AUSTIN, Texas — ERCOT’s Board of Directors on Tuesday approved price corrections for 21 operating days, dating back to September, that resulted from a series of software errors.

The board unanimously approved correcting day-ahead market prices for Sept. 16-23 and real-time prices for Oct. 16-20, 23-24, 26, 29-31, and Nov. 4 and 6.

Staff were able to correct several other operating days that were caught within two business days, as per ERCOT’s protocols.

“The volume of price corrections is not acceptable to ERCOT,” said Kenan Ögelman, vice president of commercial operations. “We have initiated a review of our practices … and changes we institute to software, to make sure we deliver to you the highest quality products.”

Ögelman said some of ERCOT’s vendors have committed to provide a better testing environment, “which is one of the ways we try to deliver quality and an error-free product.”

“It’s not the only thing,” Ögelman said, “but testing is important in delivering the product.”

The board determined that real-time prices were “significantly affected” by the software error. The Technical Advisory Committee in September debated “significance” as it applies to pricing errors, as some resettled amounts were in single digits. (See “Staff to Review Pricing Issues Following Software Errors,” ERCOT Technical Advisory Committee Briefs: Nov. 20, 2019.)

Ögelman said staff would work with stakeholders to better define the significance of price corrections.

“We believe this would reduce the incidents and the frequency of coming to the board,” Ögelman said, noting a protocol change will be likely.

ERCOT this week has already issued market notices listing the resettled prices for the Sept. 16-17 and the Sept. 18–19 operating days.

Magness, Walker Recount NERC Presentations

ERCOT CEO Bill Magness and Public Utility Commission Chair DeAnn Walker briefed the board on their November presentations to NERC’s Member Representatives Committee, saying their update on the ability of the Texas grid operator’s energy-only market to meet record demand with a single-digit reserve margin was well received.

“It was an education opportunity. There are a lot of people who don’t operate markets like this,” said Magness, noting they had offered to make the presentations before the summer began. “That’s how confident we were.”

Walker said NERC CEO Jim Robb came up to her after the presentation and said, “We’ll see about next year.”

“I was like … here we go,” Walker said, rolling her eyes. “The other fascinating thing is I was there from 1 to 5:30 [p.m.] While they seemed to be concerned about ERCOT, not once did they mention the word ‘California.’”

During his CEO report, Magness said staff are projecting a $33.9 million positive budget variance for 2019, thanks to a $6 million favorable variance for expenses and an unexpected $19.2 million in interest income. ERCOT also reported a positive variance of $29 million in 2018, a result of “aggressive” interest rate assumptions set in 2017.

Magness told the board the variances will be set aside to fund the real-time co-optimization (RTC) project. Staff have said it will take four to five years and upward of $50 million to implement RTC, which procures energy and ancillary services simultaneously in the real-time market every five minutes to find the most cost-effective solution for both requirements.

The directors will get their first chance to vote on the RTC Task Force’s work during their February meeting. The team is developing a set of key principles that will guide the protocol changes to implement the process.

Magness said the board will get regular updates in 2020 from the RTCTF, the Battery Energy Storage Task Force and on distributed generation resources. ERCOT has temporarily limited interconnections of new DG projects while it develops rules and requirements.

Garza Delivers Final IMM Report

In her last report to the board, Independent Marker Monitor Director Beth Garza said real-time prices have dropped to last year’s levels, while natural gas prices have trended even lower, resulting in higher implied heat rates for generating units.

Garza said November’s heat rate was about 12 MMBtu/MWh, compared to 2018’s final rate of 11.1 MMBtu/MWh. ERCOT’s gas prices averaged $3.22/MMBtu last year but were down to about $2.50/MMBtu in November, she said.

Real-time prices dropped to about $30/MWh in November, Garza said. They averaged $50.90/MWh through October, an approximately 42% increase over last year’s average of $35.6/MWh. Prices averaged more than $160/MWh in August, thanks to spikes in scarcity pricing.

Garza closed her report by announcing she would be stepping down as the IMM’s director. (See related story, Garza Steps Down as Head of ERCOT IMM.)

ERCOT Members Gather for Annual Meeting

Magness welcomed members to ERCOT’s annual meeting, held after the board’s public session, by recounting the market’s growth since 2009, when he joined the grid operator as legal counsel. Smart meters have grown seven-fold, wind resources have gone from 91.6 MW to 22,428 MW, and the demand peak is expected to have grown from 63.4 GW to next year’s projected record peak of 76.7 GW.

“I remember when we got to 65,000 MW, we were like …” Magness said, grabbing the podium with both hands and ducking in faux fear. “Now, we’re helping ERCOT develop the best market in the world.”

Members celebrated the service of CPS Energy’s Carolyn Shellman and CenterPoint Energy’s Kenny Mercado, who cycle off the board at year-end with a combined nine years of experience. Austin Energy’s Jackie Sargent will replace Shellman in the municipal segment, while Oncor’s Mark Carpenter will step in for Mercado as the investor-owned utility’s segment representative.

Tenaska Power’s Keith Emery also joins the board as the independent power marketer’s segment representative. He replaces DC Energy’s Seth Cochran, who is taking Emery’s previous position as an alternate.

State Rep. Dade Phelan keynoted the annual meeting, celebrating what he called “no-opposition Tuesday” — reaching the Dec. 9 filing deadline for next year’s elections without an opponent.

As chair of the House State Affairs Committee, Phelan is responsible for legislation affecting the state’s utilities. He said when handed the chairmanship, he knew “plenty about ERCOT.”

“I was at Disney World [home of Epcot]. I saw all the resorts,” Phelan said to laughter.

Board Approves AS Methodologies, 14 Changes

The board unanimously approved staff’s proposal to not make any changes to the methodologies used to determine 2020’s ancillary service quantities and the representatives to the 30-person Technical Advisory Committee, which reports and makes recommendations to the board.

Based on feedback from stakeholders, ERCOT will compute responsive reserve service quantities with an updated resource contingency criterion of 2,805 MW.

The board also unanimously approved its consent agenda, which included 10 Nodal Protocol revision requests (NPRRs), a single revision to the Planning Guide (PGRR), two system-change requests (SCRs) and a Verifiable Cost Manual update (VCMRR):

• • NPRR849: Clarifies the range of voltages at a generation resource’s point of interconnection and circumstances for which its reactive capability must be designed to meet.
  • NPRR902: Defines ERCOT Critical Energy Infrastructure Information (ECEII), adds items that are considered ECEII, specifies the restrictions imposed upon parties that receive or create ECEII and provides a framework for the submission of ECEII to ERCOT.
  • NPRR928: Defines “cybersecurity incident” and “cybersecurity contact,” classifying the former as protected information, and creates a form for notifying ERCOT of a cyber incident. The change also allows ERCOT to notify state or federal law enforcement of a cybersecurity incident and to notify market participants in order to mitigate further effects.
  • NPRR937: Removes distribution-level and non-settlement metered block load transfers from deployment during Level 2 energy emergency alerts (EEAs).
  • NPRR941: Creates a 138/345-kV trading hub for the Lower Rio Grande Valley, allowing additional trading liquidity and forward-price discovery in the area.
  • NPRR957: Establishes the terms “energy storage system” (ESS) and “energy storage resource” (ESR). ESS is the umbrella term for storage assets. ESRs are ESSes eligible to participate in security-constrained economic dispatch and/or provide ancillary services. ESRs must be registered with ERCOT as both a generation resource and a controllable load resource.
  • NPRR965: Excludes a quick-start resource’s five-minute intervals from the generation resource energy deployment performance calculation when the resource is engaging in the decommitment process or telemetering “shutdown” status.
  • NPRR968: Updates protocol language to comply with NERC reliability standards BAL-002-3 (Disturbance Control Standard – Contingency Reserve for Recovery from a Balancing Contingency Event) and EOP-011-1 (Emergency Operations) by changing the physical responsive capability trigger for a Level 3 EEA to match a new most severe single contingency of 1,430 MW, to be implemented on Jan. 1, 2020.
  • NPRR969: Clarifies ERCOT is the final authority in qualifying market participants.
  • NPRR972: Gives ERCOT the authority to decline to open a transaction-adjustment period for a congestion revenue right auction, even if the transactions submitted exceed the limit announced prior to the auction, as long as the number of transactions submitted does not exceed the number that can be processed by ERCOT’s systems.
  • PGRR071: Updates the Planning Guide to align with NPRR926, which removed the 90-day period between subsynchronous resonance study approval and initial synchronization and was approved by the board in June.
  • SCR800: Incorporates DC tie-scheduled ramp into SCED by updating the resource limit calculator’s formula to determine the generation-to-be dispatched value and adding a scheduled five-minute DC tie ramp rate (DCTRR). The DCTRR will be calculated from the scheduled systemwide DC tie ramp multiplied by five and a configurable factor to capture the scheduled five-minute ramp.
  • SCR805: Allows ERCOT to automatically provide certain reports to requesting transmission service providers (TSPs) before they are posted to the market information system public area. TSPs will receive the reports once a formal request has been approved by ERCOT.
  • VCMRR025: Removes the ESR definition from the manual, aligning it with NPRR957.

— Tom Kleckner