NOTICE DATE: March 3, 2021

NOTICE TYPE: M-B030321-01 Legal

SHORT DESCRIPTION: Transition of System-Wide Offer Cap (SWCAP) to Low System-Wide Offer Cap (LCAP)

INTENDED AUDIENCE: All Market Participants

DAYS AFFECTED: March 4 & 5, 2021

LONG DESCRIPTION: On February 15, 2021, the Public Utility Commission of Texas (PUCT) ordered ERCOT to suspend any use of the Low System-Wide Offer Cap (LCAP) until the next regularly-scheduled PUCT open meeting.  At the March 3, 2021, open meeting, the PUCT ordered that ERCOT remove the LCAP suspension.

The normal timing of the transition from HCAP to LCAP is described in paragraph (3) of Protocol Section 4.4.11.1, Scarcity Pricing Mechanism, as follows:

(a)       On the Operating Day that the Peaker Net Margin (PNM) exceeds PNM threshold the HCAP will remain in effect for the balance of the day (Day 1).

(b)       During the next Operating Day (Day 2), ERCOT shall send a Market Notice that the LCAP is going into effect for the following Operating Day (Day 3). At the end of Day 2 and following the last SCED interval at approximately 2355, the System Operator will approve the switchover from the HCAP to the LCAP.

(c)        All SCED intervals for Day 3 and through the end of the calendar year will use the LCAP.

This Market Notice serves as notification that ERCOT will transition to the LCAP for Operating Day (OD) March 4, 2021. The Day-Ahead Market for OD March 5, 2021 will use the LCAP value.

After transitioning to the LCAP, Energy Offer Curves (EOCs) may not be submitted with offer prices above the LCAP and any EOCs submitted prior to the transition will be capped at the LCAP value.  QSEs will need to update any EOCs submitted prior to the LCAP transition that exceed the LCAP with EOCs that do not exceed the LCAP. In addition, QSEs will need to update any DAM offers (Three-Part Offers, Energy-Only Offers, Ancillary-Service Offers) that exceed the LCAP.

The Power Balance Penalty Curve (PBPC) and Value of Lost Load (VOLL) are also affected by the transition to LCAP.  The Other Binding Document (OBD), Methodology for Setting Maximum Shadow Prices for Network and Power Balance Constraints, requires that the SCED PBPC be capped at LCAP plus $1 per MWh when the SWCAP is set to the LCAP.  Similarly, the OBD, Methodology for Implementing Operating Reserve Demand Curve (ORDC) to Calculate Real-Time Reserve Price Adder, defines the VOLL to be equal to the SWCAP, so the VOLL will also transition to the LCAP value.  VOLL is used in the Real-Time On-Line Reserve Price Adder and Real-Time Reliability Deployment Price Adder calculations.

CONTACT: If you have any questions, please contact your ERCOT Account Manager. You may also call the general ERCOT Client Services phone number at (512) 248-3900 or contact ERCOT Client Services via email at ClientServices@ercot.com.

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