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Verifiable Cost Working Group (VCWG) Update

This presentation outlines the updates and discussions from the Verifiable Cost Working Group (VCWG) to the ERCOT Wholesale Market Subcommittee on May 11, 2011. Key topics include changes to the VC Manual, the mitigated capacity process, and the implications of including actual resource fuel costs in the Reliability Unit Commitment (RUC) decision-making, per NPRR319. The VCWG is also evaluating the impact of fuel contracts on RUC resources, the effectiveness of DAM offer caps, and considerations for long-term solutions regarding VOX, PHR, and emissions.

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Verifiable Cost Working Group (VCWG) Update

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  1. Verifiable Cost Working Group (VCWG) Update Presentation to the ERCOT Wholesale Market Subcommittee May 11, 2011

  2. VC Manual Changes • QSGR – Mitigated Cap process description • Will submit in June for WMS approval • Including Actual Resource Fuel Cost in RUC decision (per NPRR319). Questions being asked at VCWG • How many Resources are being RUC that have fuel contracts and filing for cost recovery? • What is the magnitude of the RUC design change to consider fuel contract prices prior to commitment? • Does capping the DAM Offers with VC gain anything? • Can we do away with the DAM Cap? (probably no) VCWG Summary

  3. Telemeter fuel Cost • Possibly lots of data sent to ERCOT from Resources. • May not capture costs for Resource due to timing of the instruction. • Verification of costs would not be under scope of VC as would change daily/hourly. • Concern over PPA’s being made whole for RUC and having accurate costs reflected in VC. • Should incremental fuel costs of providing RUC instructions be reflected in VC for PPA’s? • VCWG only looked at O & M piece for VC before Nodal Implementation. • Should VCWG look into those costs based on the units that are already grandfathered? • Possibly capture costs by increasing fuel consumption rate. VCWG Summary

  4. Other Updates • VCWG is continuing to work on the Long Term Solutions for VOX, PHR & Emission. • ERCOT working on a proposal for VCWG • Generic Price for Coal and Wind. • Standard costs expire on December 31, 2011. • Next meeting May 24th. VCWG Summary

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