TEXAS ERCOT STAFF, STAKEHOLDERS MULL SCARCITY PRICE ADDER CHANGES
Houston (Platts)–6 Jan 2016 515 pm EST/2215 GMT
In response to a Texas regulator’s concern that a price adder designed to ensure that sufficient generation reserves remain available has been too low during periods of scarcity, Electric Reliability Council of Texas stakeholders and staff have been analyzing several alternatives.
On Wednesday, the ERCOT Wholesale Market Subcommittee endorsed a report from the ERCOT Supply Adequacy Working Group that summarized analysis of possible changes to this adder, known as the Operating Reserve Demand Curve, but the analysis nevertheless does not contain a consensus solution.
What prompted the work was an October 7 memo by Ken Anderson, a Public Utility Commission of Texas member, which said that on August 13, “The ORDC adder did not seem to reflect appropriately the reduction in physical responsive capacity (PRC) that occurred.”
“A low level of PRC can drive ERCOT grid operators to take out-of-market actions, including implementing Energy Emergency Alerts (EEA) and related procedures,” Anderson said.
SAWG Chairman Brandon Whittle said the SAWG stakeholders did find consensus that ERCOT should not have any more discretion in calling for an EEA than it has now, and that the effective price cap, now $9,000/MWh, should not be raised “at this time.”
But the analysis also included, in addition to the status quo, options that would either change variables used in calculating the ORDC or would change the ancillary services market in some way.
Among the variables used in the formula for calculating the ORDC is the minimum contingency level of operating reserves, which is now 2,000 MW. Another variable is the assumption of the minimum responsive reserve service, known as RRS, that grid operators try to maintain to avoid losing load, which is currently 2,300 MW. Other variables include the assumed value of lost load and the regulatory effective price cap, which are now each $9,000/MWh.