Texas Advances Operating Reserves Demand Curve, Sets Major Parameters, NPRR to Be Issued Next Week

The Public Utility Commission of Texas has directed ERCOT to develop a Nodal Protocol Revision Request to implement an Operating Reserves Demand Curve (ORDC), following the B+ design, and agreed on four major design elements for the curve.

Specifically, the Commissioners agreed that the Value of Lost Load used in the curve should be $9,000/MWh.

Additionally, Commissioners agreed that the minimum contingency value in the curve ("x") should be set at 2,000 MW.

Commissioners agreed that the curve should be shaped according to the cumulative distribution function (the "real" curve design), and that current price floors should be removed.

ERCOT said that it anticipates being able to issue an NPRR for stakeholder review by Thursday of next week. The NPRR will then work through the stakeholder process, but the Commission will provide guidance as needed.

ERCOT was directed to publish indicative pricing under the curve as soon as possible, which is expected to be within three-to-four weeks (for not-production-quality indicative data).

Chairman Donna Nelson said that she is interested, in particular, that the chosen minimum contingency level of 2,000 MW does not take money out of the market and will be monitoring the issue.

Commissioners agreed to move forward with implementation of an ORDC after reviewing cost estimates for full co-optimization, agreeing that consideration of co-optimization should not delay the ORDC. The issue of how to proceed with further evaluation of co-optimization was delegated to Staff, as Commissioners expressed concern that, with an ORDC, co-optimization may provide only marginal benefits for its implementation costs.