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ERCOT: Raiden Claims Regarding Pricing "Erroneous," Rely on "Fallacy"

February 23, 2016

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

ERCOT replied to a complaint filed at the Public Utility Commission of Texas by Raiden Commodities concerning pricing on two separate operating days (OD), with ERCOT saying Raiden's arguments are erroneous and based on a fallacy.

As previously reported (click here for background), Raiden is seeking an order for 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

With respect to a SCED failure on OD 03/30, ERCOT said that, "Raiden's claims that ERCOT has refused to correct the incorrect prices for OD 03/30 is erroneous."

"ERCOT did not refuse to correct incorrect prices resulting from the SCED Failure. Rather, on OD 03/30, ERCOT found that RTRMPRs for two Settlement intervals (06:45 and 07:00) following the SCED Failure contained BPs that were inconsistent with the BPs of a valid market solution, and corrected the RTRMPRs before prices became final, in accordance with ERCOT Protocols Sections 6.3(4)(iii), 6.3(5)(c), and 6.6.9. Following the outage, SCED successfully executed solutions based on valid EMS inputs, and produced valid LMPs and RTSPPs that matched system conditions," ERCOT said

Raiden has argued that ERCOT must correct prices for nine 5-minute intervals between 06:10 and 06:55, using the 06:10 published price of $21.09, including scarcity prices which occurred.

"However, Raiden does not seem to understand that only some of the intervals at issue occurred during the SCED Failure," ERCOT said

"Moreover, contrary to some of Raiden's claims (as related to intervals during the SCED Failure), ERCOT used the price of $21.09 to automatically calculate LMPs for the intervals in which SCED had failed, in accordance with ERCOT Protocols Section 6.5.9.2 (i.e., the initially calculated Real-Time LMPs and Settlement Point Prices ('SPPs') for SCED runs from 06:10 to 06:37 were based on 06:10 prices). Therefore, for intervals during the outage/SCED Failure, ERCOT did not perform correction of LMPs or SPPs," ERCOT said

Contrary to Raiden's claims, ERCOT said that during the time at issue (i.e., around 06:42), the system was experiencing demand such that Reg-Up reserves were fully deployed, and ramp rate constraints identified, thereby reflecting scarcity in the LMP. ERCOT concluded that the high SCED prices (i.e., $730 and $3,400) were valid given EMS inputs, and therefore, ERCOT determined that neither 5-minute SCED LMPs, nor 15-minute RTSPPs were impacted. ERCOT maintains that the only affected prices resulting from the outage were RTRMPRs for two (2) intervals after the outage (i.e., 06:45 and 07:00). For these intervals, EBPs were different from the SCED BPs. Because BP weighting is used to calculate 15-minute RTRMPRs, only the RTRMPRs necessitated price correction, and therefore, ERCOT replaced those SCED BPs with EBPs.

"Raiden's post hoc, ergo proper hoc fallacy presumes that because prices were around $22.00 before the SCED Failure, and similarly priced an hour later (following the outage), system conditions during the SCED Failure should have also reflected such prices," ERCOT said, as ERCOT further said that Raiden fails to consider the various elements and factors in play during the outage,

"When SCED returned from the outage at 06:37, SCED properly calculated prices to match system conditions, and the SCED solution was validated with correct EMS inputs. Raiden has offered no facts to support its claim that the LMPs were not consistent with SCED BPs for the only relevant intervals to this dispute (i.e., 06:45 and 07:00) or for that matter, any of the disputed nine (9) intervals on OD 03/30. ERCOT settled 03/30 in accordance with the ERCOT Protocols," ERCOT said

Regarding an erroneous dynamic line rating for a transmission line (6510_A) provided by the transmission owner for May 18, 2015, Raiden argues that because SCED utilized the incorrect rating data for 6510_A to set prices, the action constituted, under the plain language of the ERCOT Protocols, a Data Input Error, and therefore ERCOT must resettle OD 05/18 due to erroneous pricing caused by the transmission owner's incorrect telemetry.

ERCOT said that ERCOT Protocols Section 6.3(4) attempts to clarify, "some reasons that may cause [conditions for which ERCOT is required to perform a price correction]." Included in these reasons is the reference to Data Input Errors (i.e., "missing, incomplete, stale, or incorrect versions of one or more data elements input to the market applications that may result in an invalid market solution and/or prices").

"Thus far, price corrections have never been done for external input data errors. There are more than 4,000 line ratings in the ERCOT market, and consequently line rating issues in Real-Time are very frequent. Due to the frequency of line rating errors, ERCOT has reviewed many instances thereof, and has consistently maintained that a Data Input Error does not include erroneous data submitted by MPs and used in ERCOT's systems, and determined that price corrections are not required under ERCOT Protocols Section 6.3(4). Moreover, in various stakeholder discussions, the intent of Protocol language with respect to Data Input Errors in ERCOT Protocols Section 6.3(4) has been clarified to apply only to erroneous data inputs by ERCOT, not MPs," ERCOT said.

"There was no SCED Failure, and there is no evidence to suggest that an invalid market solution occurred on for OD 05/18," ERCOT said.

Moreover, with regard to Raiden's complaint about the rating error leading to high prices, ERCOT said that, "This presumes that Raiden is arguing that the erroneous telemetry of one transmission line (i.e., 6510 A) was the sole cause of high prices experienced on OD 05/18."

"During the Operating Hours at issue, there was a shortage of ramp-able reserves available, which affected the prices calculated by SCED. A shortage of ramp-able room would require SCED to dispatch expensive units and rely on penalty curves to meet demand, which will inherently contribute to higher prices. Low reserves can contribute to higher prices because the availability of ramp-able reserves is a primary component upon which SCED calculates prices. Although ERCOT has the ability to perform such a resettlement, it is unlikely that ERCOT could determine accurate prices based on a resettlement because there were other binding constraints on 05/18, and a sequential rerun, as Raiden has suggested, would require ERCOT to make assumptions about Regulation Service, constraint flow change, and Ramp Rates, while also assuming that all Generation Resources precisely followed their BPs. Attempting to perform numerous sequential recalculations of SCED (as Raiden contends should be done) involves a large degree of speculation in selecting underlying assumptions and numerous arguable alternative results to the extent that 'accurate prices' cannot be achieved," ERCOT said.

ERCOT noted that ERCOT Protocols Section 6.3(4) requires ERCOT to correct prices when invalid prices are identified in an otherwise valid market solution. "As noted above, SCED and other ERCOT systems properly functioned and executed on OD 05/18, and SCED executions on OD 05/18 were valid. The ERCOT Protocols are silent regarding the ability to determine accurate prices, as related to the correction of prices involving data errors, when such prices have been identified as invalid. However, in the event that accurate prices cannot be determined, ERCOT Protocols Section 6.3(4) does not require ERCOT to correct prices. Thus, begs the question, is ERCOT required to perform a 'price correction' when the data used in the resettlement process will not yield accurate prices," ERCOT said

"The basis for setting stringent deadlines in the price correction process is to minimize the harm caused by after-the-fact changes. Contrary to Raiden's position, a delayed price correction (resulting from a data error or otherwise) that does not ensure the resettlement of accurate prices, not only undermines market confidence and diminishes competition, but will also create a much larger risk for 'random' and 'irrational' pricing," ERCOT said

ERCOT also sought dismissal of the complaint on procedural grounds, stating that Raiden did not timely file the complaint, and that Raiden lacked standing to bring the complaints

"In its Complaint, Raiden has neither made claims, nor presented facts giving rise to any particular injury suffered by Raiden sufficient to give the Commission grounds for which Raiden (rather than ratepayers and Texas consumers generally) is entitled to relief. Simply put, the absence of an articulated injury means that Raiden lacks standing to pursue its claims," ERCOT said.

Docket 45542

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