Return to Blog

New ERCOT Operating Procedures Will Increase Costs

As a result of the grid events caused by Winter Storm Uri in early 2021, ERCOT has altered several ways in which it buys services to ensure system stability.

Starting in mid-July ERCOT began buying extra volumes of what are referred to as “ancillary services” including:

A. Paying more generators to be ready as “reserve” units in both Responsive and non-Spinning categories.

  • Responsive reserve units are actively running and ready to step in to support the grid on a moment’s notice.
  • Non-spinning reserve units are not asked to run, but need to be ready to start on only a few minutes’ notice should the grid become unstable.

B. Paying more generators to maintain grid “frequency”.

  • Note that frequency deviations were a cause of the transmission system failures during Uri.  These additional generators will help prevent that from repeating.

ERCOT has indicated that it will continue to revist the amounts of each of these services needed on a periodic basis, making the future cost impacts of these changes uncertain.

Current cost estimates for these charges are under $0.001 /kWh but will vary greatly by time of year and account usage pattern. Early estimates for 2022 impacts are as high as $0.003 / kWh.

How will this impact Retail Contracts:

Existing Agreements

Many suppliers include language in their agreements which allow them to pass-through increases in costs due to changes in rules, regulations, or laws.

  • With the additional amounts of ancillary services unknown and changing, suppliers are likely to simply include a new line item on your invoice for these charges.
  • Tradition Energy is communicating with your electricity supplier to better understand the potential impact to your current agreement.  Once we have additional clarity on this matter we will be back to you with additional details.

New Agreements

Agreements signed after July 2021 will include estimations of these new charges.

  • Due to the uncertainty some suppliers may seek to offer the costs as a pass-through service.

Disclaimer: Although the information contained herein is from sources believed to be reliable, TFS Energy Solutions, LLC and/or any of its members, affiliates, and subsidiaries (collectively “TFS”) makes no warranty or representation that such information is correct and is not responsible for errors, omissions or misstatements of any kind. All information is provided “AS IS” and on an “AS AVAILABLE” basis and TFS disclaims all express and implied warranties related to such information and does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of any of the information. The information contained herein, including any pricing, is for informational purposes only, can be changed at any time, should be independently evaluated, and is not a binding offer to provide electricity, natural gas and related services. The parties agree that TFS’s sole function with respect to any transaction is the introduction of the parties and that each party is responsible for evaluating the merits of the transaction and credit worthiness of the other. TFS assumes no responsibility for the performance of any transaction or the financial condition of any party. TFS accepts no liability for any direct, indirect or other consequential loss arising out of any use of the information contained herein or any inaccuracy, error or omission in any of its content. This document is the property of, and is proprietary to, TFS Energy Solutions, LLC and/or any of its members, affiliates, and subsidiaries (collectively “TFS”) and is identified as “Confidential.” Those parties to whom it is distributed shall exercise the same degree of custody and care afforded their own such information. TFS makes no claims concerning the validity of the information provided herein and will not be held liable for any use of this information. The information provided herein may be displayed and printed for your internal use only and may not reproduced, retransmitted, distributed, disseminated, sold, published, broadcast or circulated to anyone without the express written consent of TFS.