Update: Proposed Language Filed By Texas PUC Staff To Remove Fuel Index From ERCOT Low Offer Cap, Add New Make-Whole Provision -- EnergyChoiceMatters.com

Update: Proposed Language Filed By Texas PUC Staff To Remove Fuel Index From ERCOT Low Offer Cap, Add New Make-Whole Provision

April 29, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Staff of the Texas PUC have filed proposed language for a scarcity pricing rule change to eliminate the 50-times fuel index price provision in the ERCOT market low system-wide offer cap (LCAP), such that the LCAP would be $2,000 per MWh and $2,000 per MW per hour

As previously reported, former PUC Chair Arthur C. D'Andrea had directed Staff to file such proposed revisions

Specifically, the proposed changes would strike from the LCAP rule the current language stating, "or 50 times the natural gas price index value determined by ERCOT, expressed in dollars per MWh and dollars per MW per hour," such that the LCAP would be defined only as, "$2,000 per MWh and $2,000 per MW per hour."

Staff also proposed the following language for a make-whole provision:

"Reimbursement for Operating Losses During an Event when the LCAP is in Effect. During an event when the system-wide offer cap is set to the LCAP, ERCOT must reimburse resource entities for any actual marginal costs in excess of real-time revenues. ERCOT must utilize existing settlement processes to the extent possible to verify the resource entity’s costs for reimbursement."

Barring any further rule changes, the $2,000 per MWh low cap would be the applicable offer cap this summer, due to peaker net margin being triggered earlier this year

Barring any further rule changes, ERCOT will continue to apply the operating reserve demand curve and the reliability deployment price adder for the remainder of that calendar year. Energy prices, exclusive of congestion prices, will not exceed the LCAP plus $1 for the remainder of the calendar year.

Project No. 51871

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