PUCT Likely to Increase Power Balance Penalty Curve for

The PUCT intends to address an increase in the Power Balance Penalty Curve (PBPC), to be in place for this summer, at its next open meeting on April 12.

Chairman Donna Nelson proposed modifying the Power Balance Penalty Curve, by July 1, 2012, as follows:

• The top of the curve would be increased to $4,500 (from the current $3,001)

• From 0-10 MW, the PBPC would be increased to $500 (from the current $200-300)

• From 10-20 MW, the PBPC would be increased to $1,000 (from the current $400)

• From 20-30 MW, the PBPC would be increased to $1,000 (from the current $500)

• From 30-40 MW, the PBPC would be increased to $3,000 (from the current $1,000)

• From 40-50 MW, the PBPC would be increased to $3,000 (from the current $2,250)

Nelson said that she is amenable to not raising the System Wide Offer Cap this summer if the Power Balance Penalty Curve changes are adopted, with changes in the System Wide Offer Cap to be implemented for the summer of 2013.

Commissioner Kenneth Anderson, who has been concerned with an immediate change in the System Wide Offer Cap due to the impact on retail electric providers and other LSEs, did not offer a definitive endorsement of the Power Balance Penalty Curve changes, but appeared open to them after additional review. In particular, Anderson noted that to be effective, the modified Power Balance Penalty Curve values would have to be reflected in the Responsive Reserve energy bids, which would require an ERCOT system change to distinguish such bids from those subject to the System Wide Offer Cap. Anderson asked ERCOT to report on whether this system change can be implemented by July 1, 2012.

Commissioner Rolando Pablos was absent from today's open meeting, but in a memo supported addressing changes in the Power Balance Penalty Curve, though he did not cite exact amounts for the top of the curve or individual steps. However, it would appear immediate changes in the Power Balance Penalty Curve will have two votes.

Nelson's goal is to approve the changes at the April 12 open meeting, with the Commission voting to direct ERCOT to adopt the changes at its following April board meeting.

Additionally, Commissioners agreed that Staff will bring a draft proposal for publication concerning other long-term changes, including an increase in the System Wide Offer Cap starting in 2013, before the Commission at the April 12 open meeting. Staff will rely on the Commissioners' various memos and statements in drafting the proposal, which as previously noted have suggested an increase in the System Wide Offer Cap to as high as $7,500 or $9,000.