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Tests for Reasonable LMPs & Price Validation Tool Overview

Tests for Reasonable LMPs & Price Validation Tool Overview. NATF. October 27, 2009. 6 Month LMP Posting. 6 Month LMP Posting. References:. ERCOT Nodal Transition Plan v2.0.

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Tests for Reasonable LMPs & Price Validation Tool Overview

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  1. Tests for Reasonable LMPs & Price Validation Tool Overview NATF October 27, 2009 http://nodal.ercot.com 1

  2. 6 Month LMP Posting http://nodal.ercot.com 2

  3. 6 Month LMP Posting References: ERCOT Nodal Transition Plan v2.0 5.1 (4) As early as practical, ERCOT shall begin posting of LMPs to Market Participants based on test Resource offer curves submitted to ERCOT by the QSEs to measure the accuracy and stability of the SCED. The minimum time for this posting should be at least six months but may be longer as approved by the TPTF. Note: Early 2008 both tests for reasonableness and metrics were presented to TPTF http://nodal.ercot.com 3

  4. Tests for Reasonable LMPs If LMP > offer price (mitigated, proxy) at maximum limit (HDL) for a Resource, then unit should be dispatched at maximum limit (HDL) If LMP < offer price (mitigated, proxy) at minimum limit (LDL) for a Resource, then unit should be dispatched at minimum limit (LDL)  If LMP = offered price (mitigated, proxy) at dispatched MW point for a Resource, then Resource is marginal Base Points are between HDL and LDL Shadow Price is zero for a transmission constraint which is not binding Shadow Price is non-zero for a transmission constraint which is binding SPP Recalculation  Test #4 Dispatch Consistency Test #2 Shadow Price Check Test #1 SPP Recalc. http://nodal.ercot.com 4

  5. Overview of Price Validation Tool http://nodal.ercot.com 5

  6. Overview of the Price validation tool (PVT) • Market prices are validated for DAM, SCED and SASM; • Price Validation is done for: • DAM for each hour of the next operating day. • SCED for each dispatch interval and each settlement interval. • Each hour of the SASM if a SASM is run. http://nodal.ercot.com 6

  7. Core price validation tests http://nodal.ercot.com 7

  8. Core tests of the price validation (continued) http://nodal.ercot.com 8

  9. Tests of the Price Validation 1. 15-minute SPP Recalculation http://nodal.ercot.com 9

  10. Tests of the Price Validation 2. Shadow price check • What? • This test will verify that at each time interval, the shadow price for a transmission constraint is correctly calculated based on the binding status of the transmission constraint. • How? • i) If the transmission constraint is binding Shadow price is nonzero. • ii) If the transmission constraint is not binding Shadow price is zero. http://nodal.ercot.com 10

  11. Tests of the Price Validation 3. Marginal Units Check • What? • This test will verify that the correct number of marginal resources or Transmission Constraint Management (TCM) penalty prices are setting price in each interval given the number of binding or overloaded transmission constraints. • How? • i) If there are n transmission constraints binding  at least (n + 1) marginal resources setting price. • ii) If there are n overloaded transmission constraints  at least n transmission constraint shadow prices that are set to that constraint’s TCM penalty price. • Output? • All instances in which the correct number of marginal resources and TCM penalty prices cannot be identified will be flagged for further review. http://nodal.ercot.com 11

  12. Tests of the Price Validation 4. Dispatch Consistency Check • What? • This test will verify that committed resources are scheduled correctly based on the resource’s offer price, the LMP at its location. • (1) Base Points are between HDL and LDL • (2) If LMP > offer price at maximum limit (HDL) for a Resource, then unit should be dispatched at maximum limit (HDL) • (3) If LMP < offer price at minimum limit (LDL) for a Resource, then unit should be dispatched at minimum limit (LDL)  • (4) If LMP = offered price at dispatched MW point for a Resource, then Resource is marginal http://nodal.ercot.com 12

  13. Tests of the Price Validation 4. Dispatch Consistency Check LMP LMP LMP Marginal Unit $/MWh $/MWh $/MWh X LDL HDL LDL HDL LDL HDL MWh MWh MWh Base Point http://nodal.ercot.com 13

  14. Tests of the Price Validation 5. High Level Tests Example: Identify extreme high prices, low prices, and large changes in prices from interval to interval. (Note: this is just a warning flag) oscillating $/MWhr threshold limit interval to interval $/MWhr $/MWhr Threshold = 30 Threshold = 15 Threshold = 20

  15. Questions? Thanks! http://nodal.ercot.com 15

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