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Overview of PTP Options and CRR Clearing Performance in ERCOT's Day Ahead Market

This document discusses key topics from the CMWG meeting on January 21, 2011, focusing on Point-to-Point (PTP) Options in the Day Ahead Market, CRR clearing performance, and real-time settlement issues. It highlights concerns regarding potential congestion in the Day Ahead Market that does not appear in real-time, the need for improved modeling of PTP Options by Non-Opt-In Entities (NOIEs), and the considerable increase in auction bids. Additionally, it addresses the ongoing efforts to enhance ERCOT’s systems and processes to ensure efficiency in market operations.

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Overview of PTP Options and CRR Clearing Performance in ERCOT's Day Ahead Market

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  1. CMWG Update to WMS 2-8-11

  2. Discussions on 1/21/11 CMWG • PTP Options in the Day Ahead Market • CRR Clearing Performance • Real Time SPP Calculation

  3. PTP Options in the Day Ahead Market Background Protocols Section 2: Point-to-Point (PTP) Option: “A type of CRR that is evaluated … as the positive power flows on all directional network elements created by the injection and withdrawal at the specified source and sink points in the quantity represented by the CRR bid or offer (MW), excluding all negative flows on all directional network elements….” Protocols 4.4.5(2) CRR • All CRRs held by CRR Account Holders are settled based on applicable DAM Settlement prices, except for Point-to-Point (PTP) Options and PTP Options with Refund that have been declared by a Non-Opt-In Entity (NOIE) before DAM execution to be settled in Real-Time and are still held by that NOIE in Real-Time. • Issue: Is the method for modeling PTP Options declared by NOIEs for settlement in RT resulting in congestion in the DAM that isn’t occurring in RT?

  4. PTP Options in the Day Ahead Market CMWG Discussion • Does DAM consistently evidence congestion in certain areas that is not showing in RT? • To determine magnitude of impact ERCOT pledged to rerun the DAM, modeling the NOIE PTP Options declared for RT as Obligations • Status: ERCOT has activity on its ‘to do’ list

  5. CRR Clearing Performance • Issue: February Auction cleared ~ 2 weeks late. Hedging instruments lose value if not available in time for commercial decision making • Discussion: • Significant increase in participation (highest during market trials was 40,000 bids) • 160,000 bids in Feb 2011 auction • ERCOT is evaluating hardware & software upgrades, also rerunning w/o low priced bids • Status: ERCOT work is underway. Anticipate hardware upgrade prior to 3/31/11.

  6. Real Time SPP Calculation • Issue: Settlement Point Price (SPP) is created using MW weighted LMPs. This is causing price separation at physical locations when there is no congestion. • Discussion: • SPPs should not diverge when there is no congestion • Current Energy weighted SPPs are appropriate for settling quantities that vary within an interval (Energy prooduction/consumption) • Time Weighted SPPs appropriate for settling quantities that do not vary within a 15 minute interval (DAM Awards, Trades, PTP Obligations, etc.) • Status: ERCOT will submit NPRR to add Time weighted SPP calculation and change settlements appropriately.

  7. Discussions on 2/4/11 w/ PLWG

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