Issues

PRR650

Summary
Action
Voting Record
Background
Key Documents

Summary

Title	Balancing Energy Price Adjustment Due to Non-Spinning Reserve Service Energy Deployment
Next Group
Next Step
Status	Approved on 08/15/2006

Action

Date	Gov Body	Action Taken	Next Steps
08/15/2006	BOARD	Approved	Commission filing
08/03/2006	TAC	Recommended for Approval
06/20/2006	BOARD	Remanded	Address issues raised by the Board.
05/04/2006	TAC	Recommended for Approval	Board approval
04/21/2006	PRS	Recommended for Approval	Consideration bt TAC
03/23/2006	PRS	Recommended for Approval	Review of Recommendation Report and Impact Analysis

Date

Gov Body

Action Taken

Next Steps

08/15/2006

BOARD

Approved

Commission filing

08/03/2006

TAC

Recommended for Approval

06/20/2006

BOARD

Remanded

Address issues raised by the Board.

05/04/2006

TAC

Recommended for Approval

Board approval

04/21/2006

PRS

Recommended for Approval

Consideration bt TAC

03/23/2006

PRS

Recommended for Approval

Review of Recommendation Report and Impact Analysis

Voting Record

Date	Gov Body	Motion	Result
08/15/2006	BOARD	Approve as submitted and direct ERCOT staff to present report of impact of this PRR on prices at the end of the third quarter and the end of the year.	Passed
08/03/2006	TAC	Recommend approval as modified by ERCOT staff comments.	Passed
06/20/2006	BOARD	Remand this PRR to TAC for an analysis of how to ensure that consumers pay only one time for the Ancillary Services needed for reliability reasons and to ensure that PRR650 is the best way to ensure reliability.	Passed
05/04/2006	TAC	Recommend approval as submitted by PRS.	Passed
04/21/2006	PRS	Review of the Recommendation Report and Impact Analysis and forward documents to TAC.	Passed
03/23/2006	PRS	Recommend approval of PRR650 as revised by selected ERCOT comments	Passed

Date

Gov Body

Motion

Result

08/15/2006

BOARD

Approve as submitted and direct ERCOT staff to present report of impact of this PRR on prices at the end of the third quarter and the end of the year.

Passed

08/03/2006

TAC

Recommend approval as modified by ERCOT staff comments.

Passed

06/20/2006

BOARD

Remand this PRR to TAC for an analysis of how to ensure that consumers pay only one time for the Ancillary Services needed for reliability reasons and to ensure that PRR650 is the best way to ensure reliability.

Passed

05/04/2006

TAC

Recommend approval as submitted by PRS.

Passed

04/21/2006

PRS

Review of the Recommendation Report and Impact Analysis and forward documents to TAC.

Passed

03/23/2006

PRS

Recommend approval of PRR650 as revised by selected ERCOT comments

Passed

Background

Status:	Approved
Date Posted:	Feb 24, 2006
Sponsor:	TXU Energy
Urgent:	No
Sections:	6.7.4, 6.8.1.12, 6.9.5.1
Description:	Adjusts the Market Clearing Price of Energy (MCPE) when the deployment of Non-Spinning Reserve Service (NSRS) occurs to provide correct price signals via a post-deployment adjustment to separate the pricing solutions from the deployment on NSRS. This adjustment will still be subject to MCSM, if the Balancing Energy Service Up bids are depleted and no zonal congestion occurs, as detailed in Protocol Section 6.9.5.1(2). ERCOT will provide a notice to all market participants that highlights the interval beginning the NSRS deployment and another notice when NSRS deployment is being discontinued. The adjusted MCPE price signal would remove NSRS deployments and manually re-run SPD, sending accurate price signals in an energy-only market design.
Reason:	The foremost concern is the reliability issues that arise every time NSRS is deployed for depletion of balancing energy bid stack. The original intent of NSRS is deployment in response to loss-of-Resource contingencies on the ERCOT system or for the depletion of the responsive reserve stack. In the relatively few intervals when ERCOT deploys NSRS, the resulting MCPE is improperly depressed. This causes an incorrect price signal to the market during a time when more, not less, generation is needed. This creates a greater reliability concern. Currently, when the Bid Stack for BES Up is estimated by ERCOT to reach 95% deployment, ERCOT deploys NSRS in accordance with Protocol Section 6.7.4 (1) to replenish the BES Up stack. The resulting MCPE applied to all Balancing Energy is improperly distorted due to the fact that a large block of price-taking NSRS is suddenly deployed. The result is a distorted MCPE price that signals to the market that less capacity should be committed and carried online, when the economically correct price signal should be that the market is capacity short and additional capacity that can cost effectively be brought into the market is needed.