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Market Monitor Report Filed on 2014 Lower Rio Grande Valley Load Shed

March 25, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Staff of the Public Utility Commission of Texas have filed reports from the Independent Market Monitor and Texas Reliability Entity concerning load shed which occurred in the Lower Rio Grande Valley on October 8, 2014.

The IMM report concludes that:

• There is no evidence of manipulation strategies or market power abuse.

• Wholesale market prices were not indicative of the reliability conditions experienced by customers in the Lower Rio Grande Valley that afternoon.

        -- The localized nature of the problem would never have led to appropriate price signals for the load shed that eventually solved the problem.

         -- Due to the voltage nature of the reliability problem, ERCOT needed to take "command and control" actions that did not produce corresponding market signals.

The IMM report further notes that while the final action required to restore system stability was to shed 200 MW of load in the Rio Grande Valley region, the highest price seen by load during the event was $452.02 per MWh, which was only seen for a single 15 minute interval. Furthermore, IMM simulations show that even had there been no load shed, or if the load shed had been the requested 200 MW rather than the delivered 700 MW (approx.), the price would not have been significantly higher.

"In summary, the practice of averaging load costs over large load zones reduces the volatility of prices seen by load, but also reduces the incentive for load to act to solve congestion problems. While this balance seems favorable now, it may be worth revisiting as more load participates directly in the market," the IMM said

Click here for the full report (Project 44566)

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