In Market Notice, ERCOT Notes Impact On Power Balance Penalty Curve From Texas PUC Order Lowering High Cap

December 7, 2021

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

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ERCOT issued a market notice concerning implementation of the Public Utility Commission of Texas’s (PUCT’s) previously reported order that directed changes in High System-Wide Offer Cap (HCAP)

As previously reported, at the open meeting on December 2, 2021, the PUCT approved an amendment to §25.505 of the PUCT Substantive Rules. This amendment lowers the HCAP from its current value of $9,000/MWh to a value of $5,000/MWh with an effective date of January 1, 2022.

ERCOT noted that with the change to HCAP, there are other parameters that are directly driven by HCAP, over the effective System-Wide Offer Cap (SWCAP) more generally, that will also be changing on January 1, 2022. These include:

• The Value of Lost Load (VOLL);

• The Ancillary Service Penalty Factors for the Day-Ahead Market (DAM) and Supplemental Ancillary Service Market (SASM); and

• The Power Balance Penalty Curve used in Security-Constrained Economic Dispatch (SCED).

ERCOT stated in the market notice that, "Providing more detail regarding the Power Balance Penalty Curve in effect beginning on January 1, 2022, the curve will be changed to be capped at $5,001/MWh, i.e., HCAP plus $1/MWh. This effectively means that the price on the curve will be at its maximum value at MW violations above 100 MW. This is similar to how the Power Balance Penalty Curve is adjusted when the Low System-Wide Offer Cap (LCAP) is in effect."

ERCOT further stated in the notice that, "There are two items that ERCOT will be bringing to stakeholders for discussion and voting in the coming weeks. First, regarding the HCAP, this parameter is updated within the ERCOT Protocols through recommendation by the Technical Advisory Committee (TAC) and approval by the ERCOT Board, as described in paragraph (1) of Protocol Section 4.4.11, System-Wide Offer Caps. The table within that section will be updated following ERCOT Board approval and does not require a Nodal Protocol Revision Request (NPRR)."

"Second, ERCOT will be sponsoring an Other Binding Document Revision Request (OBDRR) for the Methodology for Setting Maximum Shadow Prices for Network and Power Balance Constraints in order to update the Power Balance Penalty Curve, as described above. OBDRRs for this document similarly require a recommendation by TAC and approval by the ERCOT Board, as described in paragraph (4) of Protocol Section 6.5.7.1.11, Transmission Network and Power Balance Constraint Management," ERCOT said

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