Recommendations based on ERCOT RTRDPA Study

1. Recommendations based on ERCOT RTRDPA Study Shams Siddiqi, Ph.D. Representing Rainbow Energy Marketing Corporation (512) 619-3532 shams@crescentpower.net WMWG Meeting April 22, 2019

2. No LDL Relaxation Maintains Flaw • Thanks to ERCOT for providing revised RTRDPA study results • ERCOT presentation clearly shows BP=LDL trigger is unnecessary and “No LDL Relaxation” maintains a current flaw due to BP=HDL relaxation (suppression of adder) as the current implementation of RTRDPA • ERCOT makes clear “No LDL Relaxation (NLR) is lower due to HDL relaxation of ramp-constrained capacity” • NLR results in 0 RTRDPA (actually negative RTRDPA - which points out flawed nature of NLR) when there should obviously be a positive adder. • The results of NLR average out to current flawed RTRDPA implementation – particularly during low probability scarcity situations where the adder is a very important price signal in Energy-Only Market • On 10/4/18, NLR resulted 0 to very little RTRDPA even though ERCOT RUC-ed resources for capacity shortage – the correct answer is the system lambda plus RTRDPA should be at or close to $1,500/MWh for many of those RUC intervals as in Conditional 1 or 2 or Seq. SCED • NLR is lower and higher than current RTRDPA – resulting in nearly the same average adder and no adder during scarcity situations as shown in Slide 8 of ERCOT Presentation

3. Conditional 1 or 2 fixes RTRDPA • Sequential SCED changes the dispatch and thus the LDL and HDL of resources as it dispatches with time compared to actual – that’s the reason the results don’t exactly match Conditional 1 or 2 • Sequential SCED also does not relax HASL and LASL due to current design – Real-Time Co-optimization (RTC) changes that • Conditional 2 reflects RTC implementation and is more conservative to address any extreme ramping concerns • Conditional 1 reflects current SCED and didn’t exhibit any ramping issues in the ERCOT study • Both provide appropriate scarcity signal of about $1,500/MWh when ERCOT RUC-ed for system scarcity and even Sequential SCED realized scarcity (e.g. 10/4/18) • ERCOT observations: • NLR sometimes does not produce an adder when Sequential SCED suggests an adder is warranted [my note: particularly during scarcity situations] • Conditional 1 and 2 approaches are designed to create higher price adders when there should be and also prevent price adders when there should not be, and it appears to do so some of the time, but also produces higher or lower adders than Sequential SCED suggests are warranted [my note: due to BP differences]

4. Conclusion • NLR does not address the flawed BP=HDL relaxation and so produces arbitrary adders, and more importantly, 0 to little adder during scarcity – why modify current RTRDPA if flaw is maintained? • With RTC and the elimination of ORDC adder, RTRDPA will be the only mechanism to correct price reversal for EDC (RMR, RUC, DC Tie related actions, etc.) – thus, critically important to fix RTRDPA flaws • Endorse either Conditional 1 or 2 as actual fixes to RTRDPA • If DC Tie exports are treated like other load as it should, then there is no need for an Advisory Limit – all E-tags approved based on projected Physical Limits of ties – this would eliminate ERCOT’s concern with posting of Advisory Limits • However, NPRR904 (and OBDRR009) still needed for situations where ERCOT curtails an approved E-tag for say system-wide scarcity (better solution and price signal than paying curtailed E-tags a make-whole payment similar to a switchable generation resource) • Thus, endorse NPRR904 with Conditional 1 or 2 while working towards treating exports like other load