ERCOT Power Trader Seeks PUC Rulemaking To Amend IMM's Authority, Include Review Of Secondary Market Impacts
Cites Alleged Non-competitive Behavior
November 15, 2022 Email This Story Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
The following story is brought free of charge to readers byEC Infosystems, the exclusive EDI provider of EnergyChoiceMatters.com
Aspire Power Ventures, LP petitioned the Texas PUC for a rulemaking to amend and clarify 16 Tex. Admin. Code (TAC) § 25.365
related to the role, duty, and authority of the Independent Market Monitor (IMM) for ERCOT.
Aspire alleged, "Especially
since Winter Storm Uri, a series of peculiar and potentially improper bidding behaviors have
occurred in the Electric Reliability Council of Texas ('ERCOT') wholesale market without
explanation or public scrutiny. The peculiar bidding of the past several months highlight the need
for more critical and robust analysis of Market Participant behavior than has occurred in the past."
Aspire alleged that, under current rule, it is at best unclear whether the IMM's responsibilities and related
participation in enforcement proceedings currently include market distorting activities that occur
outside of the physical ERCOT wholesale market in secondary financial markets like the
Intercontinental Exchange (ICE).
Aspire said that, "For example, 16 TAC § 25.365(d)(2) specifically
scopes the IMM's market screens and indices to identify, 'abnormal events in the power region's
wholesale markets.' In actuality, the IMM needs to be able to screen and
identify not only abnormal events in the power region's wholesale markets but also outside
abnormal events that impact the power region's wholesale markets."
Aspire said that, "The rule
should be clarified to explain that the IMM and the Commission may consider financial trades and
secondary markets in determining whether a person has improperly manipulated or gamed any
component of the ERCOT market. This is of particular importance in instances where the
potentially impermissible trading occurs in less liquid and less competitive market products."
"Additionally, the IMM's market power tests and analyses codified in 16 TAC § 25.365
should expressly include not just generic generating capacity but should assess market power in
individual market products," Aspire alleged
Aspire alleged the following concerning behaviors:
1. Concentration of Ownership of Generation Receiving Reliability Unit Commitment
Instruction While the Same Owner's Other Generation Sets Marginal Clearing
Aspire alleged, "As noted by the IMM, in its 2021 State of the Market Report, 'a non-traditional
withholding strategy emerged in the latter half of the year given ERCOT's increased commitment
of resources through Reliability Unit Commitment ('RUC') and the high RUC offer floor
associated with that commitment established in the protocols.'"
Aspire alleged NPRR 1092 has not cured the
problem, alleging that, "increased use of RUCs not only continues, but has compounded."
analysis shows that there are many instances in which a single entity owns the preponderance of
the RUC'ed units and simultaneously owns the generator that sets the MCP in the same interval
as the RUC'ing event. In fact, an estimated 54 percent of RUCs since 2021 relate to resources
owned by a single entity," Aspire alleged
2. Possible Impermissible Withholding in July 2022 as Dispatchable Generation
Required RUC Instructions to Run Even With Market Prices High Enough to
Aspire alleged, "This summer, the ERCOT market at various points has seen almost 10 percent of its
dispatched generation come from RUC'ed units while simultaneously incurring MCPs at the
$5,000/MWh offer cap ... Given that these RUCs have occurred in July
periods with high demand, planned outages should not be the cause for the RUC'ed units having not offered bids, but '[a]t loads greater than 65 GW [as occurs throughout the summer], there
was a pivotal supplier approximately 71% of the time in 2021.' Having almost 10 percent of the
dispatched fleet come from RUCs conflicts with the anticipated generator behavior from a
competitive market. The limited amount of bidding generators that results when so much capacity
is RUC'ed also can increase the MCP when compared to a market where all units are competitively
bid. This is especially true when the same generator possesses the generator that sets the MCP
and a significant portion of the RUC'ed capacity."
To accomplish its recommendations stated above, Aspire proposed various rule language, including defining the term "market" under the IMM rule as including, "a Secondary Market in which goods
or services associated with the ERCOT wholesale market are bought and sold." [e.g. a financial market]
Aspire proposed language stating that the IMM shall, "Detect and prevent market manipulation strategies and market power abuses in the
ERCOT wholesale and retail markets and any relevant Secondary Markets..."
Aspire also proposed that the responsibilities of the IMM shall include: "Producing and filing at the commission a publicly available monthly report that
details: (1) the number of market participants that the IMM investigated in the
thirty (30) days prior to the report for non-compliance with the Public Utility
Regulatory Act, commission rules, and ERCOT protocols and other market rules,
(2) the number of market participants in the thirty (30) days prior to the report on
which the IMM briefed the commission or commission staff pursuant to 16 TAC §
25.365(d)(13): and (3) an itemized description of the market participant behaviors
and actions prompting the IMM investigations used for computing the monthly
report's investigation count."