The Public Utility Commission of Texas created new reliability standards to enhance grid performance following Texas’ power grid failure in February 2021. 

The guidelines, adopted on Aug. 29, aim to identify necessary improvements to ensure the grid can meet consumer demand, according to a press release. 

Winter Storm Uri caused widespread power outages as the grid struggled with prolonged freezing conditions, impacting millions of residents and resulting in numerous fatalities. To address the issues exposed by the storm, the 87th Legislative Session passed Senate Bill 3 in 2021, which introduced measures to weatherize power infrastructure and improve grid reliability.

The new standards are built on the framework established by SB 3, outlining specific frequency, duration and magnitude metrics the grid is expected to meet. According to the guidelines, ERCOT grid outages should occur no more than once every 10 years, last less than 12 hours and should be manageable for grid operators

“As we enhance our grid to support the future of Texas, it’s critical we clearly define the standard at which we expect the market and system to operate,” commission Chairman Thomas Gleeson said in a press release. “By establishing a reliability standard for the ERCOT region today, we are setting a strong expectation for the market and charting a clear path to further secure electric reliability.” 

While the standards set operational goals, it does not specify changes to ERCOT’s market design to address existing infrastructure issues. Benjamin Leibowicz, engineering associate professor, said additional work is needed to ensure the grid is reliable. 

“So far, there hasn’t been that much done to actually upgrade the infrastructure,” Leibowicz said.

David Spence, professor of energy regulation, said the urgency for infrastructure upgrades is further compounded by rapid growth in energy demand from emerging technologies like Bitcoin mining and artificial intelligence.

“Winter storm Uri and worries about increasing demand have diminished faith (in the grid),” Spence said. “That’s why with the new reliability standards, there’ll be much more careful monitoring of whether or not the system is likely to be able to respond to future spikes in demand.” 

To address the demand increase and assess the effectiveness of the new standards, ERCOT will conduct probability-based assessments every three years beginning in 2026, according to the press release.  

These assessments will simulate various weather scenarios to test the grid’s performance under different conditions. If the grid fails to meet the standards, ERCOT will propose infrastructure or function changes to the Public Utility Commission to address issues. 

The commission also set a Value of Lost Load, an estimate of how much consumers are willing to pay for power, of $35,000 per megawatt-hour. The Public Utility Commission will use this value to evaluate whether infrastructure improvements, like power plant weatherization, are justified from a consumer perspective. 

“This number is really important because it reflects the benefits of any investment that would improve the reliability of the power grid,” Leibowicz said. “ERCOT is adopting a much higher value of lost load than it’s used in the past, and that signals a greater willingness to approve and incentivize investments to improve reliability.”