1 / 46

Evaluation of Historical and Proposed Alert and EECP Pricing

Evaluation of Historical and Proposed Alert and EECP Pricing. True North Associates. Evaluate Impact of Proposed Compromise Solution. Administratively set Alert and EECP Pricing Floors extending up to Market Maximum Clearing Price (HCAP) Changes to Service Cost

jasia
Download Presentation

Evaluation of Historical and Proposed Alert and EECP Pricing

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Evaluation of Historical and Proposed Alert and EECP Pricing True North Associates

  2. Evaluate Impact ofProposed Compromise Solution • Administratively set Alert and EECP Pricing Floors extending up to Market Maximum Clearing Price (HCAP) • Changes to Service Cost • Ability to offer a true ‘Long-Term Solution” within the context of risk management decisions affecting capital investment

  3. Compromise Pricing Ramp

  4. Affected Intervals

  5. Intervals Considered

  6. Approach Examine BES database and evaluate eight Events between April 3 and July 7, 2007 identified by LTSTF members Identify interval MCPE and MW conditions during Events Recalculate BES costs under Alert and EECP conditions per alternative ‘Compromise Proposal’ framework Determine change in Event costs for BES and NSRS Distinguish impacts of administrative adjustment of MCPE for congestion from Compromise Pricing framework Logarithmic Scale for MCPE

  7. Converting Energy To Revenue • Procedures and archival data contained in ERCOT BES Spreadsheets • Total BES Cost based on UBES and DBES resource deployments in N, S, W, and Houston zones • BES Costs calculated at each interval as: MW i * 0.25 Hour/Interval * MCPE, $/MWh i or $Compromise Plan/MWh • Compromise Plan pricing logic utilized in computing revised total cost • Interval Price set to Greater of MCPE and Compromise Proposal Values • Compromise Pricing for Stages 2 and 3 EECP not considered

  8. Event Patterns Event Days Intervals Advisory Intervals Alert Intervals EECP Intervals Intervals w/NSRS Deployed

  9. April 3, 2007 MCPE UBES & DBES MW Net MW Cost @ MCPE HUB Prices NSRS Intervals Advisory Intervals Intervals w/NSRS

  10. April 3, 2007

  11. Pricing Comparison4/3/2007

  12. BES Cost Comparison4/3/2007 +$5.1 Million Due to Congestion

  13. June 18, 2007 Advisory Intervals Alert Stage 1 EECP

  14. June 18, 2007

  15. Pricing Comparison6/18/2007

  16. BES Cost Comparison6/18/2007 +$6.8 Million

  17. June 19, 2007

  18. June 19, 2007

  19. Pricing Comparison6/19/2007

  20. BES Cost Comparison6/19/2007 +$4.6 Million

  21. June 24, 2007

  22. June 24, 2007

  23. Pricing Comparison6/24/2007

  24. BES Cost Comparison6/24/2007 +$3.9 Million

  25. June 26, 2007

  26. June 26, 2007

  27. Price Comparison6/26/2007

  28. BES Cost Comparison6/26/2007 +$3.6 Million

  29. June 27, 2007

  30. June 27, 2007

  31. Pricing Comparison6/27/2007

  32. BES Cost Comparison6/27/2007 +$1.9 Million

  33. June 29, 2007

  34. June 29, 2007 Advisory Alert Advisory

  35. Pricing Comparison 6/29/2007 Calculated BES > Compromise

  36. BES Cost Comparison6/29/2007 +$3.7 Million

  37. July 7, 2007 Congestion NSRS Deployed

  38. July 7, 2007

  39. Pricing Comparison7/7/2007

  40. BES Cost Comparison7/7/2007 +$6.7 Million

  41. BES Event Cost Summary

  42. Impact On NSRS

  43. Impact Of Administrative Pricing Measures On NSRS NSRS Not Deployed

  44. Observations - 1 • BES has been and is being successfully provided based on MCPE pricing • SPD is presently finding price solutions in and above the range proposed in the Compromise Solution • The proposed ‘Compromise Solution’ appears to increase the cost of BES and NSRS significantly • The increase will double over the next 2 years, per PUC SR25.605(g) as HCAP increases to $3,000/MWh • Adjusting MCPE for Congestion also produces major increases • The number of Alert and EECP Intervals and their levels of UBES are relatively small and load factors will decrease as new resources are added • The magnitude and distribution of revenues is uncertain under present and future competition

  45. Revenue Still At Cyclical Risk Effect of Adding Capacity or Revaluing Existing Resources Bust Boom • Increasing prices is one way to address the problem of ‘Missing Money,’ but higher prices alone will not stabilize revenue or provide the long-term security that large capital investments typically require

  46. Observations - 2 • Raising prices alone offers no assurance that needed or desired new resources will be deployed • No Obligations for Addition or Commitment of New Resources • No Protection for New Investment • “Resource Adequacy programs work, where they do, by signaling investors that they can expect stable and reasonable cost recovery for many years to come. This is no easy task, and an RA policy stamped ‘TEMPORARY,’ cannot succeed. It may pay out large sums of money, which will be gladly accepted by existing generation, but it will not induce new investment at anything close to a reasonable price.” The Convergence of Market Designs for Adequate Generating Capacity Cramton & Stoft, 2006 • No Revenue Prioritization Favoring New Generation Units • No Mitigation Plan Addressing Increased Potential for Collusion or Exercise of Market Power by Existing Providers

More Related