ERCOT Further Updates PUCT on West Zone Congestion Issues

ERCOT has submitted another letter, in Docket 31600, to the PUCT reporting on continuing discussions and actions to address congestion in the West Zone.

See prior story on West Zone congestion

ERCOT said that it has confirmed that the issue is not the result of a misapplication of market rules or the failure of technical systems. "Similarly, the IMM has not observed inappropriate market behavior leading to the increased West Zone congestion costs," ERCOT said.

"Therefore, the focus of our efforts has been on identifying potential mitigation strategies that could function within the nodal market construct (which is not generating similar outcomes in other parts of ERCOT)," ERCOT said.

In an effort to develop such strategies, Commission Staff convened a meeting on September 5, 2012 with representatives of Priority Power Management (PPM), one of the parties who filed a letter in Project No. 31600 requesting attention to the West Zone issues. In addition to PPM and Commission Staff, the meeting included senior representatives of ERCOT's Wholesale Markets and Legal organizations, and Mr. Dan Jones, Director of the IMM.

Among other things, the meeting included a discussion of the transmission development plans already underway by Oncor Electric Delivery Company, LLC that will provide long-term relief to the congestion issues. Oncor, working with ERCOT and other stakeholders in the Regional Planning Group (RPG) process, identified the need for these projects long before the recent congestion issues arose, and the projects are in process, ERCOT said.

To address congestion in the short-term, parties at the September 5 meeting identified three items for continued work and investigation:

• "Mr. Jones referenced a proposal developed by the IMM that is scheduled for consideration at the September 12, 2012 meeting of the ERCOT Wholesale Markets Subcommittee (WMS). The proposal includes changes to the 'Verifiable Cost Manual' affecting operations and maintenance calculations for Quick Start generation units. If adopted, these changes will result in reduced costs in situations where Quick Start units are required to resolve non-competitive constraints that are often binding for many consecutive hours. The change proposed by the IMM would become effective after approval by WMS.

• "PPM requested that ERCOT and the IMM review the shadow price caps applicable to non-competitive constraints irresolvable by Security Constrained Economic Dispatch (SCED). The ERCOT Board adopted a 'holistic' approach to managing such issues in recent months, and that approach has already been utilized to lower some of the congestion costs affecting the West Zone. ERCOT and the IMM will examine this issue further in light of the recent congestion situation. If further changes to the shadow price cap methodology are merited, they will be introduced into the ERCOT stakeholder process. A change in the shadow price cap methodology would require approval by the ERCOT Board of Directors.

• "ERCOT and PPM agreed to further investigate whether physical arrangements (short of the scheduled transmission upgrades) could be implemented that would make congestion at key locations less frequent. Such arrangements emerged from the parties' efforts at brainstorming solutions, and still require significant vetting by ERCOT, Oncor, and other affected parties from an operational standpoint to ensure feasibility and compliance with applicable reliability standards."

ERCOT also said that it will consider other options proposed by stakeholders, such as those noted in a September 5, 2012 memorandum filed by Pro-Star Energy Services. The suggestions filed by Pro-Star Energy Services included, among other things, creation of a new Load Zone (with Pro-Star noting the 36-month lea-time required by the protocols), as well as additional transmission improvements.