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ERCOT Says Granting Re-pricing Of May 30 Price Spike Interval Resulting From QSE Telemetering Error Would Lead To Frequent Price Corrections, Result In Increased Price Uncertainty And Market Instability

Seeks Dismissal Of Trader's Complaint, Says Correction Not Authorized Under Protocols

July 25, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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ERCOT moved to dismiss a complaint filed at the Texas PUC by Aspire Commodities, LLC under which Aspire is seeking an order directing ERCOT to re-price the published settlement prices for interval 14:50 on May 30

As previously reported, Aspire in the complaint alleges that the prices for such interval do not reflect a valid market solution (see details here)

ERCOT described the issues as follows: "The pricing issue in Aspire's Complaint occurred with respect to the 14:50 SCED interval on OD [Operating Day] May 30, 2019, when Calpine Power Management LLC (Calpine), a Qualified Scheduling Entity (QSE) registered with ERCOT, telemetered erroneous Resource status information to ERCOT. Specifically, for a single SCED interval (14:50), Calpine's portfolio of Resources telemetered High Sustainability Limits (HSLs) and Low Sustainability Limits (LSLs) of zero, which were captured by SCED in the 14:50 interval. Thus, for the 14:50 SCED interval, the instantaneous capacity available for dispatch appeared to be less than instantaneous demand. As a result, energy prices in the ERCOT market increased significantly for that single SCED interval. Within an hour of the SCED run that resulted in the pricing event at issue, ERCOT issued a public notice informing ERCOT Market Participants that it would not be performing a price correction. ERCOT determined that the price increase was not due to a failure of the SCED process, nor was it due to ERCOT' s failure to comply with the ERCOT Protocols or Other Binding Documents (OBDs)."

More specifically, ERCOT said, "The pricing issue giving rise to Aspire's Complaint occurred during the 14:50 SCED interval on OD May 30, 2019. At approximately 14:49 on that day, Calpine sent incorrect telemetry to ERCOT for a fleet of Resources, which was captured in the 14:50 SCED run. Specifically, Calpine telemetered zero to ERCOT as the HSLs and LSLs for these Resources for the 14:50 SCED run. Notably, the Resources at issue had a combined telemetered output of approximately 6,300 MW just prior to the telemetry error."

ERCOT further said, "In conformance with ERCOT Protocol Section, ERCOT's Resource Limit Calculator immediately and automatically determined a new High Dispatch Limit (HDL) for the Resources at issue based on the changed telemetry (i.e., the zero HSL and LSL values). This resulted in a significant decrease in the total HDL for the Resource fleet -- i.e., from 6,388 MW to 5,125 MW. Consequently, for the 14:50 SCED interval, the calculated total instantaneous capacity available for dispatch was approximately 220 MW less than the total instantaneous demand. In conformance with ERCOT's OBD 'Methodology for Setting Maximum Shadow Prices for Network and Power Balance Constraints,' this result constituted a violation of the Power Balance Penalty Curve and caused the ERCOT System Lambda to reach $9,001.00/MWh."

"Importantly, at no time was any ERCOT Load shed because of this telemetry error. Further, and contrary to Aspire' s assertion, Emergency Resource Service (ERS) was not deployed by ERCOT on May 30, 2019," ERCOT said

ERCOT said, "SCED runs automatically every five minutes; however, the ERCOT Real-Time Operating Procedure Manual gives ERCOT operators discretion to run SCED manually in certain circumstances. At 14:52 on the OD at issue, ERCOT operators executed a manual SCED run due to concerns regarding (a) the potential for high frequency (due to generation responding to the $9,001.00/MWh System Lambda), and (b) dispatch not being as expected. The manual SCED run at 14:52 captured telemetry from Calpine that appeared to more accurately reflect the actual status of the Resource fleet."

"This manual action by ERCOT operators effectively resolved the price spike caused by the telemetry error. More specifically, the Resource Limit Calculator determined a new total HDL for Calpine's Resource fleet of 6,433 MW using the telemetry captured at 14:52; this resulted in a decrease of the System Lambda to $38.04/MWh. ERCOT did not observe any noticeable issues or errors with Calpine's telemetry for subsequent SCED intervals on the OD at issue," ERCOT said

"Within an hour of the telemetry error, ERCOT investigated and determined that SCED properly executed the 14:50 interval. Further, ERCOT determined that a price correction was not appropriate because ERCOT does not have the authority to correct prices when a particular market solution is attributable to inaccurate telemetry submitted by a QSE or TDSP. Accordingly, ERCOT issued a public notice at 15:44 on May 30, 2019, stating that it would not be performing a price correction for the 14:50 SCED interval," ERCOT said

Apart from procedural grounds discussed further below, ERCOT said that, "Aspire's request for a price correction for May 30, 2019, should be denied because the ERCOT Protocols do not authorize a price correction when a market solution is attributable to an external data error caused by an ERCOT Market Participant."

"Requiring ERCOT to conduct price corrections in cases of external data errors would be imprudent, as this practice would lead to frequent price corrections and result in increased price uncertainty and market instability," ERCOT said

ERCOT said, "Aspire argues that ERCOT was required to correct prices under ERCOT Protocol Section 6.3(4) because the May 30, 2019, event resulted in a "market solution" that should have been 'determined to be invalid.' This argument is without merit, however, because: (a) the pricing issue was not due to a failure of the SCED process or a misapplication of ERCOT Protocols or OBDs; and (b) requiring ERCOT to perform a price correction when a market solution is due, in part, to a data error external to ERCOT would lead to frequent price corrections and increased uncertainty in the market."

ERCOT said that, "ERCOT Protocol Section 6.3(4) provides three conditions upon which ERCOT 'shall' correct prices, if accurate prices can be determined: (1) if a market solution is determined to be invalid; (2) if invalid prices are found in an otherwise valid market solution; or (3) if Base Points (BPs) received by Market Participants are inconsistent with BPs of a valid market solution."

"In the case of Calpine's telemetry error that occurred on May 30, 2019, ERCOT made a determination that the error did not qualify as one of the conditions in ERCOT Protocol Section 6.3(4) that mandate a price correction. Aspire, however, asserts in its Complaint that the events that occurred during the 14:50 SCED interval on May 30, 2019, resulted in an invalid market solution, and therefore require a price correction under ERCOT Protocol Section 6.3(4)," ERCOT said

"Although the ERCOT Protocols do not give express guidance on what constitutes an invalid market solution, ERCOT Protocol Section 6.3(4)(a) provides that a 'data input error' can be a condition that results in a needed price correction. ERCOT, however, has consistently interpreted this language as applying only to internal data input errors caused by ERCOT, and not to external data errors caused by ERCOT Market Participants. Notably, this interpretation has been discussed previously in stakeholder forums. Moreover, there have been prior instances where erroneous telemetry received from an ERCOT Market Participant likely had an impact on prices. ERCOT, however, did not interpret ERCOT Protocol Section 6.3(4) as requiring it to correct prices for the impacted ODs in those earlier cases, which is consistent with the position ERCOT has taken in this case," ERCOT said

"Aspire's interpretation of ERCOT Protocol Section 6.3(4) ignores the fact that the ERCOT Protocols require ERCOT to use a Market Participant's telemetered data in SCED, and that is precisely what happened in this case. Moreover, the ERCOT Protocols make clear that every ERCOT QSE that represents a Resource is responsible for providing ERCOT with accurate telemetry," ERCOT said

"Accordingly, ERCOT properly complied with ERCOT Protocols when it utilized Calpine's telemetered data for the 14:50 SCED run," ERCOT said

"The ERCOT Protocols do require ERCOT to validate certain QSE telemetered data. For example, per ERCOT Protocol Section 6.4.6(2)(b), ERCOT must identify inconsistencies between a QSE's telemetered Resource status and its COP five minutes before the end of each hour. In this matter, however, nothing in the ERCOT Protocols required this type of validation for the impacted SCED interval, and ERCOT did not act in violation of any Protocol when SCED utilized Calpine's erroneous telemetered data for the 14:50 SCED run. Moreover, although ERCOT's systems are designed to automatically disregard certain telemetry data that is outside of acceptable ranges, the data telemetered by Calpine on May 30, 2019, was within the range of values deemed presumptively valid by ERCOT systems -- i.e., the HSLs values of zero telemetered by Calpine were considered acceptable in this case," ERCOT said

"ERCOT recognizes that it is critical for values telemetered by ERCOT Market Participants, and captured by SCED, to be as accurate as possible. ERCOT, however, has consistently interpreted ERCOT Protocol Section 6.3(4) as not requiring a price correction when a market solution if found to be due to erroneous data sent to ERCOT from an external source, such as in this case. This makes sense as both a practical matter and as a matter of market certainty. In all likelihood, on any given day, at least some telemetry sent to ERCOT by QSEs and/or TSPs is inaccurate or sent in error. If ERCOT were to interpret Protocol Section 6.3(4) to require a price correction whenever an external data error was discovered, price corrections would occur on a weekly or perhaps daily basis," ERCOT said

"ERCOT Protocol Section 6.3(4) does not give ERCOT discretion to perform a price correction when a pricing error is of a particular magnitude. Rather, ERCOT Protocol Section 6.3(4) mandates that ERCOT 'shall' perform a price correction every time the conditions stated in that section are satisfied. Accordingly, interpreting ERCOT Protocol Section 6.3(4) in the manner suggested by Aspire would require ERCOT to perform a price correction every time it discovered an external data input error that could have a price impact, regardless of whether the impact was nominal or significant. Interpreting ERCOT Protocol Section 6.3(4) in this manner would lead to frequent price corrections, resulting in increased uncertainty and instability in the market," ERCOT said

ERCOT said that, "ERCOT notes that it expects to engage in further stakeholder discussions regarding possible revisions to the Protocols and/or ERCOT processes in light of the May 30, 2019, event with respect to ERCOT' s telemetry validation processes. Nonetheless, ERCOT cannot support a price correction for May 30, 2019. Rather, and for the reasons set forth above, ERCOT acted in conformance with ERCOT Protocols by not correcting prices on May 30, 2019. Therefore, Aspire's request for relief should be denied."

ERCOT also said that Aspire's Complaint should be dismissed because: (a) Aspire failed to complete ERCOT's Alternative Dispute Resolution process before seeking relief with the Commission; and (b) Aspire suffered no direct injury due to ERCOT's alleged conduct.

Concerning the latter point, ERCOT said that, "Relevant here, Aspire has failed to explain in its Complaint how obtaining the relief it seeks -- a price correction in the ERCOT market for May 30, 2019 -- would remedy an injury it admits occurred entirely outside of the ERCOT market through the positions it took in the Intercontinental Exchange (ICE). Aspire admits that it was not active in the ERCOT market for the SCED interval in question; therefore, Aspire has failed to show it suffered any direct injury due to ERCOT's alleged actions on that day."

Docket 49673

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