Sec. 39.1594.  RELIABILITY PROGRAM.  (a)  Under Section 39.159(b), as added by Chapter 426 (S.B. 3), Acts of the 87th Legislature, Regular Session, 2021, or other law, the commission may not require retail customers or load-serving entities in the ERCOT power region to purchase credits designed to support a required reserve margin or other capacity or reliability requirement unless the commission ensures that:
(1)  the net cost to the ERCOT market of the credits does not exceed $1 billion annually, less the cost of any interim or bridge solutions that are lawfully implemented, except that the commission may adjust the limit:
(A)  proportionally according to the highest net peak demand year-over-year with a base year of 2026; and
(B)  for inflation with a base year of 2026;
(2)  credits are available only for dispatchable generation;
(3)  the independent organization certified under Section 39.151 for the ERCOT power region is required to procure the credits centrally in a manner designed to prevent market manipulation by affiliated generation and retail companies;
(4)  a generator cannot receive credits that exceed the amount of generation bid into the forward market by that generator;
(5)  an electric generating unit can receive a credit only for being available to perform in real time during the tightest intervals of low supply and high demand on the grid, as defined by the commission on a seasonal basis;
(6)  a penalty structure is established, resulting in a net benefit to load, for generators that bid into the forward market but do not meet the full obligation;
(7)  any program reliability standard reasonably balances the incremental reliability benefits to customers against the incremental costs of the program based on an evaluation by the wholesale electric market monitor;
(8)  a single ERCOT-wide clearing price is established for the program and does not differentiate payments or credit values based on locational constraints;
(9)  any market changes implemented as a bridge solution for the program are removed not later than the first anniversary of the date the program was implemented;
(10)  the independent organization certified under Section 39.151 for the ERCOT power region begins implementing real time co-optimization of energy and ancillary services in the ERCOT wholesale market before the program is implemented;
(11)  all elements of the program are initially implemented on a single starting date;
(12)  the terms of the program and any associated market rules do not assign costs, credit, or collateral for the program in a manner that provides a cost advantage to load-serving entities who own, or whose affiliates own, generation facilities;
(13)  secured financial credit and collateral requirements are adopted for the program to ensure that other market participants do not bear the risk of nonperformance or nonpayment; and
(14)  the wholesale electric market monitor has the authority and necessary resources to investigate potential instances of market manipulation by program participants, including financial and physical actions, and recommend penalties to the commission.
(b)  This section does not require the commission to adopt a reliability program that requires an entity to purchase capacity credits.
(c)  The commission and the independent organization certified under Section 39.151 for the ERCOT power region shall consider comments and recommendations from a technical advisory committee established under the bylaws of the independent organization that includes market participants when adopting and implementing a program described by Subsection (a), if any.
(d)  Before the commission adopts a program described by Subsection (a), the commission shall require the independent organization certified under Section 39.151 for the ERCOT power region and the wholesale electric market monitor to complete an updated assessment on the cost to and effects on the ERCOT market of the proposed reliability program and submit to the commission and the legislature a report on the costs and benefits of continuing the program.  The assessment must include:
(1)  an evaluation of the cost of new entry and the effects of the proposed reliability program on consumer costs and the competitive retail market;
(2)  a compilation of detailed information regarding cost offsets realized through a reduction in costs in the energy and ancillary services markets and use of reliability unit commitments;
(3)  a set of metrics to measure the effects of the proposed reliability program on system reliability;
(4)  an evaluation of the cost to retain existing dispatchable resources in the ERCOT power region;
(5)  an evaluation of the planned timeline for implementation of real time co-optimization for energy and ancillary services in the ERCOT power region; and
(6)  anticipated market and reliability effects of new and updated ancillary service products.
(e)  If the commission adopts a program described by Subsection (a), the commission by rule shall prohibit a generator that receives credits through the program for a dispatchable electric generating unit operated by the generator from decommissioning or removing from service that unit while the generator participates in the program unless the decommissioning or removal from service begins after September 1, 2028, or the commission finds that the decommissioning or removal from service:
(1)  is required by or is a result of federal law; or
(2)  would alleviate significant financial hardship for the generator.
(f)  If the commission adopts a program described by Subsection (a), the wholesale electric market monitor described by Section 39.1515 biennially shall:
(1)  evaluate the incremental reliability benefits of the program for consumers compared to the costs to consumers of the program and the costs in the energy and ancillary services markets; and
(2)  report the results of each evaluation to the legislature.
Added by Acts 2023, 88th Leg., R.S., Ch. 410 (H.B. 1500), Sec. 23, eff. September 1, 2023.