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Texas Generators Endorse LCRA Compromise for Offer Floor for Non-Spin, RUC Service
August 19, 2011
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Several generators are supporting a compromise proposal from the Lower Colorado River Authority to address the depressing energy price impacts from deployments of Non-Spinning Reserve Service in ERCOT, which would, among other things, set a minimum offer floor for online and offline Non-Spinning Reserve Service (NSRS) and Reliability Unit Commitment (RUC).
Specifically, LCRA describes the key elements of its compromise proposal as follows:
- Online NSRS and Quick Start Generation Resource (QSGR) providing NSRS are always offered into Security Constrained Economic Dispatch (SCED) and always deployed by SCED
- Online NSRS (for capacity providing NSRS), QSGR NSRS (from Low Sustained Limit-LSL to High Sustained Limit-HSL) and RUC resources (from LSL to HSL) must offer no lower than $250/MWh (or $500/MWh) to $1,000/MWh linear curve (Note: Non-Competitive congestion deployments using these offers would be mitigated by two-step SCED). There is still debate as to whether the lower bound of the floor should be $250 or $500.
- Offers for Offline non-QSGR capacity providing NSRS must be no lower than $1,000/MWh to $3,000/MWh linear curve from LSL to HSL
- Offers for Response Reserve Service (RRS) and Up-Regulation Service (URS) portion of capacity must be at the System Wide Offer Cap
- ERCOT shall continue to deploy Offline non-QSGR NSRS in accordance with current deployment criteria and there is no change in the handling of the LSL portion of these resources
- If the System Wide Offer Cap is reduced to LCAP [Low Cap], then the offers for NSRS and RUC resources listed above must be no lower than 90% of LCAP
- The requirement on QSEs to offer no lower than the specified levels above shall be implemented either as an offer floor or an adder to the resources' offer in the Day-Ahead Market and monitored by ERCOT for compliance. "It is envisioned that with the implementation of real-time co-optimization, offer floors or adders would be implemented by the ERCOT systems thereby not requiring QSEs to modify their offers. Real-time co-optimization would be performed using the un-modified offer curves submitted by the QSEs," LCRA said.
"Because Online Non-Spin and Quick Start Non-Spin are always offered into SCED in the Compromise Proposal, this eliminates price reversal when energy from that Non-Spin capacity is dispatched by SCED. With these resources always available to SCED, it reduces the likelihood of ramp-rate-constrained price spikes. The proposal also in effect implements a real-time 'demand' or 'penalty' curve for Operating Reserves that reflects the depletion of Operating Reserves," LCRA said.
LCRA's compromise was supported by Luminant, NRG Texas, and Macquarie Energy, though some of the wholesalers tempered their support by stating that the compromise is a beneficial "initial" step, but that additional changes to the market are needed. Calpine also generally supported the broad principles embodied in the LCRA compromise.
The South Texas Electric Cooperative supported much of the LCRA proposal, except that STEC opposes the use of linear pricing.
No competitive load serving entity filed comments with the PUCT regarding the proposal, or on the other Non-Spin questions on which the Commission sought comment (Project 37897).
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