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Calpine, Texas Staff Reach Settlement on Voluntary Mitigation Plan

February 22, 2013

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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Staff of the Public Utility Commission of Texas and Calpine Corporation have filed for approval of a settlement agreement establishing a Voluntary Mitigation Plan (VMP) for Calpine, which specifies offering practices that Calpine may use when offering its generation resources into the ERCOT real-time energy market during the term of the agreement.

The stipulated plan provides Calpine with an absolute defense against an allegation pursuant to PURA § 39.157(a) and P.U.C. SUBST. R. 25.503(g)(7) of an abuse of market power through economic withholding, with respect to the specific behaviors permitted by the plan, as provided in PURA § 15.023(f) and P.U.C. SUBST. R. 25.504(e).

The plan addresses Calpine's offer strategy for the natural gas-fired units under its control.

The stipulated VMP provides:

Gas Unit Offer Procedures: Energy Offer Curves (EOCs) from each of Calpine's combined cycle generator trains, except for energy offered as Responsive Reserve Service, Up-Regulation Service, NSRS, energy from units dispatched by the RUC process, or energy offered as per sections 2.1.2 and 2.1.3 below, shall be no higher than the value calculated in sections 2.1.1:

2.1.1: [(Incremental Heat Rate * (Fuel Index Price + $0.51/MMBtu)) + Variable O&M + SO2 Emissions Cost + NOx Emissions Cost + Fees] + $50/MWh

"Fees" are any charges or changes to administrative fees charged to generators, or changes resulting from federal, state or local laws that impose new or modified fees or costs on Calpine's generation that are beyond Calpine's control. No charges are currently applicable.

2.1.2: Up to 10% of the Hourly Dispatchable Capacity may be offered at prices no higher than $500/MWh.

2.1.3: Up to 5% of the Hourly Dispatchable Capacity may be offered at prices up to and including the then-existing high system wide offer cap (HCAP).

2.1.4: The fraction of Hourly Dispatchable Capacity that is offered at prices up to and including $500 per MWH or up to and including the then-existing HCAP, pursuant to sections 2.1.2 and 2.1.3, and the prices at which it is offered must remain constant for all hours of the operating day. If MWH offered pursuant to section 2.1.2 and/or 2.1.3 are offered on combined cycle generator trains that become unavailable during the operating period for reasons including, but not limited to, trips and/or forced outages, Calpine will as soon as reasonably practicable adjust the EOC of other trains in order to maintain the correct fraction of Hourly Dispatchable Capacity.

2.1.5: Any NSRS carried on non-quick start qualified gas units shall be offered at no greater than 150% of the then current NSRS offer floor.

Offers and/or bids for energy and ancillary services can be made at prices up to and including the then-existing HCAP.

Notwithstanding any other provisions of the plan, for any units providing Responsive Reserve Service or Up-Regulation Service, the prices for the quantities offered for those services shall be consistent with the ERCOT Protocols.

Docket: 40545


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