January 12, 2022 – 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.