1 / 11

Resource Cost Working Group April 5, 2017 WMS Update

This resource cost working group update discusses the background, options, and proposed solutions for mitigating exceptional fuel events in real-time. It also addresses the treatment of fuel cost components in the fuel adder and proposes a long-term solution to the coal index price.

kellyprice
Télécharger la présentation

Resource Cost Working Group April 5, 2017 WMS Update

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Resource Cost Working Group April 5, 2017 WMS Update

  2. Real-Time Mitigation During Exceptional Fuel Events Background: • On certain days in February and March 2014 (Polar Vortex), some Resources were mitigated in real-time to below their actual cost due to large differences between FIP and their actual gas price • NPRR664 implemented a manual Real-Time Make-Whole Payment process for exceptional fuel events that expired May 1, 2015 • Also provided for a resource-specific Fuel Index Price (FIPR) of HSC, Waha or weighted-average • NPRR714 extended the manual process for Make-Whole with a sunset date of 6/1/17

  3. Real-Time Mitigation During Exceptional Fuel Events Background (continued): • TAC assignment to investigate alternatives to NPRR664 • Prefer exceptional fuel costs in LMPs to avoid make-whole and uplift, but also concerned with incorrect LMPs • RCWG/WMS have discussed several options without reaching consensus • Option 1: Continue with existing Real-Time Make-Whole Payment • Option 2: Pursue “Exceptional Fuel Cost flag” concept • Option 3: Increase MOC’s during Cold Weather Events • ERCOT has proposed a new revised option

  4. Real-Time Mitigation During Exceptional Fuel Events • ERCOT proposed new option • During an exceptional fuel event, QSEs could submit a weighted average intraday fuel price (WAFP) to ERCOT, similar to TPO submittals • ERCOT would use the WAFP in the MOC calculation • After the event, QSEs would provide documentation of the WAFP to ERCOT for verification, including attestation by an officer • ERCOT developing NPRR and will submit to PRS • RCWG expects to review the NPRR when assigned by WMS

  5. Fuel Cost Components in the Fuel Adder Issue: • TAC assignment to WMS to RCWG • Review appropriate treatment of fixed costs such as pipeline capacity charges and penalties in the Fuel Adder Background: • Fuel Adder is used in calculation of Mitigated Offer Caps and RUC Make-whole payments • Default is $0.50/MMBtu, but a Resource can elect to submit an “actual” fuel adder, subject to verification by ERCOT • Fuel costs can include a number of non-commodity components, such as costs for transportation, storage, etc.

  6. Fuel Cost Components in the Fuel Adder Status: • RCWG has thoroughly discussed the issue and did not reach consensus on a recommendation for changes to the Fuel Adder. • Although there were concerns expressed with the potential for fixed-costs in the Fuel Adder, there were also concerns with broader market design issues. • And no market participant has put forth an NPRR or VCMRR proposing changes to fuel cost components in the Fuel Adder at this time. • RCWG considers this action item Complete, subject to WMS agreement

  7. Long-Term Solution to Coal Index Price • VCMRR014 provided an interim solution • $1.10 fuel adder for coal and lignite resources that is added to the $1.50 Solid Fuel Price • Sunsets 6/1/18 • RCWG reviewed ERCOT’s revised draft NPRR for Coal Fuel Index Price • “CFIP” Coal Fuel Index Price: “Delivered to ERCOT” index price based on PRB 8400 coal plus rail transportation • $0/MMBtu fuel adder for coal and lignite • ERCOT planning to submit the NPRR to PRS

  8. NPRR 816 Clarification of Definitions of FIP and FOP • NPRR 816 modifies FIP and FOP definitions to support procurement of FIP and FOP indices from more than one vendor • RCWG discussed the NPRR and determined that the existing protocol language appears sufficient • ERCOT considering withdrawing the NPRR

  9. WMS Open Action Items for RCWG

  10. APPENDIX

  11. Exceptional Fuel Costs in Real-Time Mitigated Offer Cap • Proposal for modifying the Mitigated Offer Cap • The Mitigated Offer Cap (MOC) can be modified such that it incorporates exceptional fuel costs to ensure LMPs reflect the incremental cost of intraday fuel (if included in EOC). • The MOC can be modified as follow: • The greater of: • [Generic Heat Rate * FIP, • {IHR * Max [(FIP + FA), WAFP] + O&M} * Multiplier] • Where, • WAFP($/MMBtu) = For the affected period, fuel cost based on the actual exceptional fuel prices, weighted by applicable volumes.

More Related