1. (a) Purpose. The purpose of this section is to promote reliability through the procurement of FFSS for deployment during, or in preparation for, a natural gas curtailment or other fuel supply disruption during extreme cold weather conditions.

2. (b) Definitions. The following words and terms, when used in this section, have the following meanings unless the context indicates otherwise:

   1. (1) Firm gas storage agreement--An agreement for firm off-site storage of natural gas, as the term is defined in ERCOT protocols.
   2. (2) Firm transportation agreement--An agreement for firm transportation of natural gas to a resource from an off-site storage facility, as the term is defined in ERCOT protocols.
   3. (3) FFSS obligation period--The period from November 15 through March 15 for which a procured resource is obligated to provide FFSS.
   4. (4) FFSS resource--A generation resource that ERCOT procures for FFSS.
   5. (5) Market clearing price--The dollar amount per megawatt (MW) that is awarded for an FFSS resource that ERCOT procures for an FFSS obligation period.
   6. (6) Non-procurement costs--The fuel restocking payments to FFSS resources following a deployment during the FFSS obligation period.
   7. (7) Offer cap--The maximum dollar amount per MW that a qualified scheduling entity (QSE) representing a resource may offer into the FFSS program for the applicable FFSS category.
   8. (8) Procurement costs--The standby payments to FFSS resources for an FFSS obligation period.

3. (c) Resource requirements for FFSS eligibility. A resource that meets the requirements for one of the three FFSS categories under this subsection is eligible and may be selected by ERCOT in the procurement process to provide FFSS for an FFSS obligation period.

   1. (1) On-site FFSS category. An FFSS resource that provides on-site FFSS must successfully demonstrate dual fuel capability, have the ability to establish and burn an alternative on-site stored fuel, and have on-site fuel storage capability.
   2. (2) Resource-controlled FFSS category. An FFSS resource that provides resource-controlled FFSS must have an on-site natural gas or fuel oil storage capability or off-site natural gas storage where the resource or QSE owns and controls both the natural gas storage facility and the pipeline to deliver the required amount of reserved natural gas to the resource from the storage facility.

   3. (3) Contractual off-site FFSS category. An FFSS resource that provides contractual off-site FFSS must have a firm gas storage agreement with a storage provider for firm storage of the natural gas at the storage facility and have a firm transportation agreement with a natural gas pipeline that is a critical natural gas facility, as defined in §25.52 of this title (relating to Reliability and Continuity of Service) for firm transportation of the natural gas from the storage facility to the FFSS resource. The natural gas pipeline providing firm transportation of the natural gas from the storage facility to the FFSS resource must be:

      1. (A) subject to the jurisdiction of the Federal Energy Regulatory Commission under the Natural Gas Act (15 U.S.C. §717 et seq);
      2. (B) an intrastate natural gas pipeline that is not operated by a gas utility, as defined in Title 3 of the Texas Utilities Code; or

      3. (C) an intrastate natural gas pipeline that is owned or operated by a gas utility, as defined in Title 3 of the Texas Utilities Code. An intrastate natural gas pipeline that is owned or operated by a gas utility must:

         1. (i) provide only transmission service in accordance with its gas utility tariff;
         2. (ii) certify that, if the gas utility reduces firm deliveries to customers pursuant to §7.455 of this title (relating to Curtailment Standards), the intrastate pipeline will have sufficient operational capacity, including sufficient pipeline pressure, to provide the volume of gas required for the transportation path between the storage facility and FFSS resource to provide continuous service in the event of a curtailment; and
         3. (iii) certify that the pipeline has not curtailed deliveries of gas, under §7.455 of this title or an order issued by the Railroad Commission of Texas, to a resource that was subject to a firm transportation agreement during a curtailment event that occurred after January 1, 2021.

4. (d) FFSS procurement. ERCOT must procure FFSS ahead of each FFSS obligation period to help maintain reliability during, or in preparation for, a natural gas curtailment or other fuel supply disruption.

   1. (1) ERCOT may spend a maximum of $54 million in procurement costs during a single FFSS obligation period. ERCOT may reject an offer that a QSE submits on behalf of a resource if ERCOT determines that:

      1. (A) the offer is unreasonable;
      2. (B) the offer is an outlier when evaluating the parameters of an acceptable offer;
      3. (C) the offer exceeds the applicable offer cap;
      4. (D) ERCOT lacks a sufficient basis to verify whether the resource complied with ERCOT established performance standards in an event in which the resource was deployed by ERCOT during the preceding FFSS obligation period;
      5. (E) the QSE representing the resource fails to reserve sufficient fuel for the first deployment for the FFSS obligation period; or
      6. (F) the QSE representing the resource fails to reserve sufficient emissions allowances or credits to meet at least three deployments for the FFSS obligation period.
   2. (2) ERCOT must allocate a combined amount of at least 70% of the $54 million budget to procure resources under the on-site FFSS category and the resource-controlled FFSS category, unless insufficient offers were submitted for resources under those categories. If insufficient offers were submitted for resources under the on-site FFSS category and the resource-controlled FFSS category to allocate 70% of the budget to those resources, then ERCOT may reallocate the remainder of that portion of the budget to resources under the contractual off-site FFSS category.

5. (e) Offer caps. Before the start of an FFSS obligation period, ERCOT must administratively set the offer cap for each category of eligible resources. The offer cap must be calculated as a function of maximum hours per deployment (hours), heat rate (MMBtu/MWh), and fuel price ($/MMBtu), using the following equation: Offer cap ($/MW) = hours * heat rate * fuel price

   1. (1) The fuel price for resources eligible to provide FFSS under the on-site FFSS category and the resource-controlled FFSS category must be based on the projected price of fuel oil for the upcoming FFSS obligation period.
   2. (2) The fuel price for resources eligible to provide FFSS under the contractual off-site FFSS category must be based on the projected price of natural gas for the upcoming FFSS obligation period.
   3. (3) ERCOT must establish a heat rate for each of the three categories of resources that are eligible to provide FFSS under subsection (c) of this section. The heat rate for each category must be based on the characteristics of the resources that are eligible to provide FFSS under that category.

6. (f) FFSS program requirements. The following minimum requirements apply to the FFSS program.

   1. (1) An FFSS resource must be represented by a QSE.
   2. (2) ERCOT must establish qualifications for a QSE to represent an FFSS resource.
   3. (3) ERCOT must establish performance criteria for an FFSS resource and a QSE representing an FFSS resource.
   4. (4) An FFSS resource's offer must be submitted to ERCOT through a QSE representing the FFSS resource.
   5. (5) ERCOT may deploy FFSS as necessary throughout the FFSS obligation period.

   6. (6) When deployed by ERCOT, an FFSS resource must deploy consistent with its obligations and must remain deployed until the earlier of:

      1. (A) exhaustion of the fuel reserved to generate at the MW level and for the specified duration associated with the FFSS award, including any fuel that was restocked following approval or instruction by ERCOT;
      2. (B) the fuel supply disruption no longer exists; or
      3. (C) ERCOT determines the FFSS deployment is no longer needed.
   7. (7) ERCOT may limit the restocking of fuel to manage the overall cost of the service or for reliability needs.
   8. (8) ERCOT must develop protocols to establish procedures for testing FFSS resources.

7. (g) FFSS payment and charges.

   1. (1) ERCOT must establish a single market clearing price mechanism for resources eligible to provide FFSS under the on-site FFSS category and the resource-controlled FFSS category. ERCOT must establish a separate market clearing price mechanism for resources eligible to provide FFSS under the contractual off-site FFSS category.
   2. (2) ERCOT must make a payment to each QSE representing an FFSS resource based on the appropriate market clearing price mechanism, subject to modifications determined by ERCOT based on the FFSS resource's availability during an FFSS obligation period and the FFSS resource's performance in a deployment event.
   3. (3) ERCOT must charge each load serving entity (LSE) for FFSS procurement costs based upon the LSE's load ratio share during the relevant FFSS obligation period.
   4. (4) Non-procurement costs may be charged to an LSE based on the LSE's load ratio share during the FFSS resource's deployment.

8. (h) Compliance.

   1. (1) ERCOT must establish criteria to reduce a QSE's payment, claw back a QSE's payment, suspend a QSE from participation in FFSS, or any combination thereof, based on the QSE's failure to meet its FFSS obligation under this section or a related ERCOT protocol. ERCOT must also establish criteria for subsequent reinstatement.
   2. (2) ERCOT must establish criteria to suspend an FFSS resource based on noncompliance with this section or a related ERCOT protocol. ERCOT must also establish criteria for subsequent reinstatement.
   3. (3) ERCOT must notify the commission of all alleged instances of noncompliance with this section or a related ERCOT protocol.
   4. (4) ERCOT must maintain records relating to any alleged noncompliance with this section or a related ERCOT protocol.
9. (i) Reporting. Prior to the start of each FFSS obligation period, ERCOT must publicly report the number and category of FFSS resources providing the service, the market clearing prices, the amount of reserved fuel associated with each FFSS award, the highest and lowest offers, the number of MW associated with each FFSS award, and the projected total cost to procure FFSS for that obligation period.
10. (j) Implementation. ERCOT must develop, in consultation with commission staff, additional procedures, guides, technical requirements, protocols, or other standards that are consistent with this section and that ERCOT finds necessary to implement FFSS, including development of a standard FFSS agreement and specific performance guidelines.

Source Note:The provisions of this §25.520 adopted to be effective February 25, 2026, 51 TexReg 1113.