NOTICE DATE: December 7, 2021

NOTICE TYPE: M-A120721-01 General

SHORT DESCRIPTION: Implementation of the Public Utility Commission of Texas’s (PUCT’s) approval of changes to the High System-Wide Offer Cap (HCAP)

INTENDED AUDIENCE: All Market Participants

DAYS AFFECTED: January 1, 2022 and thereafter

LONG DESCRIPTION:  At their open meeting on December 2, 2021, the PUCT approved an amendment to §25.505 of the PUCT Substantive Rules.  This amendment lowers the HCAP from its current value of $9,000/MWh to a value of $5,000/MWh with an effective date of January 1, 2022.  With the change to HCAP, there are other parameters that are directly driven by HCAP, over the effective System-Wide Offer Cap (SWCAP) more generally, that will also be changing on January 1, 2022.  These include:

• The Value of Lost Load (VOLL);
• The Ancillary Service Penalty Factors for the Day-Ahead Market (DAM) and Supplemental Ancillary Service Market (SASM); and
• The Power Balance Penalty Curve used in Security-Constrained Economic Dispatch (SCED).

Providing more detail regarding the Power Balance Penalty Curve in effect beginning on January 1, 2022, the curve will be changed to be capped at $5,001/MWh, i.e., HCAP plus $1/MWh.  This effectively means that the price on the curve will be at its maximum value at MW violations above 100 MW.   This is similar to how the Power Balance Penalty Curve is adjusted when the Low System-Wide Offer Cap (LCAP) is in effect.

There are two items that ERCOT will be bringing to stakeholders for discussion and voting in the coming weeks.  First, regarding the HCAP, this parameter is updated within the ERCOT Protocols through recommendation by the Technical Advisory Committee (TAC) and approval by the ERCOT Board, as described in paragraph (1) of Protocol Section 4.4.11, System-Wide Offer Caps.  The table within that section will be updated following ERCOT Board approval and does not require a Nodal Protocol Revision Request (NPRR).

Second, ERCOT will be sponsoring an Other Binding Document Revision Request (OBDRR) for the Methodology for Setting Maximum Shadow Prices for Network and Power Balance Constraints in order to update the Power Balance Penalty Curve, as described above.  OBDRRs for this document similarly require a recommendation by TAC and approval by the ERCOT Board, as described in paragraph (4) of Protocol Section 6.5.7.1.11, Transmission Network and Power Balance Constraint Management.

ADDITIONAL INFORMATION:  In addition to presenting to TAC and the ERCOT Board, ERCOT plans to present on this topic to the Wholesale Market Working Group (WMWG) on December 17, 2021 and the Wholesale Market Subcommittee (WMS) on January 5, 2022.

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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