ERCOT Files NPRR Regarding Procurement, Deployment of Resources to Address Emergency Conditions

ERCOT has filed Nodal Protocol Revision Request (NPRR) 432 to institute parameters governing ERCOT's procurement and deployment of Resources that may be used to alleviate imminent Emergency Conditions in a manner not otherwise delineated in the Protocols and Operating Guides, specifically, in taking actions similar to the reliability must-run (RMR) contracts executed with mothballed units this summer.

The NPRR specifies that ERCOT shall not take such actions without approval of the ERCOT Board and the Public Utility Commission of Texas.

To the fullest extent practicable, ERCOT shall also ensure that any such actions meet the following criteria:

- Resources deployed to alleviate imminent Emergency Conditions will not be offered into the Day-Ahead Market (DAM). Rather, ERCOT will determine whether to use the Resources as part of the Hourly Reliability Unit Commitment (HRUC) process based on system conditions and the ability to meet Demand. In the event these Resources are committed and On-Line, ERCOT systems will generate a proxy offer for the Resource at the SWCAP [System-Wide Offer Cap]. The default offer will place the Resources among the last for economic Dispatch, so as not to displace Resources that are On-Line and offering into the market. To the extent practicable, the Resources deployed to alleviate imminent Emergency Conditions will not be used solely for the purpose of reducing local congestion.

ERCOT said that these steps are meant to minimize impacts on the broader market.

Aside from obtaining prior Board and PUCT approval, the NPRR would require ERCOT, to the fullest extent practicable, to use an open process for any such procurements. The terms of the procurement between ERCOT and the Resource Entity shall be memorialized in contracts that will be publicly available for inspection on the ERCOT website, and each contract shall include specified financial terms and termination dates that will be established before the contract is presented for review by the ERCOT Board and the PUCT.

Urgent status was requested for the NPPR to ensure that a transparent process for procuring and deploying Resources to alleviate imminent Emergency Conditions is documented in the Protocols before Summer 2012 in the extraordinary event that such process may need to be utilized.

"The NPRR preserves ERCOT's authority to maintain reliability in Emergency Conditions, but establishes limits on how ERCOT may procure and deploy certain Resources in such circumstances. The NPRR provides the market with greater transparency regarding ERCOT's exercise of its authority to procure and deploy Resources to alleviate an imminent Emergency Condition, and institutionalizes protections that will limit the impact of such deployments on market prices during times of scarcity," ERCOT said.