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Raiden Commodities Files Complaint at Texas PUC Over ERCOT LMPs Resulting From Hardware Failure, Data Error; Seeks Market Resettlement

January 26, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Raiden Commodities, L.P. filed a complaint at the Public Utility Commission of Texas seeking an order directing ERCOT to resettle the market on two days on which Raiden alleged ERCOT's actions in the wake of hardware failures and data errors were inconsistent with the ERCOT protocols

March 30, 2015

As alleged by Raiden, on March 30, 2015 from 06:13 to 06:39 a hardware failure within ERCOT made SCED unable to set Locational Marginal Prices. The published LMPs for the HB North hub for the three intervals (06:00, 06:05, and 06:10) prior to the hardware failure at 06:13 were $20.72, $22.32, and $21.09. One hour later the LMPs for the same location were $25.78, $23.23, and $22.72. However, during that hour ERCOT generated, published and eventually used for settlement - meaning that consumers paid and generators received - LMPs reaching nearly $3400.00.

"The reason for that price spike had absolutely nothing to do with supply, demand, outages, or any other grid condition. During the hardware failure there were no supply shocks, no demand shocks, and no sudden transmission outages. Therefore any significant price movements were the direct result of inefficient, incorrect and negligent decision-making by ERCOT during the hardware failure," Raiden alleged

"LMPs reached $3400.00/MW immediately following the hardware failure because during the hardware failure from 06:13 to 06:39 ERCOT failed to issue instructions for adequate generation; thus, when SCED began operating again at 06:39 ERCOT lacked sufficient generation and had to bring inefficient and expensive generation online in order to immediately resolve and correct the errors ERCOT made during the hardware failure. By 07:00 SCED was able to mitigate ERCOT's bad decisions and LMPs normalized," Raiden alleged

"ERCOT contends that the post-hardware failure price spike represented a 'valid' market solution because it was produced by the SCED. But that answer elevates form over substance and ignores the entire market theory underlying SCED's use. SCED is merely an algorithm. Thus, to operate properly, it depends on accurate information and data inputs. During the price spike, ERCOT did not allow provide SCED accurate information about market dynamics and thus SCED's output was not a market solution. A valid market price does not exist, by definition, when a substantial portion of available supply is not allowed to participate in the market. And that is what happened here," Raiden alleged

Raiden argued that Section 6.3(4)(ii) of the Protocols directly applies to the occurrences on March 30th, with such section providing, "ERCOT shall correct prices when: ... (ii) invalid prices are identified in an otherwise valid market solution."

Raiden requested that ERCOT be required to correct the published prices by using the price established for the interval ending at 06:10, for the next nine intervals, i.e., until 06:55 during which time ERCOT's SCED was not producing valid solutions but rather solutions that reflected the mistakes made during the hardware failure. This necessarily means that ERCOT should also be required to re-settle the market to reflect the corrected prices, Raiden noted

May 18, 2015

On May 18, 2015 Raiden alleged that ERCOT received incorrect dynamic line ratings for line 6510A telemetered from the TSP. ERCOT used these incorrect line ratings to dispatch generation, resulting in inaccurate LMPs and inefficient dispatch.

Raiden alleged that the effect of using this incorrect data in the SCED process was to incorrectly and inefficiently reduce the true capacity of the transmission line at the relevant times, thereby causing significantly more expensive than necessary generation to be used to satisfy actual demand.

"Section 6.3(4) of the Protocols explicitly references the conditions under which ERCOT is to correct prices. Included is in these conditions is an explicit reference to 'incorrect versions of one or more data elements input to the market applications.' [listed as an example of a Data Input error] That is, the Protocols specifically state that incorrect data is a reason that ERCOT shall - not may - correct prices," Raiden alleged

"ERCOT contends that the phrase 'data input error' in the above Protocols does not have its common and ordinary meaning, but instead describes only errors that occur within ERCOT's systems or errors that are generated by ERCOT itself. Thus according to ERCOT, the incorrect data supplied by Oncor does not constitute a 'data error' because the incorrect data did not originate from ERCOT," Raiden alleged

Apart from being inconsistent with the protocols, Raiden alleged that, "ERCOT's interpretation is inconsistent with creating and maintaining a competitive wholesale market because it potentially institutionalizes conditions whereby (1) outcomes are irrational, not transparent, and inconsistent3, (2) prices become random, and as a result (3) overall prices rise because of the increased risk."

Raiden alleged that, "When questioned about its obligation to re-calculate market prices for May 18, ERCOT and a number of Market Participants have stated that there are 'so many errors in the system that virtually every price could be re-calculated,' a manifestly troubling statement and one that cannot justify ERCOT's failure to act."

For May 18, 2015, Raiden demands that ERCOT use the corrected line rating data to create correct prices and then resettle the market transactions.

Docket 45542

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