In response to a Texas regulator's concern that a price adder designed to ensure that sufficient generation reserves remain available has been too low during periods of scarcity, Electric Reliability Council of Texas stakeholders and staff have been analyzing several alternatives.
On Wednesday, the ERCOT Wholesale Market Subcommittee endorsed a report from the ERCOT Supply Adequacy Working Group that summarized analysis of possible changes to this adder, known as the Operating Reserve Demand Curve, but the analysis nevertheless does not contain a consensus solution.
What prompted the work was an October 7 memo by Ken Anderson, a Public Utility Commission of Texas member, which said that on August 13, "The ORDC adder did not seem to reflect appropriately the reduction in physical responsive capacity (PRC) that occurred."
"A low level of PRC can drive ERCOT grid operators to take out-of-market actions, including implementing Energy Emergency Alerts (EEA) and related procedures," Anderson said.
SAWG Chairman Brandon Whittle said the SAWG stakeholders did find consensus that ERCOT should not have any more discretion in calling for an EEA than it has now, and that the effective price cap, now $9,000/MWh, should not be raised "at this time."
But the analysis also included, in addition to the status quo, options that would either change variables used in calculating the ORDC or would change the ancillary services market in some way.
Among the variables used in the formula for calculating the ORDC is the minimum contingency level of operating reserves, which is now 2,000 MW. Another variable is the assumption of the minimum responsive reserve service, known as RRS, that grid operators try to maintain to avoid losing load, which is currently 2,300 MW. Other variables include the assumed value of lost load and the regulatory effective price cap, which are now each $9,000/MWh.
Several of the suggested ORDC calculation revisions analyzed in the WMS report would alter these variables, such as raising the minimum contingency level to 2,300 MW or to 2,750 MW, or changing it to a varying number representing the sum of RRS and "up regulation services" acquired through the ancillary service market.
Others suggested raising the minimum RRS to 2,750 MW or the assumed value of lost load to $12,000/MWh or $18,000/MWh.
Two changes involved keeping all of the variables unchanged, but one of these advocates converting the ORDC into an Ancillary Services Demand Curve in the day-ahead market, while the other proposal involves requiring all quick-start resources to come online whenever ERCOT deploys its Non-Spinning Reserve Service, an ancillary service in which offline generation stays ready for deployment within 30 minutes.
The next step in the process is to present the report to the ERCOT Technical Advisory Committee, Whittle said. ERCOT or stakeholders may present the WMS report and any recommended ORDC proposals to the PUC at a later date, he said.
