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Texas PUC Staff Make Recommendations On PCM Design Parameters, REP Collateral
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Staff of the Texas PUC have filed preliminary recommendations on Performance Credit Mechanism (PCM) design parameters for the purpose of being included in the base case benefit-cost analyses of the PCM.
Staff said that its recommendations, which will be considered at the PUC's August 29 open meeting, may be revised upon review of the forthcoming filing of a strawman report by ERCOT
Staff recommends a firm $1 billion gross cost cap to comply with the $1 billion cost cap for PCM under PURA § 39.1594(a)(1)
Several parties had argued that lower ERCOT market prices under PCM should be reflected in determining PCM's cost relative to the statutory cost cap (i.e. use net costs for cost cap compliance, not gross).
Staff conceded that its recommended gross cost cap, "would limit the ability of the PCM to achieve a reliability standard by itself, meaning that other market enhancements will likely be needed in the long-term," but said that, "[a] firm, gross cost cap is the only realistic way to comply," with the provision of PURA § 39.1594(a)(1) that requires the Commission to ensure that, "the net cost to the ERCOT market of the [PC] credits does not exceed $1 billion annually."
Staff recommends that the allocation of the system PC [performance credit] requirement across LSEs be based on load ratio share of system-wide gross load during PC hours
"Allocating PC requirements to LSEs based on a load-ratio share during PC hours allocates proportionate to load usage during those hours and provides an incentive for loads to reduce consumption during the highest risk hours," Staff said
Staff recommends that LSE participation in the forward PC market be voluntary (the non-forward PC market is mandatory)
Staff proposes that LSEs, such as retail electric providers, in the PCM post collateral based on their potential PC procurement shortfall.
"Collateral requirements based on the maximum potential exposure is most consistent with the requirement in PURA § 39.1594(a)(13), which requires that 'secured financial credit and collateral requirements are adopted for the program to ensure that other market participants do not bear the risk of nonperformance or nonpayment,'" Staff said
Staff said that ERCOT should further study the timeline for LSEs to post PCM collateral, and did not propose a timeline at this time
Recalculation of collateral requirements would be monthly, Staff proposed
Staff recommends that PCM have 4 seasons, defined as Winter: Dec-Feb; Spring: Mar-May; Summer: Jun-Sept; and Fall: Oct-Nov
Staff recommends that the number of PC hours per season be 48, versus 60 as proposed by E3
Staff would allocate PCM hours as follows: Summer: 16 hours; Fall: 8 hours; and Winter and Spring: 12 hours each
In a change from a prior Staff recommendation, Staff recommends that the metric used to determine PC hours be the hours with the lowest surplus of total available generating capacity, relative to load. Previously, Staff had recommended this metric be set as "hours of highest net load."
Staff recommends an ex-ante approach to determine the number of PCs that will need to be procured for each season
The Seasonal Value Allocation under the Demand Curve would also be set ex-ante, based on LOL hours, Staff proposed
Project 55000
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August 9, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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