Texas Public Utility Commissioner Kenneth Anderson has posted on the PUCT's website a new presentation concerning operational reliability, and its importance in the "reliability triad."

Link to Presentation

The presentation notes the success of Texas' energy-only market in aligning generator incentives with performance, comparing, in particular, the February 2011 emergency event, which required load shed on only one day, with one of the challenging days from the January 2014 polar vortex which had similar demand, but which did not require load shed.

"Operational reliability is much more important than installed generating capacity in keeping the lights on. As evidenced by 2011 and 2014, operational reliability can deteriorate or improve dramatically overnight. A market based approach providing proper scarcity pricing will incent generators to provide consistent operational reliability," the presentation says.

Regarding improved operational reliability the day after the February 2, 2011 load shed, as well as looking at improvements from 2011 to 2014, the presentation concludes, "Improvement in day over day operational reliability was strongly incented by scarcity pricing and improvement in year over year operational reliability was strongly incented by improved scarcity pricing."

The presentation contrasts Texas' generation performance during the polar vortex with non-performance in PJM.

The presentation notes:

For example, in PJM “The winter issue… Incentives are clearly not adequate, a 40% outage rate is unacceptable, incentives need to look like an all energy market.” Joseph Bowring, Market Monitor for PJM market during UBS conference call, May 28, 2014 describing the polar vortex event of January 2014 and the outage rate suffered by the PJM market.