eLab Accelerator 2019
Promoting Texas Non-Wires Solutions
This project will address the opportunities and challenges specific to Texas with respect to non-wires solutions, and identify policy solutions to address those opportunities and challenges.
- Suzanne Bertin – Managing Director, Texas Advanced Energy Business Alliance
- Connie Corona – Director, Competitive Markets Division, Public Utility Commission of Texas
- Robert Helton – Director, Government & Regulatory Affairs, Engie North America Inc.
- Chris Brewster – Principal, Lloyd Gosselink Rochelle & Townsend, P.C.
- Doug Lewin – Principal, Stoic Energy
- Charles Brower – Director, Distribution Engineering, AEP-TX
- Michael Quinn – VP Portfolio Strategy & Risk, Oncor Electric Delivery
- Mona Tierney-Lloyd – Sr. Director, Regulatory, Enel X
Throughout the economy, companies are finding efficiencies and operational benefits by meeting their needs through services provided by third parties rather than investing in physical assets that they own and manage. Utilities are no different. However, the trend toward services has faced some unique barriers in the investor-owned utility industry, as utilities have a disincentive in their underlying business model, imposed by regulation, that most other businesses do not. In the current cost-of-service regulatory model, capital investments are a large driver of returns to utility shareholders. In contrast, operating costs are generally passed through to customers in electric rates without the utility making any direct profits on them, although utilities remain incented to manage operating costs to reduce overall cost to customers, and also to manage profits between regulatory rate reviews. Over the long term, however, services that can improve the utilization of, defer, or replace capital investments may have the effect of reducing opportunities for utilities to generate earnings under current regulatory structures and business models. However, non-wires solutions may be in the best interest of the ratepayers. Because many new technologies are offered only as a service and not a rate-based investment, utilities may be discouraged from using them.
Texas is uniquely positioned compared to other states because the ERCOT wholesale market is wholly contained within the state and not subject to FERC jurisdiction, but rather is subject to PUCT rules. Further, Texas restructured its electricity market almost 20 years ago and has structurally separated formerly integrated utilities into competitive retail and generation companies, and transmission and distribution “wires-only” utilities. This separation creates additional complexity and requires Texas-specific policies regarding non-wires solutions to be crafted in a way to address utility needs while preserving Texas market principles of separation between competitive and non-competitive activities.
This project will explore opportunities and challenges to adoption of non-wires alternatives that are specific to the Texas market and identify policy changes needed to address those opportunities and challenges.
Progress Made to Date
Parties have separately filed comments in the PUCT’s rulemaking on non-traditional technologies (PUCT Project No. 48023).
The TX NWS project team is focused on supporting the PUCT in its rulemaking by drafting a process map and framework to identify the key elements required for effective NWS deployment in ERCOT. Once drafted, the team intends to socialize the work products with NWS stakeholders to refine the proposed design of NWS selection, procurement, and evaluation processes.