By Tom Kleckner
AUSTIN, Texas — The ERCOT Board of Directors Feb. 9 remanded to the Technical Advisory Committee a proposal to pay lost opportunity costs to generators ordered to ramp down for grid reliability.
Nodal protocol revision request (NPRR) 649, in the works since September 2014, received 56% support in a TAC roll call vote in November, short of the two-thirds threshold for approval.
ERCOT submitted the NPRR to satisfy a settlement agreement with Odessa-Ector Power Partners, owner of a West Texas combined cycle plant that said it lost $300,000 because of dispatch overrides during three days in November 2012.
The settlement came in response to an appeal the company and Merrill Lynch, its qualified scheduling entity at the time, filed with the Public Utility Commission of Texas (docket #41790).
Odessa-Ector, a subsidiary of Koch Ag & Energy Solutions, asked the ERCOT board to override the TAC’s rejection. “While nearly all out-of-merit actions have financial protection in the protocols, these specific actions, which were not foreseen during the original protocol development, result in financial losses for those complying with ERCOT’s instructions,” the company said, predicting that remanding the issue to TAC would not resolve the impasse.
ERCOT CEO Bill Magness proposed that the board return the issue to the TAC.
“We believe if we remand this [to the TAC], there could be an opportunity for further discussion around the compensation issue and put further alternatives on the table,” Magness said. “We would commit to filing comments and identifying options we might put forward. It seems like it might be better to take one more crack at it [in the TAC] and work it out.”
Interested parties who had filed position statements supported Koch.
“After more than a year of work on this NPRR by stakeholders and ERCOT staff, it is clear that there is no acceptable resolution that would be achieved by additional time or debate,” said Texas Competitive Power Advocates, which called the NPRR “fair and appropriate.”
South Texas Electric Cooperative and Golden Spread Electric Cooperative also asked the board to grant the appeal, saying “strong support at multiple TAC subcommittees are indicative of a NPRR that is well vetted and developed.”
The Wholesale Market Subcommittee unanimously endorsed the proposal in October and the Protocol Review Subcommittee endorsed it with one opposing vote.
Twelve voters from ERCOT’s Consumer, Cooperative and Independent Retail Electric Provider (IREP) market segments opposed the proposal at the TAC meeting, where there were also three abstentions from the IREP and Investor-Owned Utility segments.
Some opponents said that since ERCOT’s nodal market went live in December 2010, ramp-down dispatch orders have been rare and do not justify the estimated cost. Others contended that that the proposal could overcompensate generators rather than making them whole.
“It’s a slippery slope when you start paying opportunity costs and lost profits,” said Valero Services’ Jack Durland, who represents industrial customers. “ERCOT does everything it possibly can, but it can’t always take power. Should generators be guaranteed payments?”
“There are solid arguments on both sides of this issue,” said unaffiliated director Karl Pfirrmann. “It’s important for stakeholders to reach [a] solution, rather than us direct it from above.”
Pfirrmann said he was “concerned about precedent-setting issues as we go forward,” expressing his hope that “we find resolution in our committee structure.”
The motion to remand the issue to the TAC carried with one abstention. The board also directed ERCOT staff to file suggested alternatives that might satisfy the two-thirds majority requirement.
TAC Chair Randa Stephenson promised the board her committee would be “very diligent” about bringing the NPRR back to the board for its next meeting in April.
