PUCT Majority Agrees on New Non-Spin Price Floors for ERCOT

The PUCT agreed, by a 2-1 margin, to set new offer floors for Non-Spinning Reserve Service (NSRS).

Although no formal vote was taken, Commissioner Kenneth Anderson proposed, and Commissioner Rolando Pablos agreed with, the following new offer floors:

Online NSRS: $120

Offline NSRS: $180

Chairman Donna Nelson had supported a floor of $325 for offline NSRS, and a number closer to $325 than $120 for online NSRS.

However, Anderson said that he was unprepared to adopt the higher NSRS floors given that he believes the issues that the Commission is trying to address -- generator revenue, resource adequacy, and depressing impacts from reliability deployments -- should not solely be addressed through NSRS pricing revisions. Citing the inter-related nature of the issues, Anderson proposed in conjunction with his offer floors that ERCOT and the Commission also address, before next summer, the following:

- Replacing 500 MW, or another amount, of NSRS with Responsive Reserves

- Reviewing Reliability Unit Commitment (RUC) pricing (presumably when used for capacity) and whether it should be at the system-wide offer cap or another number

- Increasing the Power Balance Penalty Curve to $4,000

All these issues should be addressed on an "urgent" basis, with Anderson suggesting implementation this spring, meaning formal proposals coming to ERCOT or the Commission for consideration by the end of this year or very early next year. Stakeholders are to report at the next open meeting proposed timelines for resolving each of the issues identified by Anderson.

Anderson also noted that NSRS and other issues implicated by reliability deployments will be resolved when look-ahead Security Constrained Economic Dispatch is implemented.

Nelson supported the higher NSRS offer floors due to the lead time in building new generation, and forecasts of a reliability violation in 2014.