By Tom Kleckner

ERCOT market participants last week grilled staff over the grid operator’s requests to delay generation outages in advance of an early March cold-weather event that led to a new monthly peak but ultimately did not require emergency actions.

Members rained their concerns on Dan Woodfin, ERCOT’s senior director of system operations, for more than two hours at the Technical Advisory Committee’s March 27 meeting. They contended the grid operator didn’t give the market a chance to work and that it had an insight into the market not shared with its participants.

When it was over, TAC Chair Bob Helton teased Woodfin to be careful drinking water “because of all the holes punched in you.”

Cold Weather, High Loads

In late February, weather forecasters projected an arctic cold front to cover much of Texas during the first week of March. ERCOT’s earliest assessments indicated peak loads of more than 58 GW, “substantially higher” than is typical for early March.

Complicating matters was the more than 7.7 GW of capacity scheduled to begin maintenance outages on March 1 and 2, in addition to more than 12 GW of outages already underway. Meanwhile wind forecasts from ERCOT vendors indicated the grid operator could face low wind output during peak times through March 5.

ERCOT issued an operating condition notice (OCN) just after noon on Feb. 27, warning of a “potential cold weather system” affecting its footprint March 3-7. Staff said they followed up by asking the generators’ qualified scheduling entities to review their fuel supplies and urging them to delay maintenance or return from outages early. ERCOT said it asked about 6 GW of outages to be delayed, but by the following afternoon, only one unit had delayed its outage.

“Normally, when we issue an OCN of this type, we see a lot of response from the pertinent units,” Woodfin said. “It’s not a matter of OCNs causing us to do things; it’s a matter of OCNs causing the market to respond. The idea is to look at your outages … it should cause people to sit up and look closer, and delay the outage because things look tight.”

On Feb. 28, ERCOT projected it had 58 GW of capacity available, which included 2 GW of wind and load resources. However, expected gas curtailments and forced outages led to what ERCOT called a “more reasonable scenario” of a 5.5-GW shortage and a “potential for more extreme conditions” — considering a projected 60-GW peak and a need for 3.5 GW of reserves.

But when ERCOT posted market information at 8 a.m. on Feb. 28, it indicated a surplus of 3.4 GW, boosted by 7 GW of wind energy. Later that day, ERCOT switched to a second vendor’s more conservative forecast of wind production.

‘Voluntary’ or not?

Generator representatives objected to ERCOT’s descriptions of the event. Calpine’s Brandon Whittle noted ERCOT used the terms “ask” and “voluntary” in reviewing the event, but said it was “not the case for my shop.”

The OCN “was just a notice. We get many of those during the year,” he said. “[ERCOT said,] ‘We issued an OCN, no one did this, now you have to respond.’ Ultimately, this is an issue for operators and generators to determine when it is to their economic advantage to start a plant or do whatever they need to do.”

“When we issued the OCN, our expectation was people on their own would respond to it,” Woodfin replied.

“The language I heard over and over that afternoon and the next morning, in discussions with ERCOT staff and management, was that because no one responded to the OCN, you have to do this,” said Whittle, using “strong arm” to describe the underlying message he received from staff. “Part of the instruction to generators was if you don’t move your outage, we’ll cancel it, or you will have it forced.”

When Woodfin explained ERCOT was requesting outage delays so generators could maintain their place in the schedule, Whittle responded, “Is that not a threat in some way?”

“We were trying to help them,” said Woodfin, who observed communications between ERCOT operators and market participants. “All those communications were very cordial. There was no animosity.”

Eventually, more than 6.5 GW of generation originally scheduled to begin planned outages was available through the cold spell.

Potomac Economics’ Beth Garza, director of ERCOT’s Independent Market Monitor, said that while she was supportive of the grid operator’s description of events, it also reminded her of the “offer he couldn’t refuse” line from “The Godfather.”

“‘Either your brains or your signature will be on the contract.’ Either your outage will be moved, or it will be withdrawn,” she said. “That’s what it sounds like right now. That’s not a good situation.”

“No doubt ERCOT was doing what they think they needed to do to maintain the reliability of the system,” Reliant Energy Retail Services’ Bill Barnes said. “We would certainly have a different view when ERCOT declares an OCN and there would be some expectation to take action. The OCN, to us, is information that is interesting, but the No. 1 thing that will drive our behavior is what the prices are doing.

“If the prices are high enough, that would encourage us to change our outage schedule around. I don’t think ERCOT should have that expectation that people are going to start taking all this action unless the market sends the price signal to do so,” he said.

ERCOT “complained of a lack of voluntary outage deferrals after it issued the OCN, but based on the forecasts … there was no reason for the market to expect an extreme situation,” Whittle told RTO Insider on Monday. “Without an expectation of scarcity, the forward prices for the cold snap were not high enough to incent generators to defer outages on their own.”

The generators also complained about a lack of transparency in ERCOT’s development of planning scenarios for March 3-7 and what they saw as a delay in issuing the OCN.

“We want to wait as long as possible to let the market respond on its own,” Woodfin said. “On the 27th, we realized no one was adjusting and we see this [cold weather] coming. Hello? That was what the OCN was for.”

“Issuing the OCN earlier would have prompted more response,” South Texas Electric Cooperative’s Clif Lange said.

Lack of Transparency?

“Why didn’t market prices reflect what was going on?” Barnes asked. “[There was] a lack of transparency in some of the information [provided]. There were also likely expectations that ERCOT would intervene with reliability actions. That should be the focus of what we try to address. There should be confidence in the market.”

“We try to let the market respond, and hopefully, it will, so we don’t have to take command-and-control actions,” Woodfin said.

ERCOT set a new monthly record for demand on March 5 at 60.7 GW, breaking a mark set in 2014. The grid operator wound up with 66.5 GW of capacity to work with, and it canceled the OCN at noon on March 6.

Prices briefly eclipsed $1,300/MWh in the real-time market and approached $800/MWh in the day-ahead market during the morning hours. There were also periods of lower operating reserve demand curve (ORDC) reserves and higher ORDC price adders during the same period.

Asked whether ERCOT believed it had completed all reasonable options before issuing the initial OCN, COO Cheryl Mele responded, “We’ve heard that message.”

“We’re already talking about the ways we can ensure we’re portraying to the market all the things we are looking at,” she said. “The root of the problem is we didn’t do a good job of selecting the forecast early enough that would be what we thought was going to be the most likely outcome.”

ERCOT staff will review its existing Protocols governing the use of OCNs and other market notifications, and it has already begun discussing improvements to its communications processes. Separately, Helton said he would work with TAC Vice Chair Diana Coleman to assemble a group to review how ERCOT distributes planning information data, its definitions or levels of emergencies in the planning horizon, and the timing of market notifications.

Texas Public Utility Commission Chair DeAnn Walker was among the interested observers during the two-hour discussion. Walker did not join in the discussions, but the PUC has opened a docket (Project 49378) to review ERCOT’s “outage scheduling processes” and has placed it on the agenda for its April 4 open meeting.