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Texas QSE Would Pay $40,000 Under Settlement With Texas PUC Staff

June 9, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Viridity Energy, Inc. would pay $40,000 under a settlement with Staff of the Public Utility Commission of Texas to resolve alleged violations of Electric Reliability Council of Texas (ERCOT) Protocols § 8.1.3.3.1, regarding suspension of qualification of non-weather-sensitive Emergency Response Service resources and/or their qualified scheduling entities.

In a prior Notice of Violation related to the allegations, PUC Enforcement Staff had recommended that Viridity be assessed an administrative penalty in the amount of $50,000. The settlement resolves the allegations which prompted the Notice of Violation

The settlement states that Viridity is a Qualified Scheduling Entity (QSE), and an Emergency Response Service (ERS) Resource must be represented by a QSE.

The settlement states that Viridity was contracted to provide ERS - 30 during the October 2015 - January 2016 contract period for Business Hours 1, 2 and 3 and Non-Business Hours. The settlement states that, in addition, Viridity was also contracted to provide ERS - 30 during the February - May 2016 Contract Period for the following Time Periods: 1, 2, 3, 4, 5, and 6.

The settlement states that, pursuant to ERCOT Protocols § 8.1.3.3.1, if a QSE submits an offer during the ERS contract period and that offer is accepted by ERCOT, the QSE must be ready to dispatch. If dispatched by ERCOT, ERS resources shall deploy consistent with their obligations and shall remain deployed until recalled by ERCOT. If the resource is not dispatched by ERCOT, ERCOT will calculate a portfolio-level ERS Availability Factor (ERSAF). If the ERSAF meets or exceeds 0.95, the QSE will be deemed to have met its ERS performance requirements for their ERS contract period. If a QSE does not achieve a 0.95 ERSAF, the QSE is subject to suspension from participating in ERS as well as administrative penalties levied by the Commission.

The settlement states that Viridity's ERSAF in the October 2015 - January 2016 Contract Period was 0.4832. The settlement states that Viridity's ERSAF in the February - May 2016 Contract Period was 0.2995.

The settlement states that Viridity failed to achieve a portfolio-level ERSAF of 0.95 or greater for two separate Contract Periods. The settlement states that Viridity failed to maintain the required amount of load available for ERS deployment during any of the time periods for ERS - 30 in the October 2015 - January 2016 Contract Period and any of the time periods for ERS - 30 in the February - May 2016 Contract Period.

The settlement states that, "Viridity asserts that the failure was caused by circumstances beyond the control of either Viridity or its customers, which was neither predictable nor controllable. Viridity took multiple steps to derive an accurate estimate of customer load before submitting an offer. However, an unpredicted downturn in business occurred. Viridity also asserts that all customers positively affirmed their respective bid levels. Due to production changes resulting from unpredictable economic slowdowns, fewer furnaces were operated and site loads were approximately 6000 to 7000kW per hour less than predicted. This represents a decrease of almost 80% of expected average site load, and consumed the safety margin associated with the conservative bid amounts. The shut-down of one plant and the bankruptcy of another are events that are unpredictable and beyond the control of a QSE. Viridity asserts that the failures were not the result of intentionally malicious behavior."

The settlement states that, "Commission Staff asserts that the ERS program is a critical component of maintain [sic] grid reliability. As a repeat violator of the ERCOT Protocols as they related to the ERS program, Viridity continues to use resources that have totally failed in previous ERS Contract Periods, and all of its ERS Resources are notably susceptible to decreased production or even closure under certain economic conditions. As the QSE, Viridity is wholly responsible for ensuring that the ERS Resources it represents are appropriate for inclusion in an ERS portfolio and that the MW amounts committed will actually be available. Moreover, a previous administrative penalty has not resulted in significantly improved ERSAF scores in subsequent contract periods. Viridity has failed to reach the ERSAF baseline contained within the Protocols and has put the reliability of the grid at risk, all while being compensated more than $75,000 after ERCOT clawbacks in the two Contract Periods addressed by this Agreement. As such, an administrative penalty of $40,000 is warranted."

The settlement agreement represents a compromise of claims and allegations, and the execution of the agreement does not constitute the admission of the truth or accuracy of any such disputed claims.

Docket 46946

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