Texas PUC Staff Say ERCOT Protocols Do Not Require Re-Pricing Of May ERCOT Price Spike Caused By QSE Input Error

January 22, 2020

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Staff (Staff) of the Public Utility Commission of Texas said that the ERCOT protocols do not require ERCOT to re-price the published settlement prices for interval 14:50 on May 30, 2019 as is being sought in a complaint filed by Aspire Commodities, LLC ("Aspire")

As previously reported, Aspire has alleged that the event which led to the spike, a Qualified Scheduling Entity (Calpine) wrongly setting the HSL and LSL levels for certain generation it represented at 0, does not reflect a valid market solution. The input error led prices for the interval to reach $9,000 per MWh. ERCOT issued a market notice on May 30, 2019 stating that it would not be performing a price correction for interval 14:50. See more background here

"Overall, Staff takes the position that ERCOT Protocol Section 6.3(4) does not require repricing of the 14:50 SCED interval for OD May 30, 2019," Staff said

In summarizing Aspire's argument, Staff said, "According to Aspire, ERCOT Protocol Section 6.3(4) requires ERCOT to re-price the 14:50 SCED interval because ERCOT Protocol Section 6.3(4) states that 'ERCOT shall correct prices when (i) a market solution is determined to be invalid.' Further, Aspire states that Section 6.3(4)(a) clearly lists 'data input error' as a reason that may cause an invalid market solution.'"

In summarizing ERCOT's argument against re-pricing, Staff said, "According to ERCOT, the 'ERCOT Protocols do not give express guidance on what constitutes an invalid market solution . . . .' Furthermore, ERCOT states that, although ERCOT Protocol 6.3(4)(a) provides that a 'data input error' may be a condition that results in an invalid market solution or prices, 'ERCOT 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.' ERCOT interprets 'data input error' language in this manner because ERCOT Protocols require that ERCOT to use a Market Participant's telemetered data in SCED. Furthermore, ERCOT explains that ERCOT Protocols require a QSE, like Calpine in this matter, is responsible for providing ERCOT with accurate telemetry. Overall, ERCOT argues that since that data input error was external, the market solution for the 14:50 SCED interval was not determined to be invalid. Therefore, ERCOT should not be required to re-price the interval under ERCOT Protocol 6.3(4)."

"In considering Aspire's complaint, Staff agrees with ERCOT," Staff said

"Under ERCOT Protocol 6.3(4), there was no invalid market solution since the prices for the 14:50 SCED interval were based on data telemetered to ERCOT by Calpine, not an internal data input by ERCOT. As explained by ERCOT, ERCOT Protocols require ERCOT to use a Market Participant's telemetered data in SCED and requires that data to be accurate. Therefore, while Calpine's portfolio of Resources incorrectly telemetered High Sustainability Limits (HSLs) and Low Sustainability Limits (LSLs) of zero, this external data input was correctly captured by SCED in the 14:50 interval," Staff said

"Additionally, as ERCOT explains, since ERCOT Protocol Section 6.3(4) does not give ERCOT discretion to perform a price correction based on the magnitude of the pricing error, interpreting ERCOT Protocol Section 6.3(4) as requiring ERCOT to re-price the 14:50 SCED interval for OD May 30, 2019 would then require ERCOT to perform a price correction every time an external data input error has a price impact. Since, 'on any given day, at least some telemetry sent to ERCOT by QSEs and/or TSPs is inaccurate or sent in error[]' price corrections could occur on a weekly or even daily basis," Staff said

"Lastly, Aspire only seeks for the Commission to order ERCOT to re-price the SCED interval at issue and that Aspire seeks no other remedy. Aspire seeks no other remedy, because, as Aspire explains in its complaint, Aspire was not a direct counterparty to the ERCOT market and its 'exposure to the fictious [sic] prices was through [] ICE where [Aspire] had forward positions.' Further, Aspire is a sophisticated investor who clearly knew that there can be inaccuracies in the SCED process and yet still chose to take a position on a contract for trading on ICE," Staff said

Docket 49673

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