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“The Staff of the Public Utility Commission of Texas (Commission) and Luminant Energy Company LLC (Luminant) enter into the following settlement agreement, which resolves and concludes Commission Staff’ s investigation of Luminant regarding the duties of a qualified scheduling entity (QSE) as set forth under 16 Texas Administrative Code (TAC) §§ 25.503(f)(2) and (8) and Electric Reliability Council of Texas, Inc. (ERCOT) Nodal Protocols §§ 6.4.6(1) and 6.5.7.9(1).1 The agreement also serves as a report to the Commission under 16 TAC § 22.246(h).”

Under the settlement Luminant Energy Company LLC would pay $300,000 to resolve alleged violations of 16 Texas Administrative Code (TAC) §§ 25.503(f)(2) and (8), and Electric Reliability Council of Texas, Inc. (ERCOT) Nodal Protocols §§ 6.4.6(1) and 6.5.7.9(1), relating a QSE’s obligation to comply with dispatch instructions and to provide accurate information to ERCOT.

Per the settlement parties agree that the violations identified in the settlement, “were unintentional and resulted from Luminant’s attempts to comply with ERCOT’s directive to preserve fuel to best serve peak load during a period of high demand.”

Administrative Penalty 

71. While attempting to comply with ERCOT’s directive, Luminant violated ERCOT Nodal Protocols § 6.4.6(1) on January 16, 2018, by submitting HSL and NDRR telemetry that did not accurately reflect current generation resource operating capabilities.
72. While attempting to comply with ERCOT’s directive, Luminant violated ERCOT Nodal Protocols § 6.5.7.9(1) on January 16, 2018, by failing to fully and promptly comply with ten dispatch instructions issued between 12:00 and 12:15. 73. Luminant unintentionally violated 16 TAC § 25.503(f)(2) on January 16, 2018, by failing to comply with applicable requirements and procedures as set forth under the ERCOT Nodal Protocols. 74. Luminant unintentionally violated 16 TAC § 25.503(f)(8) on January 16, 2018, by providing ERCOT with inaccurate, false, or misleading information about the physical capabilities of five generation resources. 75. Under PURA § 15.023 and 16 TAC § 25.8(b), the Commission may impose administrative penalties for violations of PURA, Commission rules, and ERCOT Nodal Protocols in amounts of up to $25,000 per violation per day for Class A violations, up to $5,000 per violation per day for Class B violations, and up to $1,000 per violation per day for Class C violations. 
73. Under 16 TAC § 25.8(b)(3)(B)(i), the violations described in this agreement are Class A violations. 
74. Commission Staff recommends, and Luminant agrees to pay, an administrative penalty of $300,000 for the violations described in this agreement. 
75. The parties agree that the recommended administrative penalty of $300,000 is reasonable. 
76. Consistent with 16 TAC § 22.246(c)(3), and in support of the agreed administrative penalty, Commission Staff provides the following analysis of factors required for consideration when determining a reasonable and appropriate administrative penalty: 
77. The seriousness of the violation, including the nature, circumstances, extent, and gravity of any prohibited acts, and the hazard or potential hazard created to the health, safety , or economic welfare of the public . Commission Staff recommends that the violations described in this agreement created a significant hazard to the health, safety, and economic welfare of the public. First, Luminant’ s violations created a hazard to public health and safety by interfering with ERCOT’ s ability to accurately assess and manage conditions on the state’ s electric grid. When a generation resource’ s HSL is derated, the reduced megawatts are removed from the total generation available to be dispatched to the ERCOT system, preventing ERCOT from dispatching those megawatts to the system under any circumstances. When megawatts are arttficially made unavailable to the ERCOT system by derating the telemetered HSL to reflect operational preferences, those “lost” megawatts remain inaccessible to the ERCOT system, even if needed to balance the frequency ofthe ERCOT system and avoid load-shed. Further, because the five generation resources were actively dispatched at or near their true HSLs at the time Luminant derated their HSL values during a period of near-peak load, the sudden loss of 1,213 MW risked causing a potentially significant deviation in the frequency of the grid, posing an additional risk to grid reliability. Because the reliability of the electric grid is pivotal to maintaining lifeand health-sustaining functions, Luminant’ s violations posed a hazard or potential hazard to the health and safety of the general public. 

Additionally, artificial scarcity impacts prices within the ERCOT wholesale market, creating a hazard to the economic welfare of electricity consumers. A QSE may communicate a resource’ s operational preferences to SCED by making appropriate adjustments to the resource’ s energy offer curve, which identifies the price at which the resource would be willing to sell a certain quantity of electricity at a specific point in time. Appropriate adjustments to the energy offer curve utilize price signals to indicate how a resource would prefer to operate at a given time , while still allowing SCED to consider the conditions under which the resource would be willing to enhance operations. Accordingly, as changes in market conditions occur, SCED is able to include the resource in its calculation of the most economic dispatch of resources across the ERCOT system. Conversely, when a QSE seeks to effectuate operational preferences by derating the resource’ s HSL, SCED is unable to consider the price at which the resource may be willing to increase operations and, therefore, may be required to dispatch less economic resources to sell electricity that the derated resource would have provided at a lower price point. In the aggregate, this behavior could artificially drive up prices across the market, ultimately harming the consumers that foot the bill through increased rates. Because the public ultimately bears the costs of the wholesale market, Luminant’ s violations created a potential hazard to the economic welfare of the public. 

Accordingly, Commission Staff recommends that the $300,000 agreed administrative penalty appropriately reflects the serious nature of the violations at issue in this agreement.

1. The economic harm to property or the environment caused by the violation. Commission Staff is not aware of any specific economic harm to property or the environment caused by Luminant’s actions as stated herein. 

c . The history of previous violations. A review of Commission records indicates that Luminant has no prior history of violations involving conduct similar to the violations described in this agreement. 

d . The amount necessary to deter future violations. Commission Staff recommends that the agreed administrative penalty is an appropriate amount to deter future violations of this nature. 

e . Efforts to correct the violation. Commission Staff recommends that the corrective actions taken by Luminant sufficiently address the cause of the violations as necessary to ensure that its commercial operations team uses appropriate methods to try to preserve limited fuel supplies, if necessary, during future operations. 

f . Any other matter that justice may require. Commission Staff recommends that no other matters warrant consideration.

Settlement Agreement  (09/17/2025)
58674
(Settlement Agreement And Report To The Commission Regarding Luminant Energy Company Violations Of 16 TAC 25.503 And ERCOT Nodal Protocols 6.4.6 And 6.5.7.9)