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ERCOT Market Analysis

Review of the Methodology for Setting Transmission Shadow Price Caps for Irresolvable Non-Competitive Constraints in SCED. ERCOT Market Analysis. References. ERCOT Business Practice “Setting the Shadow Price Caps and Power Balance Penalties in Security Constrained Economic Dispatch”

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ERCOT Market Analysis

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  1. Review of the Methodology for Setting Transmission Shadow Price Caps for IrresolvableNon-Competitive Constraintsin SCED ERCOT Market Analysis

  2. References • ERCOT Business Practice “Setting the Shadow Price Caps and Power Balance Penalties in Security Constrained Economic Dispatch” • The appropriate section of this document is noted in the headers of the following slides • ERCOT Business Practice “System-Wide Offer Cap and Scarcity Pricing Mechanism Methodology” • Contains LCAP definition

  3. Default Shadow Price Caps – 3.5

  4. Trigger Conditions – 3.6.1 • A non-competitive constraint violation is not resolved by the SCED dispatch or overridden for more than two consecutive hours on more than 4 consecutive Operating Days; or • A non-competitive constraint violation is not resolved by the SCED dispatch or overridden for more than a total of 20 hours in a rolling thirty day period.

  5. Trigger Conditions – 3.6.1 • Resource C and D identification • Resource C – used in determination of shadow price cap • The Generation Resource with the lowest absolute value of the negative shift factor impact on the violated constraint • Resource D – used for net margin calculation • The Generation Resource with the highest absolute value of the negative shift factor on the violated constraint. • Resources with < 2% abs(shift factor) are ignored • In cases for which there is no Resource C, SP cap is set to $2,000 • In cases for which there is no Resource D, net margin is calculated based on Settlement Point of the Resource with the most negative shift factor • The day the trigger is met is used to determine Resource C and D • For the end of year evaluation (3.6.2), the last day the constraint was binding is used

  6. Trigger Conditions – 3.6.1 • Resource C data for Shadow Price Caps effective January 1, 2013 • For VALIMP, the Resource C shift factor was 96.3% • For other constraints in which a Resource C was identified, the shift factors ranged between 2.0% and 3.4%

  7. Methodology for Setting the Shadow Price Cap – 3.6.2 • The Shadow Price Cap on this constraint will initially be set to the minimum of: • The current value of the Generic Shadow Price Cap as determined in Section 3.5, and • The Maximum of the largest value of the Mitigated Offer Cap / abs (SF) for Generation Resource C or $2000. MOC SF Range of allowed SP cap $2,000 $2,800 $3,500 $4,500 $5,000 $0

  8. Current Constraints with Modified Shadow Price Caps Constraints in RED will be reset to default values on January 17, 2013 as they have been determined to be resolvable

  9. Net Margin Calculation – 3.6.3 • The Settlement Point Price at the Resource Node for Generation Resource D is the net margin reference SPP. • The constraint net margin calculation is: ∑ ¼ * MAX(0, (net margin reference SPP – 10*FIP))over all intervals in which the constraint is binding

  10. Net Margin Calculation – 3.6.3 • As constraint binding periods are defined by SCED interval, the SCED intervals must be converted to the appropriate Settlement Intervals for the net margin calculation 10:00:20 10:30:09 10:45:08 SCED Intervals (5 min) Settlement Intervals (15 min) 10:00 10:30 11:00 Example Calculation Net Margin = ¼ * (SPP – 10*FIP)

  11. Net Margin Calculation – 3.6.3 • End of 2012 net margin calculations • Totals were reset to zero on January 1, 2013

  12. Methodology for Setting the Shadow Price Cap – 3.6.2 • When $95,000 net margin is reached, the Shadow Price Cap on this constraint will be set to the minimum of: • $2,000, or • The maximum of the largest value of the Mitigated Offer Cap / abs (SF) for Generation Resource C or the current effective LCAP. • SNCWMOS8:ODNTH_FMR1 met this condition on August 6. Its Shadow Price Cap was changed from $2,274.65 to $2,000.00. • On November 7, 2012, the LCAP definition was changed frommax(50*FIP, $500) to max(50*FIP, $2,000) • Since LCAP can never be lower than $2,000, the equation above now reduces to: When $95,000 is reached, the Shadow Price Cap will be set to $2,000 MOC SF $95K range Prior to $95K range $2,000 $2,800 $3,500 $4,500 $5,000 $0 $500 LCAP

  13. Methodology for Setting Transmission Shadow Price Caps or Irresolvable Non-Competitive Constraints in SCED Questions?

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