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QSGR MITIGATED OFFER CAP PROPOSAL

RCWG Meeting September 21,2012. QSGR MITIGATED OFFER CAP PROPOSAL. INTRODUCTION . Purpose of WMS-approved changes to VCM on September 12 were meant to amortize start-up costs for QSGRs across a more accurate calculation of run-times.

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QSGR MITIGATED OFFER CAP PROPOSAL

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  1. RCWG Meeting September 21,2012 QSGR MITIGATED OFFER CAP PROPOSAL

  2. INTRODUCTION • Purpose of WMS-approved changes to VCM on September 12 were meant to amortize start-up costs for QSGRs across a more accurate calculation of run-times. • The calculation (75% of all online time) does not recognize the significant amount of time when a QSGR’s LSL is greater than the amount of energy needed by SCED, and the unit is not receiving a positive Base Point above LSL. In those situations, it is probable that the unit is receiving an LMP lower than its MOC (i.e., below short-run marginal costs).

  3. PROPOSED SOLUTION • Modify Protocols to allow QSGRs to telemeter a zero LSL while online • This will allow SCED to dispatch the unit between zero and its physical LSL such that the LMP at the generator bus will continue to be set by the unit’s MOC. • NPRR needed to provide exceptions for Base Point Deviation charges and GREDP violations. • The possible increased use of Reg-Down can be addressed and minimized through implementing the draft NPRR on calculation of Generation To Be Dispatched, which effectively changes the calculation of GTBD from “actual generation” to “Base Points + deployed regulation”.

  4. OTHER ISSUES WITH QSGR COST RECOVERY • Heat Rate • The verifiable cost calculation for QSGRs uses an incremental heat rate, which would be correct for dispatch if minimum run costs were separately paid, but that is not the case for QSGRs. • The VCM manual should be revised to account for these uncompensated minimum run costs • Gas Shaping and Transportation • The VCM recognizes the appropriateness of compensating resources for their “actual cost of transporting and purchasing spot fuel.” • However, the VCM does not include gas shaping and transportation costs for calculating the QSGR MOC. • And, fuel adjustment it is not included in the cost calculation for the dispatch of any resource.

  5. NEXT STEPS • Review proposed draft NPRR for QSGR Dispatch Adjustment • Review proposed draft VCM changes • Seek to finalize recommendations back to WMS for their October 10, 2012 meeting.

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