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ERCOT stakeholders mull potential price corrections tied to software error


Board to decide significance

Could affect markets outside ERCOT

Houston — Electric Reliability Council of Texas stakeholders expressed concern Wednesday about the significance of price corrections being contemplated in relation to certain transmission outage errors committed by ERCOT for several days in September, which could affect settlements outside the ERCOT market.

During the ERCOT Technical Advisory Committee meeting, Kenan Ogelman, ERCOT vice president for commercial operations, described a situation that arose over the summer and had an effect that may require price corrections.

At the end of May, Ogelman said, ERCOT implemented a change in its market management system for modeling transmission outages in the day-ahead market and reliability unit commitment process.

But the software incorrectly modeled transmission outages withdrawn before their start date in the DAM as if they were in fact out of service, when they were in fact in service.

ERCOT discovered the error September 24 and began investigating how prices were affected May 30 through September 25, and an emergency software patch addressing the error was implemented September 26, Ogelman said.


ERCOT found that the error did not affect the real-time market, and while it affected RUC modeling, no RUC deployments were required as a result of the issue.

The error affected the day-ahead market for August 20-21 and September 16-25, but August prices could not be corrected "as prices for these [operating days] were final, and outside the timeline for board review," according to Ogelman's written presentation.

As the errors discovered for operating days September 24-25 were not yet final, ERCOT corrected them without being required to obtain board approval.

However, the period of September 16-23 was affected and within the time line for Board of Directors review, and the price changes would only be implemented if the board considers the differences "significant," Ogelman said, which ERCOT protocols do not define.

"The burden of significance is on the board, but we anticipate that the board will ask ... what ERCOT considers significant," Ogelman said, which prompted him to bring the issue to TAC. "We would like to hear what feedback there is on that."

For ERCOT's four hubs and four competitive load zones, spread across September 16-23, ERCOT identified in its preliminary analysis 1,536 instances in which the software error resulted in differences in prices. Of this total, 1,315 instances could have corrected prices ranging from $1 less than what was published to $1 more than what was published.

ERCOT found 174 instances when the prices should have been at least $1 higher than was published and 47 instances when the prices should have been at least $1 less than was published.

Ian Haley, director of ERCOT regulatory policy at Vistra Energy, who serves on the Technical Advisory Committee, said stakeholders need more information -- "price times quantity" -- to consider more thoughtfully the question of significance.


Clayton Greer, vice president for commodities at Morgan Stanley, who also serves on the TAC, pointed out that secondary markets rely on ERCOT settlement prices, and while price differences my be small within ERCOT's own markets, "every few cents on the [ERCOT] North Hub is going to mean millions elsewhere."

"The impact outside ERCOT can be much larger," Greer said.

However, Beth Garza, who heads Potomac Economics independent market monitor office for ERCOT, pointed out that ERCOT should focus on significance within its own markets.

"If you don't understand the significance inside the ERCOT sandbox, there's no way to determine the significance outside the ERCOT sandbox," Garza said.

Ogelman said ERCOT staff would further analyze and confirm the data it has collected so far, which would be presented to TAC and the ERCOT Wholesale Market Subcommittee meetings in November. ERCOT hopes to have the board of directors decide the issue in December and have the new prices incorporated in market participant statements by the end of 2019.

-- Mark Watson,

-- Edited by Bill Montgomery,