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ERCOT to run simulations of long-lead real-time pricing next spring

Highlights

The Electric Reliability Council of Texas will do simulations in the spring on a program that could allow real-time market participation for units that need as much as 30 minutes' lead time, state regulators learned Thursday.

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The Public Utility Commission of Texas received a status report regarding the concept of a multi-interval real-time market, which would expand the real-time market from its current single five-minute interval to a time horizon that extends to 30 minutes or more. That time horizon is "subject to stakeholder discussion," ERCOT said in its report.

In effect, the market would generate prices at five-minute intervals to the time horizon, but only the first five-minute interval's prices would be financially binding.

The longer time horizon would enable "more efficient commitment and dispatch of the current fleet of resources," ERCOT said, and could encourage more resources to participate in the real-time market, such as demand-response resources and those that take more than five minutes to ramp up or that have limitations on how short or long they can run.



However, the success of the concept depends on the accuracy of forecast loads, variable renewable generation and the status of generation resources, it added.

"If MIRTM commits a resource and the subsequent binding price in real-time is lower than the resource's offer ... price, the resource will be entitled to a make-whole payment," ERCOT said in its report.

These make-whole payments that would be paid by load on a load-ratio share basis are also known as "uplift," about which Commissioner Ken Anderson expressed concern.

"To me, the benefits going forward ... have to clearly exceed the cost by a significant factor," Anderson said. "We need to all keep in mind that while the benefit may be there, you have to factor in that the prices in the market [now] at least are hedgeable."

Any uplift "is going to be a cost that ends up being a tax," Anderson said.

ERCOT staffers said they plan to operate the simulation on an iterative basis, refining the process and model with stakeholder input between each iteration.

PUC Chairwoman Donna Nelson advised ERCOT to return to the PUC for guidance if stakeholders deadlock in taking the simulation in different directions.

EL PASO ELECTRIC SOLAR PILOT PROGRAM

In other business, the commission approved a preliminary order laying out the issues that must be addressed to decide whether to approve El Paso Electric's proposal to implement a voluntary community solar pilot program.

"I want to continue to note that I want the final order to state that the costs of this program will not be included in base rates, if it turns out that the program does not get subscribers," Nelson said. "I want the parties to know that if they move forward with this ... it will be over my dead body that these costs will be put in the rate base."

Commissioner Brandy Marty Marquez added that she wanted to make sure the utility has "explained all of the relevant assumptions, including the existence of customer demand for this program."

Those issues include how El Paso Electric proposes to obtain the renewable energy to meet projected demand for the first two years, and whether the proposal ensures appropriate costs are recovered from community solar program participants, and not from non-participants. Other issues are whether the proposed renewable energy cost is reasonable and what would El Paso Electric do if the program is not fully subscribed after two years.

On another subject, Nelson noted that during a recent Southwest Power Pool Regional State Committee meeting, SPP advised the states to submit Clean Power Plan compliance plans, rather than let the federal government impose its own plan.

"I said it wasn't their place to do that," Nelson said.

--Mark Watson, markham.watson@platts.com
--Edited by Lisa Miller, lisa.miller@platts.com