Texas PUC Staff Offer Possible Next Steps in ORDC Review

In a memo concerning the review of the Operating Reserve Demand Curve (ORDC), Staff of the Public Utility Commission of Texas have offered potential next steps the Commission could take in its review, as little stakeholder consensus developed at ERCOT

Staff suggested that if the Commission wishes to continue its review of the ORDC, potential next steps may include:

• A workshop, presided over by the Commissioners or Staff, to deliberate the merits and implications of the various ORDC proposals.

• Request for written comment, filed either in response to discussion at the workshop or in response to the initial comments filed at ERCOT.

• Additional Analysis: At the request of stakeholders, ERCOT staff conducted a series of backcast analyses for each proposed ORDC modification. The Commission could request that ERCOT conduct further analysis, such as quantifying the expected equilibrium reserve margin for each proposal, undertaking additional study to determine a more accurate VOLL, or running additional backcasts.

• Rulemaking to Amend §25.505(g): PUC Substantive Rule §25.505(g) contains a "safety valve" provision that reduces the system-wide offer cap from $9,000/MWh to $2,000/MWh in the event that annual peaker net margin (PNM) exceeds three times the cost of new entry. Because the parameters of the ORDC are not affected by this provision, even if PNM were to meet the safety valve threshold, prices could still rise to reflect a VOLL of $9,000/MWh during scarcity conditions. A rulemaking proceeding would allow Staff to fully evaluate potential amendments to the rule in light of the ORDC.

If, after consideration of the ERCOT analysis and stakeholder recommendations, the Commission considers its review of the ORDC complete, Staff will take no specific action at this time.

Staff's memo also summarizes the positions and recommendations of stakeholders (click here for Staff's memo)

Additionally, ERCOT filed in the project (45572) a Supply Analysis Working Group whitepaper reviewing ORDC options, and ERCOT ORDC Options Analysis (click here)

ERCOT separately filed in Project 45572 an update on the status of stakeholder discussions regarding Operating Day August 13, 2015 (click here)