By Tom Kleckner
AUSTIN, Texas — ERCOT’s Technical Advisory Committee last week agreed on a method for paying lost opportunity costs to generators ordered to ramp down for grid reliability, a solution that will now go to the ISO’s Board of Directors.
Stakeholders discussed three options brought forth by ERCOT staff to address Nodal Protocol Revision Request 649 (Addressing Issues Surrounding High Dispatch Limit (HDL) Overrides), which was remanded back to TAC during the board’s February meeting. (See LOC Rule Sent Back to ERCOT’s Stakeholder Process.)
Staff’s preferred option was the first of three it presented: rewriting the NPRR’s language to replace compensation for opportunity costs with “justified” losses suffered by qualified scheduling entities (QSEs) holding existing contracts. The QSEs would have to provide an attestation of loss, calculations and supporting documentation to recover a claim.
A second option proposed software changes to override the resource node’s LMP, which would have created difficulties at the 98 nodes with at least two generator connections. The third, and priciest option, at $200,000 to $300,000 plus ongoing support, would pre-position manual constraints associated with each resource node in the system model.
As the discussion wore on, it became apparent stakeholders were coalescing on the first of ERCOT’s options.
“This seems to be a quickly diminishing issue,” said Shell Energy’s Greg Thurnher, representing independent power marketers. “It looks like Option 1 is the remedy.”
“We think Option 1 is the way to go for now,” said Megawatt Analytics’ Brandon Whittle, speaking for Odessa-Ector Power Partners and Koch Services. “It puts the onus on the people who might get hurt. No generator wants to be paid back for their losses because of HDL overrides. We’d rather adjust the LMPs.”
The proposal passed by a 23-5 vote, with two abstentions. The NPRR will go before ERCOT’s board April 19. Staff will revise the revision request’s impact analysis and better define energy bilateral contracts.
Odessa-Ector, a subsidiary of Koch Ag & Energy Solutions, initiated discussion of the issue when it claimed its combined cycle plant had lost $300,000 because of three days of dispatch overrides in November 2012. ERCOT submitted the NPRR to satisfy a settlement agreement with Odessa-Ector after the company filed a complaint with the Public Utility Commission of Texas (docket #41790).
Luminant’s Amanda Frazier expressed a preference for an earlier version of the NPRR, which failed to secure sufficient votes. But she said that in subsequent discussions, “ERCOT has eliminated a number of concerns we originally had.
“The damages are limited to those attested to by the resources, and compensating the actual damages rather than the opportunity costs is a good compromise,” she said.
Resmi Surendran, ERCOT senior manager of market analytics and design, highlighted staff’s efforts to reduce HDL overrides, which peaked at more than 348,000 minutes in 2011. The numbers have steadily dropped since then, with only 57 minutes of overrides recorded last year.
Surendran attributed the improved results to increased operator training, their ability to enter manual constraints, the availability of new generic transmission constraints and topology improvements.
Whittle sought reassurance from ERCOT that the NPRR’s cost can be reduced from its current staff estimate of $100,000 to $150,000.
“We try to implement [any changes] at the minimum cost we can,” said Kenan Ögelman, ERCOT’s vice president of commercial operations. “We’ll definitely go back and see if we can’t reduce the cost. I just can’t give you a number, right now.”
