Texas PUC Commissioners Agree To Maintain ERCOT Reliability Deployment Price Adder If LCAP Triggered

During today's open meeting, Commissioners of the Public Utility Commission of Texas agreed that the operating reserve demand curve and the real time reliability deployment price adder should remain in place in the ERCOT market even when the low system wide offer cap (LCAP) is triggered (when peaker net margin is reached)

Commissioners were addressing a draft proposal for adoption in a rulemaking concerning discrete changes to the scarcity pricing rules

Staff had recommended suspending the Operating Reserve Demand Curve and the Reliability Deployment Price Adder if the LCAP is in effect, with the intention of preventing divergence between the real-time and day-ahead markets if the LCAP is ever activated

Chairman DeAnn T. Walker said in a memo in advance of the meeting that, "the value of lost load (VOLL) should be set at whatever the cap is at the time."

"Therefore, if the LCAP is in place, then the VOLL should match the LCAP. This allows the operating reserve demand curve and the real time reliability deployment price adder to be used after the LCAP has been triggered; thereby, preserving all of the mechanisms the ERCOT market has in place. Several stakeholder comments supported this approach, and it is my understanding that this also would be the fastest and least expensive way for ERCOT to implement the changes," Walker wrote

Similarly, Commissioner Arthur C. D'Andrea said in a memo in advance of the meeting that, "I recommend that, in the event the peaker net margin threshold is triggered, both the operating reserve demand curve and the reliability deployment price adder be left in place and the value of lost load be reduced to equal the low system-wide offer cap, which is proposed to remain at $2,000 per MWh. Maintenance of the low system-wide offer cap helps guard against overly excessive revenues for resource owners while keeping the overall fundamentals of the energy-only market in place."

Language in the proposal for adoption will be modified consistent with Commissioners' recommendations and will be taken up again at the May 9 meeting

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