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May 10, 2019

Texas regulators approve changes in ERCOT scarcity pricing (P-48721)

by Kelso King, Grid Monitor
Source – Grid Monitor
Posted 05/10/2019

This item was approved by consent, without discussion.

Proposal for Adoption

On May 2, 2019, Staff filed a revised Proposal for Adoption, incorporating revisions  to a previous Proposal for Adoption that were requested by the commissioners at the April 18, 2019 open meeting. Consistent with the Commission’s discussion at that meeting, the revised draft rule:

•       Sets the value of lost load (VOLL) equal to the system-wide offer cap in effect. This change would codify the VOLL at $9,000 per MWh under the currently effective system-wide offer cap, and set it to $2,000 per MWh when the LCAP is in effect; and

•       Retains the Operating Reserve Demand Curve (ORDC) and Reliability Deployment Price Adder (RDPA) in the event that the Low System-Wide Offer Cap (LCAP) is imposed.

To ensure that the ORDC and the RDPA can be applied under the LCAP without causing divergence between the day-ahead and real-time markets, the Proposal for Adoption establishes that the VOLL is set to equal the system-wide offer cap in effect.

Background

The PUCT proposed amendments to PUCT Substantive Rule §25.505, relating to resource adequacy in the ERCOT power region. The amendment to §25.505 improves market certainty and clarity with respect to the ERCOT market. The Commission also repealed §25.508, relating to the high system-wide offer cap in the ERCOT power region, to remove obsolete language from the Commission’s rules.

Although generally supportive of Staff’s original proposal, at the April 18, 2019 Open Meeting, Chairman Walker and Commissioner D’Andrea recommended several substantive changes to the proposed rule revisions. The Chairman believed that the Value of Lost Load should be set at whatever the cap is at the time. Commissioner D’Andrea recommended that the Operating Reserve Demand Curve and reliability deployment price adder be left in place and the value of lost load be reduced to equal the Low System-Wide Offer-Cap.

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