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ERCOT seeks alternative to must-run agreement with NRG unit

Amonth after approvinga reliability must-run agreement that will keep a Houston-area power plant inservice through June 2018, the ElectricReliability Council of Texas Inc. is looking for alternatives.

Atransmission project under construction will alleviate reliability concernsonce it is completed, but until then, ERCOT is $3,185 per hour year-round tokeep NRG Energy Inc.'sGreens Bayouplant available. The payment, ERCOT said, reserves 371 MW of capacity that mustbe available all hours during the months of July 2016 through September 2016;June 2017 through September 2017; and June 2018.

Theavailable capacity reduces post-contingency loading on the 345-kVSingleton-Zenith transmission lines, a concern that will be alleviated once theHouston Import Project transmission development is complete.

Accordingto S&P Global Market Intelligence data, the plant, which began operating in1973 and has been rarely used in recent years, has a nameplate capacity of 406MW.

OnJuly 13, ERCOT issued a request for proposals for an alternative supply, sayingits protocols require it to evaluate cost-effective alternatives to anyreliability must-run agreement. Suppliers recognized as "qualifiedscheduling entities" in ERCOT are eligible to bid.

ERCOTsaid it may award multiple contracts to obtain the equivalent reliabilitybenefit of Greens Bayou's capacity. The alternative, whether a single contractor multiple contracts, must provide at least $1 million in annual savings overthe projected net annualized costs for the Greens Bayou unit, ERCOT said in theRFP.

Proposalsare due Aug. 24 and ERCOT expects to execute any contracts on Oct. 7.