ERCOT Submits NPRR Authorizing Corrective Actions to Prevent Practices Inconsistent With Efficient Operation of the Market

March 31, 2011
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ERCOT has filed Nodal Protocol Revision Request 342 to provide ERCOT with authority to implement corrective measures and advise Market Participants to discontinue practices that are inconsistent with "efficient operation of the market," after identifying such outcomes in the Day-Ahead Market (DAM) and Real-Time Market (RTM).

ERCOT requested urgent status for the NPRR.

P.U.C. SUBST. R. 25.503(f)(12) places duties on Market Participants and ERCOT Staff to identify to the appropriate ERCOT subcommittee any, "provision in the ERCOT procedures that produces an outcome inconsistent with the efficient and reliable operation of the ERCOT-administered markets." P.U.C. SUBST. R. 25.503 defines "efficient operation of the market" as, "[o]peration of the markets administered by ERCOT, consistent with reliability standards, that is characterized by the fullest use of competitive auctions to procure ancillary services, minimal cost socialization, and the most economical utilization of resources, subject to necessary operational and other constraints."

"Since the Nodal market began operations in December 2010, market outcomes have been identified that ERCOT contends are inconsistent with the efficient operation of the market. These anomalous outcomes have resulted from flaws in the design or implementation of Nodal market procedures or systems that created unintended consequences in ERCOT-administered markets. Under the current Protocols, ERCOT has insufficient ability to prevent or control the impact of such problems," ERCOT said.

While ERCOT may put Market Participants on notice that such problems have arisen in the market, ERCOT has very limited authority to correct prices so as to eliminate the market distortions created by such issues.

"The NPRR recognizes that once problems are identified, their resolution may require Protocol and system changes that cannot be implemented immediately. In order to mitigate future inconsistent market outcomes, the NPRR gives ERCOT authority to notify Market Participants of these outcomes and instruct corrective measures going forward. Any such corrective measures will be subject to ERCOT Board review at the next scheduled meeting of the ERCOT Board, unless circumstances dictate a special meeting be called to address the situation," ERCOT said.

The NPRR would provide that, after consultation with the Independent Market Monitor and PUCT Staff has identified an outcome inconsistent with efficient market operations, ERCOT may advise Market Participants to refrain from taking certain actions until a solution has been implemented.

ERCOT would also be authorized to take corrective measures to ensure that efficient operation is maintained, including, when authorized by the ERCOT Board, price corrections and resettlement actions, including for situations in which a Market Participant takes action contrary to ERCOT's advisory regarding such actions, or contrary to the corrective measures identified by ERCOT.

NPRR 342 is titled "Notification and Actions to Address Outcomes Inconsistent With Efficient Operation of the ERCOT Market."

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