To clarify a little on the RPRS item on the upcoming TAC agenda, I would like to propose a vote for a resolution on the Replacement Reserve Market:

"ERCOT is advised that the intent of the Protocols is for RPRS that has been procured for ERCOT System wide insufficiency be appropriately charged to QSEs that have insufficient capacity to meet their load on an ERCOT system wide basis and not by individual zone. RPRS that has been procured for Zonal Congestion is to be applied QSEs whose schedules impact the CSC(s) for which the service was procured."

For those who may not be aware, when ERCOT has procured RPRS based on an ERCOT wide market insufficiency basis, the settlements have been charging QSEs who are short on a zonal basis.  Thus, if a QSE has scheduled 500MWs of load in the North Zone and 500MWs of load in the South Zone, but in real time has 400MWs of load in the North and 600MWs of load in the South, they will be charged for the 100MW insufficiency in the South Zone even though they were not insufficient on an ERCOT wide basis.

The reason for this discrepancy is found in the settlement formulas in section 6.  While the intent for the application of charges for the service is found in 6.6.3.2.1 and describes the separation of charges into separate buckets for ERCOT System wide insufficiency, Zonal Congestion and Local Congestion, the formulas in section 6.9.2.1.1 apply ERCOT wide insufficiency based on separate zonal calculations.  This is, in part, believed to be one of the contributors of the gross overcharges related to RPRS market thus far.

As with any contract where the language of the contract and the settlement formulas in the contract disagree, it is incumbent on parties to determine what the underlying intent of the contract is and resettle (if needed) based on that intent.  The point of my motion is to clarify that in this case the intent obviously lies with the language and not the formulas.

I look forward to discussing this with everyone at TAC.

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