list contained in the complaint;

(B) [~~(2)~~] a procedural and historical [~~the response need not include a~~ ]statement of the case, a statement of the issues or points presented for commission review, or a statement of the facts, unless the respondent contests that portion of the complaint;

(C) [~~(3)~~] a statement of jurisdiction, [~~should be omitted~~ ]unless the complaint fails to assert valid grounds for jurisdiction, in which case the reasons why the commission lacks jurisdiction must [~~shall~~] be concisely stated; and

(D) any item already contained in a record filed by another party.

~~[(4) the argument shall be confined to the issues or points raised in the complaint;]~~

~~[(5) the record need not include any item already contained in a record filed by another party; and]~~

(2) [~~(6)~~] If [if] the complainant seeks a suspension of the conduct or implementation of the decision that is the subject of the complaint, the response must [~~complained of the response shall~~] state whether the respondent opposes the suspension and, if so, the basis for the opposition, specifically stating the harm likely to result if a suspension is ordered.

(h) [~~(g)~~] Comments by commission staff and motions to intervene.

(1) Commission staff representing the public interest must [~~shall~~ ]file comments within 45 days after the date on which the complaint was filed.

(2) Any [~~In addition, any~~] party desiring to intervene in accordance with [~~pursuant to~~] §22.103 of this title (relating to Standing to Intervene) must [~~shall~~] file a motion to intervene within 45 days after the date on which the complaint was filed. A motion to intervene must [~~shall~~] be filed with [~~accompanied by~~] a response to the complaint.

(i) [~~(h)~~] Reply. The complainant may file a reply addressing any matter in a party's response or commission staff's comments. A reply, if any, must be filed within 55 days after the date on which the complaint was filed. The [~~However, the~~] commission may consider and decide the complaint [~~matter~~] before a reply is filed.

(j) [~~(i)~~] Suspension of conduct [~~enforcement~~]. The ERCOT conduct that is the subject of the complaint remains [~~complained of shall remain~~] in effect until [~~and unless~~] the presiding officer [~~or the commission~~] issues an order suspending the conduct or decision.

(1) If the complainant seeks to suspend the conduct or implementation of the decision that is the subject of the complaint [~~complained of~~ ]while the complaint is pending and all entities against whom the complainant seeks relief do not agree to the suspension, the complainant must demonstrate that there is good cause for suspension. A [~~The~~] good cause determination under [~~required by~~] this subsection will [~~shall~~] be based on the presiding officer's [an] assessment of:

(A) the harm that is likely to result to the complainant if a suspension is not ordered;[,]

(B) the harm that is likely to result to others if a suspension is ordered;[,]

(D) any other relevant factors as determined by the commission or the presiding officer.

(2) [~~(1)~~] The presiding officer may issue an order, for good cause, on such terms as may be reasonable to preserve the rights and protect the interests of the parties during the processing of the complaint, including requiring the complainant to provide reasonable security, assurances, or to take certain actions, as a condition for granting the requested suspension.

(3) [~~(2)~~] A party may appeal a decision of a presiding officer granting or denying a request for a suspension, in accordance with [~~pursuant to~~ ]§22.123 of this title (relating to Appeal of an Interim Order and Motions for Reconsideration of Interim Orders Issued by the Commission).

(k) [~~(j)~~] Oral argument. If the facts are such that the commission may decide the matter without an evidentiary hearing on the merits, a party desiring oral argument must [~~shall~~] comply with the procedures set forth in §22.262(d) of this title (relating to Commission Action After a Proposal for Decision). In its discretion, the commission may decide a case without oral argument if the argument would not significantly aid the commission in determining the legal and factual issues presented in the complaint.

(l) [~~(k)~~] Extension or shortening of time limits. [~~The time limits established by this section are intended to facilitate the expeditious resolution of complaints brought pursuant to this section.~~]

(1) The presiding officer may grant a request to extend or shorten the time periods established by this rule for good cause shown.

(A) Any request or motion to extend or shorten the schedule must be filed prior to the date on which any affected filing would otherwise be due.

(B) A request to modify the schedule must [~~shall~~] include a representation of whether all other parties agree with the request[,] and a proposed schedule.

(2) For cases to be determined after the making of factual determinations or through commission ADR as provided for in subsection (o) [~~(n)~~] of this section, the presiding officer will [~~shall~~] issue a procedural schedule.

(m) [~~(l)~~] Standard for review.

(1) If the factual determinations supporting the conduct complained of have not been provided or established [~~made~~] in a manner that meets the procedural standards under paragraph (3) of [~~specified in~~] this subsection, or if factual determinations necessary to the resolution of the matter have not been provided or established [~~made~~], the commission will resolve any factual issues on a de novo basis.

(2) If the factual determinations supporting the conduct complained have been made in a manner that meets the procedural standards specified under paragraph (3) of [in] this subsection, the commission will reverse a factual finding only if it is not supported by substantial evidence or is arbitrary and capricious. [~~The procedural standards in this subsection require that facts be determined:~~]

(3) Facts must be determined:

(A) [~~(1)~~] in [In] a proceeding to which the parties have voluntarily agreed to participate; and

(B) [~~(2)~~] by [By] an impartial third party under circumstances that are consistent with the guarantees of due process inherent in the procedures established by [~~described in~~] the Texas Government Code Chapter 2001 (Administrative Procedure Act).

(n) [~~(m)~~] Referral to the State Office of Administrative Hearings (SOAH).

(1) If resolution of a complaint does not require determination of any factual issues, the commission may decide the issues raised by the complaint on the basis of the complaint, including any [~~and the~~] comments, [~~and~~ ]responses, and replies.

(2) If factual determinations must be made to resolve a complaint brought under this section, and the parties do not agree to the making of all such determinations in accordance with [~~pursuant to~~] a procedure described in subsection (o)[~~(n)~~] of this section, the matter may be referred to SOAH for [~~the State Office of Administrative Hearings for the making of~~] all necessary factual determinations and the preparation of a proposal for decision, including findings of fact and conclusions of law, unless the commission or a commissioner serves as the finder of facts.

(o) [~~(n)~~] Availability of alternative dispute resolution. In accordance with [~~Pursuant to~~] Texas Government Code Chapter 2009 (Governmental Dispute Resolution Act), the commission will [~~shall~~] make available to the parties alternative dispute resolution procedures described by Civil Practices and Remedies Code Chapter 154, as well as combinations of those procedures. The use of these procedures before the commission for complaints brought under this section must [~~shall~~] be by agreement of the parties only.

(p) [~~(o)~~] Granting of relief. Where the commission finds merit in a complaint and that corrective action is required by ERCOT, the commission will [~~shall~~] issue an order granting the relief the commission deems appropriate. The commission order granting relief may include[~~, including, but not limited to~~]:

(1) entering [~~Entering~~] an order suspending the conduct or implementation of the decision complained of;

(2) ordering [~~Ordering~~] that appropriate protocol revisions be developed;

(3) providing [~~Providing~~] guidance to ERCOT for further action, including guidance on the development and implementation of protocol revisions; or [~~and~~]

(4) ordering [~~Ordering~~] ERCOT to promptly develop protocols revisions for commission approval.

(q) [~~(p)~~] Notice of proceedings affecting ERCOT.

(1) Within seven days of ERCOT receiving a pleading instituting a lawsuit against it concerning ERCOT's conduct as described in subsection (c) [~~(b)~~] of this section, ERCOT must [~~shall~~] notify the commission of the lawsuit by filing with the commission, in the commission project number designated by the commission for such filings, a copy of the pleading instituting the lawsuit.

(2) Within [~~In addition, within~~] seven days of receiving notice of a proceeding at the Federal Energy Regulatory Commission in which relief is sought against ERCOT, ERCOT must [~~shall~~] notify the commission by filing with the commission, in the commission project number designated by the commission for such filings, a copy of the notice received by ERCOT.

(r) Complaint regarding exemptions to ERCOT reliability requirements. In a complaint involving the outcome of an exemption decision by ERCOT under §25.517 of this title, the following provisions apply:

(1) the complainant is not required to comply with the Applicable ERCOT Procedures prior to submitting a complaint to the commission;

(2) the parties to a proceeding under this subsection are the complainant, the complainant's transmission service provider, ERCOT, OPUC, and commission staff;

(3) ERCOT is exempt from the notice requirements of subsection (f) of this section;

(4) a proceeding under this subsection is exempt from ADR or other informal dispute resolution procedures otherwise available in this section;

(5) the complaint must include the resource's history of violations of ERCOT protocols, operating guides, or other binding documents related to the reliability requirement that is the subject of the complaint;

(6) commission staff's comments under subsection (h) of this section may include consideration of the following, in addition to the specific claims by the complainant:

(A) ERCOT's most recent outlook for resource adequacy;

(B) date of interconnection of the resource in question;

(D) the resource's history of violations described in paragraph (4) of this subsection;

(E) the complainant's cost to comply with the reliability requirement; and

(F) a modification or condition to the exemption.

(7) In addition to any other relief the commission may grant under subsection (p) of this section, the commission may grant an exemption to a complainant with modifications as the commission deems appropriate.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 19, 2024.

TRD-202406144

Adriana Gonzales

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: February 2, 2025

For further information, please call: (512) 936-7322

CHAPTER 25. SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS

SUBCHAPTER S. WHOLESALE MARKETS

16 TAC §25.517

The Public Utility Commission of Texas (commission) proposes new 16 Texas Administrative Code (TAC) §25.517, relating to Exemption Process for ERCOT Reliability Requirements. The proposed rule will allow ERCOT to promulgate reliability-related technical standards and list general criteria by which ERCOT must decide whether to grant an exemption from those standards. In the same project, the commission also proposes amendments to 16 TAC §22.251, relating to Review of Electric Reliability Council of Texas (ERCOT) Conduct. The amended rule will modify the appeal process at the commission for ERCOT decisions on exemptions and make other minor and conforming changes.

Growth Impact Statement

(1) the proposed rule will not create a government program and will not eliminate a government program;

(2) implementation of the proposed rule will not require the creation of new employee positions and will not require the elimination of existing employee positions;

(3) implementation of the proposed rule will not require an increase and will not require a decrease in future legislative appropriations to the agency;

(4) the proposed rule will not require an increase and will not require a decrease in fees paid to the agency;

(5) the proposed rule will create a new regulation;

(6) the proposed rule will not expand, limit, or repeal an existing regulation;

(7) the proposed rule will not change the number of individuals subject to the rule's applicability; and

(8) the proposed rule will not affect this state's economy.

Fiscal Impact on Small and Micro-Businesses and Rural Communities

Takings Impact Analysis

The commission has determined that the proposed rule will not be a taking of private property as defined in chapter 2007 of the Texas Government Code.

Fiscal Impact on State and Local Government

Public Benefits

Local Employment Impact Statement

Costs to Regulated Persons

Texas Government Code §2001.0045(b) does not apply to this rulemaking because the commission is expressly excluded under subsection §2001.0045(c)(7).

Public Hearing

Public Comments

Interested persons may file comments electronically through the interchange on the commission's website. Comments must be filed by February 3, 2025. Comments should be organized in a manner consistent with the organization of the proposed rule. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed rule. The commission will consider the costs and benefits in deciding whether to modify the proposed rule on adoption. All comments should refer to Project Number 57374. In addition to this proposed rule, the commission is simultaneously proposing amendments to 16 TAC §22.251. Interested persons may provide comments to both proposals in a single filing, and the commission will consider the two proposals together.

In addition to general comments on the text of the proposed rule, the commission invites interested persons to address the following specific questions:

1. Should the concept of feasibility include a cost component?

2. How should the rule distinguish between ERCOT reliability requirements that should and should not allow for an exemption?

3. How should ERCOT evaluate cost in comparison to the reliability risk that an unmodified resource may pose to the grid?

4. Under subsection (g)(1), an exemption is no longer valid if the market participant makes a modification covered by the ERCOT planning guide section relating to Generator Commissioning and Continuing Operations. Is this a reasonable threshold for considering a resource modified to the extent that it is no longer the same resource that was granted an exemption? If not, what is a reasonable threshold?

Statutory Authority

The new section is proposed under PURA §14.001, which grants the commission the general power to regulate and supervise the business of each public utility within its jurisdiction and to do anything specifically designated or implied by this title that is necessary and convenient to the exercise of that power and jurisdiction; and §14.002, which authorizes the commission to adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction.

Cross Reference to Statute: Public Utility Regulatory Act §§14.001; and 14.002.

§25.517.Exemption Process for ERCOT Reliability Requirements.

(a) Application. This section applies to the Electric Reliability Council of Texas (ERCOT) and market participants in the ERCOT region that are required to comply with reliability requirements. Any exemption granted under this section applies only to a resource that existed before the date a reliability requirement takes effect and that satisfies the criteria for an exemption. An unacceptable reliability risk described in subsection (b)(5) of this section applies only to the assessment of exemption requests and does not affect reliability criteria in the ERCOT protocols, operating guides, or other binding documents.

(b) Definitions. The following words and terms, when used in this section, have the following meanings unless the context indicates otherwise:

(1) Resource--includes a generation resource, load resource, and an energy storage resource, as defined in the ERCOT protocols.

(2) Reliability requirement--a technical standard adopted by ERCOT to support the reliability of electric service, with which market participants must comply, that is included in the ERCOT protocols, operating guides, or other binding documents to support the reliability of electric service.

(3) Technical limitation--a technical restriction preventing a resource from complying with a reliability requirement, based on the resource's documented technical infeasibility to comply with the reliability requirement.

(4) Technically feasible--describes a modification or upgrade that, based on physics and engineering, can be made to a resource.

(5) Unacceptable reliability risk--a risk posed to the ERCOT system, including:

(A) instability, cascading outages, or uncontrolled separation;

(B) loss of generation capacity equal to or greater than 500 megawatts in aggregate from one or more resources;

(D) equipment damage; or

(E) an unknown or unverified limitation.

(c) Exemption Request. If a technical limitation prevents a resource from complying with a requirement that ERCOT has determined is critical for reliability, a market participant may submit to ERCOT an exemption request in accordance with this section. The exemption request must be submitted in a form prescribed by ERCOT that, at a minimum, requires the following:

(1) a description of the applicable reliability requirement that the market participant's resource cannot meet, including cross-references to ERCOT protocols, operating guides, or other binding documents where the applicable reliability requirement is codified;

(2) a succinct description, with supporting technical documentation, of the market participant's efforts to comply with the applicable reliability requirement, and an explanation of the market participant's inability to comply;

(3) documentation describing all technically feasible modifications, replacements, or upgrades the market participant could implement, but has not yet implemented, to improve the performance of the resource toward meeting the applicable reliability requirement;

(4) the estimated total cost of implementing each modification, replacement, or upgrade identified in paragraph (3) of this subsection, including line-item descriptions and costs for procurement; installation, replacement, or modification; and operations and maintenance;

(5) models that accurately represent expected resource performance and reflect actual as-built resource equipment and settings, with all technical limitations, before and after maximizing the resource's operational capability. Each model must include a description of any technical limitation the market participant cannot accurately represent in that model;

(6) a plan to comply with each specific element of the applicable reliability requirement to the maximum extent possible. A plan under this paragraph must include:

(A) a proposed completion deadline for each proposed modification, replacement, or upgrade;

(B) proposed dates for the market participant to provide updates to ERCOT on its progress;

(7) whether any other exemption request has been submitted for the resource, in accordance with this section or otherwise, including the outcome of each request;

(8) a list detailing the resource's history of violations of ERCOT protocols, operating guides, or other binding documents related to the reliability requirement for which an exemption is being requested; and

(9) the resource's interconnection date, including a copy of the resource's interconnection agreement and any amendments.

(d) ERCOT assessment of exemption requests.

(1) Assessment process. ERCOT must assess the ERCOT system to determine whether an exemption granted to one resource or several resources would adversely affect ERCOT system reliability, including whether an unacceptable reliability risk is present in ERCOT's assessment. The assessment may consider the estimated total cost of each modification, replacement, or upgrade included in an exemption request under subsection (c)(3) of this section and must consider the following:

(A) steady state and dynamic stability of the ERCOT system;

(B) resource and system performance under a reasonable set of operating conditions (e.g., peak summer, peak winter, high wind low load, and nighttime conditions);

(D) any contingencies ERCOT deems critical based on engineering judgment, including contingencies from any applicable North American Electric Reliability Corporation reliability standard, including any allowed steady state system adjustments for contingencies, or from the ERCOT planning guide;

(E) any technical limitations described in the request that are not included in the models provided by the applicant under subsection (c)(5) of this section, the effect of which will be assessed by analyzing the expected impact based on ERCOT's engineering judgment;

(F) ERCOT's most recent outlook for resource adequacy;

(G) the potential impact of new resources in the interconnection queue on system reliability; and

(H) any other information ERCOT deems necessary to assess the reliability impact of an exemption based on ERCOT's engineering judgment.

(2) Assessment outcomes. ERCOT may grant an exemption, grant an exemption with conditions, or deny an exemption.

(A) ERCOT may grant an exemption if its assessment identifies no unacceptable reliability risks.

(B) ERCOT may grant an exemption with conditions (e.g., curtailment of the resource's output under certain circumstances, a congestion management plan, or other remedial action) if implementation of those conditions would eliminate all unacceptable reliability risks.

(C) ERCOT must deny the exemption request if its assessment identifies an unacceptable reliability risk that cannot be eliminated by imposing conditions, such as those listed in subparagraph (B) of this paragraph.

(e) ERCOT inspections. ERCOT may inspect resources to verify the need for an exemption or perform field verification of modeling parameters, using employees or ERCOT-designated contractors. ERCOT must provide the market participant at least 48 hours' prior notice of a field visit unless otherwise agreed by the market participant and ERCOT. A market participant must grant ERCOT employees or ERCOT-designated contractors access to its facility to conduct, oversee, or observe the inspection. ERCOT may require additional documentation from the resource or conduct its own verifications, as ERCOT deems necessary.

(f) Appeal to commission. If a market participant is not satisfied with ERCOT's determination of that market participant's request under subsection (d) of this section, the market participant may file a complaint under §22.251 of this title (relating to Review of Electric Reliability Council of Texas (ERCOT) Conduct).

(g) Revocation.

(1) Any exemption is limited to the period identified by ERCOT in granting the exemption under subsection (d)(2) of this section or the period in the commission's order ruling on an exemption under §22.251 of this title. An exemption is no longer valid if the resource owner or operator makes a modification covered by the ERCOT planning guide section relating to Generator Commissioning and Continuing Operations. After such a modification, the resource must meet the latest reliability requirements in the ERCOT protocols, operating guides, and other binding documents.

(2) ERCOT may revoke an exemption it granted, or suspend an exemption granted by the commission, if a reliability study by ERCOT demonstrates that system conditions have materially changed since the exemption was granted. If ERCOT suspends an exemption granted by the commission, the commission will either ratify or set aside ERCOT's action as soon as practicable.

(3) Nothing in this section reduces or otherwise adversely affects ERCOT's authority to prudently operate the grid, regardless of whether a resource has been granted an exemption. The commission may initiate a review of an exemption on its own motion or in response to a filing by ERCOT.

(h) Limit on number of exemptions. A resource is limited to two exemptions from the same reliability requirement, regardless of whether the exemption is granted by ERCOT or the commission.