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Calpine: Texas PUC Should "Consider Eliminating" Emergency Response Service

July 18, 2016

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

"Calpine encourages the Commission [Texas PUC] to consider eliminating the current ERS [Emergency Response Service] program," Calpine said in comments in a project reviewing ERS (45927)

"Load resources have the potential to play a meaningful reliability role, but any reliability program that incorporates load resources must be operationally and economically efficient. Calpine does not believe the facts at this time support the current ERS program as either necessary or valuable," Calpine said

"ERS is a forward capacity product for a limited set of resources in ERCOT, which is rarely deployed and pays selected ERS resources up to $50 million annually," Calpine noted

"The program can cost up to $50 million/year, which is paid for by loads. Contracts are forward in nature, to provide capacity for a four (4) month period and eligible resources are selected based on a clearing price auction. Successful bidders receive the capacity payment whether or not ERCOT ever declares an emergency event. Generally, the ERS providers have met their contractual commitments, which are good, yet ERCOT has rarely needed to deploy ERS. Since ERS was revised in 2012, ERCOT has only deployed ~620MW of ERS during the same hour of 1-day," Calpine said

"The limited use of ERS is fortunate, but it raises an important question: What is the value of a service ERCOT used for less than 2-hours in more than four (4) years," Calpine asked

Citing the IMM's recent state of the market report, Calpine noted comments from the IMM which observed that, because the ERS program is so lucrative, there is concern that ERS is limiting the motivation for loads to actively participate in SCED and contribute to price formation

In separately filed comments, Shell Energy North America, noting that the ERS program design discourages participation in Loads in SCED, proffered an "ERS in SCED" mechanism, a conceptual program where ERS resources capable of responding to a SCED instruction within 10 minutes could express their willingness to curtail/generate to ERCOT based upon a telemetered price and forfeit their ERS capacity payment on an hourly basis when deployed by price.

Shells proposal is intended to enable the price responsive behavior of ERS resources to contribute to efficient price formation. The proposal would also reduce the cost of the ERS program by clawing back ERS dollars paid to resources upon deployment associated with a marginal offer, Shell said

Shell noted, however, that the ERS in SCED concept is not without its flaws.

Most notably, "complications arise when a Retail Electric Provider represents an ERS Resource for their energy needs, but not for their ERS Resource needs. A third party-QSE for ERS could inadvertently impact a REP whose customer is deployed by that 3rd party," Shell noted

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