ercot market education load serving entities 201 · please turn off cell phones & other...

ERCOT MARKET EDUCATIONLoad Serving Entities 201

PROTOCOL DISCLAIMER

This presentation provides a general overview of the Texas Nodal Market Implementation and is not intended to be a substitute for the ERCOT Nodal Protocols (available at http://nodal.ercot.com/protocols/index.html), as amended from time to time. If any conflict exists between this presentation and the ERCOT Nodal Protocols, the ERCOT Nodal Protocols shall control in all respects.

ANTITRUST ADMONITION

ERCOT strictly prohibits Market Participants and their employees who are participating in ERCOT activities from using their participation in ERCOT activities as a forum for engaging in practices or communications that violate the antitrust laws. The ERCOT Board has approved guidelines for members of ERCOT Committees, Subcommittees and Working Groups to be reviewed and followed by each Market Participant attending ERCOT meetings. If you have not received a copy of these Guidelines, an electronic version is available at http://www.ercot.com/about/governance/index.html. Please remember your ongoing obligation to comply with all applicable laws, including the antitrust laws.

Legal Disclaimers and Admonitions

• Restrooms

• Refreshments

• Attendance sheet

• Exam

• Questions

• Microphones

Legal Disclaimers and Admonitions

Please turn off cell phones & other electronics

Course Introduction

Load Serving Entities (LSEs), including:

• Retail Electric Providers

• Electrical Cooperatives

• Municipally-Owned Utilities

This course is designed for:

Course Audience

• Identify key Wholesale Market costs associated with serving load in the ERCOT Market

• Describe several means of hedging these costs

• Evaluate your current strategies against your needs

Upon completion of this course you will be able to:

Course Objectives

• Nodal Market Overview

• Nodal Market Pricing

• Market Costs of Serving Load

• Nodal Market Tools

• Trades

• Day-Ahead Market

• Congestion Revenue Rights

• Using Tools to Manage Costs

Topics covered in this course:

Course Objectives

Nodal Market Overview

• Registration Requirements

• Network Modeling

• CRR Auction

• Day-Ahead Market

• Reliability Unit Commitment

• Adjustment Period

• Real-time Operations

• Settlements

• Market Information System (MIS)

Topics in this lesson . . .

Course Objectives

NODAL MARKET OVERVIEW – The Market Structure

LSEs in ERCOT – Defining LSEs

A Load Serving Entity (LSE) provides

electrical service to end-use customers

Load Serving Entity

Types of LSEs:• Retail Electric Providers• Electrical Cooperatives• Municipally-Owned Utilities

Load Serving Entity

Registration Requirements:• Registration as an LSE• Designation of a QSE

LSEs in ERCOT – LSE Registration

To register as an LSE• Market Participant application• Standard Market Participant agreement

Designating a QSE• Occurs during registration• LSE may also be a QSE

Changing QSE Representation• LSE must inform ERCOT • New QSE must confirm

NODAL MARKET OVERVIEW – Network Modeling

NODAL MARKET OVERVIEW – CRR Auction

Congestion Revenue Rights (CRR)• Financial instrument • Hedge against congestion costs

CRR Account Holders• Must register with ERCOT and

meet qualification requirements• LSE may also be a CRR

Account Holder

NODAL MARKET OVERVIEW – Day-Ahead Market

NODAL MARKET OVERVIEW – Reliability Unit Commitment

NODAL MARKET OVERVIEW – Adjustment Period

NODAL MARKET OVERVIEW – Real-Time Operations

NODAL MARKET OVERVIEW – Settlement

NODAL MARKET OVERVIEW – Market Information System

• Registration requirements• The purpose of Network Modeling• The role CRRs play in the Nodal Market• Participation in the Day-Ahead Market• Reliability Unit Commitment• Activities of the Adjustment Period• The components of Real-Time Operations• The goals of Settlements• The uses of the MIS

You’ve learned about…

Summary

Nodal Market Pricing

• Settlement Points

• Settlement Point Pricing

• Locational Marginal Pricing

Overview

All Energy in the ERCOT Market is settled at one of three types of Settlement Points:

Settlement Points

ResourceNodes

LoadZones

Each Settlement Point has its own Settlement Point Price

An Electrical Bus where a Resource’s measured output is settled

What is a Resource Node?

Settlement Points

ResourceElectrical Bus

A grouping of Load Buses where Load is settled.

What is a Load Zone?

Settlement Points

All Load must be assigned to a specific Load Zone for Settlement purposes

• Competitive Load Zones

• Non Opt-in Entity Load Zones

• DC Tie Load Zones

Three types of Load Zones

Settlement Points

A grouping of 345kV buses wherefinancial transactions are settled.

What is a Hub?

Settlement Points

Specific buses in each Hub defined by Protocols

ERCOT Hub Average

ERCOT Bus Average

Six Hubs in ERCOT Market

Settlement Points

Four Regional Hubs• North

• West

• South

• Houston

Two Average Hubs

Settlement Point Prices are calculated from Locational Marginal Prices:

Settlement Points

• Load Zone: Load-weighted average of LMPs at Load Buses within the Load Zone

• Hub: Simple Average of LMPs at defined Hub Buses within the Hub

• Resource Node: LMP at Resource Node

Additional Real-Time pricing component…

Settlement Points

• Reserve Price Adder: the economic value of reserves that are available for energy dispatch in Real-Time

• LMPs and Reserve Price Adders are used together to form SPPs in Real-Time

LMPs are location-specific. Reserve Price Adders represent the value of

reserves ERCOT-wide.

What is Locational Marginal Pricing (LMP)?

• Pricing: Cost

• Marginal: to serve the next increment of Load

• Locational: at an Electrical Bus

Locational Marginal Pricing

Buses can be:• Load Buses• Generation Resource Buses• Hub Buses• Other Buses

• Energy

• Congestion

LMP components

In some markets, LMPs have a component for losses.

The ERCOT Nodal Market does NOT include losses in LMPs.

Introducing the players…

345kVHub Bus

69kVLoad Bus

Gen 2 Gen 3

Let’s solve for LMPs at each Bus

Gen 2 Gen 3

20 MW20 MW @ $20

20 MW @ $10

345kVHub Bus

69kVLoad Bus

5 MW Limit

10 MW Limit

40 MW @ $30

$10LMP?

$20LMP?

$30LMP?

Clear 5 MW

Clear 5 MW Clear 10 MW

Load$20LMP?

Since we have congestion. . .

Charges to BuyersLMP MW

$30 20 $600

Total $600

Payments to SellersLMP MW

Gen 1 $20 5 $100

Gen 2 $10 5 $50

Gen 3 $30 10 $300

Total $450

Chargesto

Buyers

Paymentsto

Sellers

Day-Ahead Market Congestion Rent funds Congestion Revenue

Rights (CRRs)

• LMPs and Settlement Point Prices

• Every Hour

How often are LMPs & Settlement Point Prices calculated?

Settlement Point Prices

LMPs and Reserve Price Adders• Every 5 minutes*

Settlement Point Prices• Every 15 minutes

* Generated every SCED cycle

• LMP Contour Map

• Day-Ahead Market SPPs

• Real-Time LMPs

• Real-Time SPPs

Market Information System

• Settlement Points

• Settlement Point Pricing

• Locational Marginal Pricing

Summary

Market Costs of Serving Load

• The LSE Business Environment

• Wholesale Market Costs of Serving Load

• The Challenges of Predicting Cost Exposure

Overview

The LSE Business Environment

• Primary Costs to Manage: Other costs

• Energy - Reliability Must Run

• Capacity - Black Start

• Congestion - Voltage Support

• Ancillary Services - ERCOT Administrative Fee

Settlement Exposure

Energy

Capacity

Congestion

Ancillary Services

What are the wholesalemarket costs for serving load?

Acquire Energy to serve Load

Bilateral Trade

Day-Ahead Market

Real-Time Purchase

Acquire Energy to serve Load

Bilateral Trade

Day-Ahead Market

Real-Time Purchase

Energy& Capacity

Energy

Congestion Cost exposure

Congestion costs are built in to the energy prices.

Resource Node A

$30/MWh

Load Zone

$40/MWh

$50/MWh

Ancillary Services Costs

Regulation Up

Regulation Down

Responsive Reserve

Non-Spin ReserveQSEs (with Load)

Ancillary Service Plan

• Ancillary Services (MW) for each hour of the Operating Day

• Based on forecasted load

• Posted to MIS Public

Ancillary Services Costs (continued)

Ancillary Service Obligation

• AS Plan allocated to each QSE, by service, by hour.

• Based on Load Ratio Share

QSE settles with LSE

• ERCOT charges QSE for any Obligation not self-arranged

• QSE may charge LSE for Ancillary Services

• Supply and Demand

• Transmission Congestion

• Transmission and Generation Outages

• Weather

Factors Impacting Wholesale Market Costs:

Predicting Cost Exposure

• The LSE Business Environment

• Wholesale Market Costs of Serving Load

• The Challenges of Predicting Cost Exposure

Summary

Market Tools

• Why do anything?

• Tools available in ERCOT, including:

• Trades

• Day Ahead Market

• Criteria for using these tools

• Financial impact of using these tools

Overview

The Tools for Managing Wholesale Costs

Market Tools

Congestion

Energy, Capacity, Congestion

Day-Ahead Market

Congestion Revenue Rights

Bilateral TradesEnergy, Capacity, Ancillary Services

The more forward the Energy is purchased the higher the price.

In general . . .

Market Tools

So, why would an LSE buy energy forward?

Trades and DAM provide Price Certainty

Real-Time Price Volatility!

Market Tools

1 3 5 7 9 11 13 15 17 19 21 23

Load Zone

Real-Time Prices

Day-Ahead Prices

Trade Prices

Avoid Capacity-Related charges!

Market Tools

Bilateral Trade

Day-Ahead Market

Real-Time Purchase

Energy& Capacity

Energy

Market Tools - Trades

• QSE-QSE transactions• Transfers financial responsibility• Types

• Capacity• Energy• Ancillary Service

Trades

Market Tools – Trades

Trades are used only in Settlements

Trade Options:• LSEs may trade• QSEs report trades to ERCOT

• Trades do not “exist” until bothQSEs agree.

• One QSE reports the trade• The other QSE confirms the trade

• After the Trade is confirmed, either party may reject it if the deadline for doing so has not passed.

Buyer and Seller QSE must confirm Trades

Information Needed Energy Trade Capacity Trade AS Trade

Buying QSE

Selling QSE

Type of AS:

Settlement Point:

MW quantity for each Settlement Interval 15 minute Hourly Hourly

Start and Stop Time 1st / Last 15-minute Settlement Interval 1st / Last Hour 1st / Last Hour

Submittal Criteria by Trade

Submitted prior to 1430

Energy Trade• Energy supply in Real-Time• Capacity supply in Day-Ahead

Capacity Trade• No Energy supply in Real-Time• Capacity supply in Day-Ahead

Submitted after 1430

Energy Trade• Energy supply in Real-Time• Capacity supply in subsequent

Hourly RUC

Capacity Trade• No Energy supply in Real-Time• Capacity supply in subsequent

Hourly RUC

Market Tools - Day Ahead Market (DAM)

• Centralized Forward Market• QSEs buy and sell Energy• ERCOT buys Ancillary Services • Forward market provides price

certainty

The Day-Ahead Market

Market Tools – Day Ahead Market

• Market opens at 0600

• Clearing Process begins at 1000

• Results posted by 1330

When does the Day-Ahead Market occur?

06:00 13:30 00:00

Only QSEs participate in the Day-Ahead Market.

Types of Bids:• Energy Bid• PTP Obligation Bid

Energy Bid

• Submitted at any Settlement Point• Includes:

• MW Quantity• Price buyer is willing to pay

Day-Ahead Market Energy Bid

Energy bids are used only in DAM. Load is a price

taker in Real-Time

• Financial instruments• Hedge against

congestion costs• Financial Investment

• Purchased at DAM price spread

• Settled at Real-Time price spread

Day-Ahead Market PTP Obligations

• Submitted for any two Settlement Points• Includes:

• MW Quantity• (Sink – Source) price buyer is willing to pay

DAM PTP Obligation Bid

SourceSettlement

SinkSettlement

PTP Obligation

• Awarded DAM Energy Bid

• Energy supply in Real-Time

• Capacity supply in RUC

• Awarded DAM PTP Obligation

• Payment or Charge in Real-time

• No Energy supply in Real-Time

• No Capacity supply in RUC

TOMORROWTODAY

Market Tools - Congestion Revenue Rights (CRRs)

• Financial instruments• Hedge against

congestion costs• Financial Investment

• Purchased at Auction Clearing Price

• Settled at DAM price spread

Congestion Revenue Rights

Market Tools – Congestion Revenue Rights

Price certainty - Locking in the price of congestion at the cost of purchasing the CRR

Price Separation between two Settlement Points

As a Financial Hedge for…

•As a Financial Investment…

•CRRs may be purchased as a financial tool to speculate:

Congestion Rent > Purchase Price

Congestion Revenue Rights Characteristics

• Designated point of injection (source) and point of withdrawal (sink)

• Settlement based on difference between sink and source Settlement Point Prices (Sink – Source)

• Two Instruments:• Point-to-Point Options• Point-to-Point Obligations

Point-to-Point Congestion

Revenue Rights

Types of Congestion Revenue Rights

Point-to-Point Options• Can only result in a payment

Point-to-Point Obligation• Can result in a payment or charge

Point-to-Point Congestion

Revenue Rights

Point-to-Point (PTP) Options

Point A

Point B

Point COptionAB Payment = $10.00

OptionCB Payment = $0?

$10/MWh$20/MWh

$30/MWh

Point-to-Point (PTP) Obligations

Point A

Point B

Point CObligation AB Payment = $10.00

Obligation CB Payment = -$10.00 ?

$10/MWh$20/MWh

$30/MWh

• CRR Auction

• Allocation (NOIEs only)

• Bilateral Trades

Auction

Allocation

Three ways of acquiring CRRs:

• Time-of-Use Blocks

• One month strips

CRRs are auctioned and allocated by:

• CRR Auction• Monthly and Semi-Annual Auctions• Based on Network Operations Model

Only CRR Account Holders can become owners-of-record for CRRs

• Timing of Auctions:

• Monthly

• Long Term Auction Sequence

• Semi-annual

• Four successive auctions

1st Six months

2nd Six months

3rd Six months

4th Six months

• Available Capacity

• 90% in Monthly Auction

• Less in Long-Term Auction

• 60% for first six months

• 45% for second six months

• 30% for third six months

• 15% for fourth six months

CRR Auction Awards are also constrained by

Credit Limits

Pay to QSEs representing Load

Annual and MonthlyCRR Auctions

Distribution occurs once a month.

CRR Auction Settlement

• PTP Options• PTP Obligations

• Characteristics remain unchanged

• Both parties must meet credit requirements.

Trading CRRs Bilaterally

• The need for forward energy purchases

• Tools available in ERCOT, including:

• Trades

• Day Ahead Market

• Criteria for using these tools

• Financial impact of using these tools

Summary

Using Market Tools to Manage Costs

• Introduce our Laboratory LSE and the experimental conditions

• Use various market tools to manage costs for our LSE

• Explore many scenarios

• Use single tools and combinations of tools

• Compare costs

• Discuss the benefits and risks associated with each tool.

In this lesson we will. . .

Overview

MEGALOAD CORPORATION

Goals in doing Business in the ERCOT Market:

• Provide reliable electric service at a competitive rate

• Manage cost exposure

Introducing…

Scenario Conditions

MegaLoadCorp

Scenario Conditions

What do I do

MegaLoadCorp

• MegaLoad is it’s own QSE.

• MegaLoad is also a CRR Account Holder.

• MegaLoad does not own any generation.

Hour Ending 1200

Resource Node A West HubWest Load

Trade Price $23 25 $35DAM SPP $20 25 $30RT SPP $30 40 $50

Scenario Conditions

Peak Weekday Block PTP Option Clearing Price

West Hub to West Load Zone $5Resource Node A to West Load Zone $8

Comparing Forward & Real-time transactions

• DAM transactions & Trades are conducted hourly

• Real-Time is settled in 15 minute intervals

• For simplicity, we will

• Calculate all examples on an hourly basis

• Assume Real-Time prices and loads are constant for an hour

Scenario Conditions

Scenarios – Managing Costs of Serving Load

Costs Tools

Bilateral Trades

Energy

Congestion

Capacity

Ancillary Services Do Nothing

Day-Ahead Market

Managing Energy Costs

Costs Tools

Energy

Congestion

Capacity

Ancillary Services Do Nothing

QSE Representing Load• Settled for difference between

Real-Time Load and Trade or DAMtransactions

• Settles with LSE

Loads in Real-Time• Are price takers

• Pay for all energy not previouslyarranged through Trade or DAM

1015202530354045

1 3 5 7 9 11 13 15 17 19 21 23

Load Zone

ERCOT calculates each QSE’s Real-Time Energy Imbalance:

Real-Time Energy Settlement

( )_ x (-1) RTSPP ($/MWh)Real-Time Settlement

Point Price

ERCOT settles a QSE’s Energy Imbalance at each Settlement Point

Supplies Obligations

Real-Time Energy Purchase:SCENARIO 1

x (-1) RTSPP ( )_Supplies Obligations

• QSE does not buy forward energy

• Load is 5 MW in West Load Zone for hour ending 1200

• Settlement Point Price: $50/MWh

Real-Time Energy Purchase:SCENARIO 1

_0 (-1) $50.00 = $250.005 xSupplies

(Obligations

• Load is exposed to Real-Time Price

• QSE pays $250 (per hour)

Type of Settlement Hour 12:00

Real-TimeReal-Time Energy Imbalance $250.00Payment for DAM PTP Obligations N/A

Day-AheadDAM Energy Charge N/APayments for CRRs Settled in DAM N/ACharge for DAM PTP Obligations N/A

CRR Auction Charge for Awarded CRR Auction Bid N/A

Total ERCOT Settlement $250.00

Energy Trade Cost to LSE for Energy Traded N/A

NET MegaLoad Cost $250.00

SCORECARD

Costs Tools

Energy

Congestion

Capacity

Ancillary Services

Day-Ahead Market

Day-Ahead Market PurchaseSCENARIO 2

5MW X $30.00/MWh = $150.00 for the hour

• QSE buys 5MW in the West Load Zone for Hour Ending1200

• Day-Ahead Settlement Point Price• West Load Zone: $30/MWh

Real-Time SettlementSCENARIO 2

• QSE bought 5MW in DAM

• Load is 5 MW in West Load Zone for interval 1200

_5 (-1) $50.00 = $0.005 xSupplies

(Obligations

• Load is not exposed to Real-Time Prices

• Settlement Point Price• West Load Zone: $50/MWh

Day-AheadDAM Energy Charge $150.00Payments for CRRs Settled in DAM N/ACharge for DAM PTP Obligations N/A

SCORECARD

Costs Tools

Energy

Congestion

Capacity

Ancillary Services

Bilateral Trades

Trade Energy PurchaseSCENARIO 3

5MW X $25.00/MWh = $125.00 for the hour

• QSE buys 5MW at the West Hub for Hour Ending1200

• Trade Price• West Hub: $25/MWh

• QSE bought 5MW through Trade

• Load is 5 MW in West Load Zone for Hour Ending 1200

_5 (-1) $40.00 = -$200.000 xSupplies

(Obligations

• Trade energy is delivered to West Hub

• Settlement Point Price• West Hub: $40/MWh

_0 (-1) $50.00 = $250.005 xSupplies

(Obligations

• QSE still has load at the West Load Zone

• Settlement Point Price• West Load Zone: $50/MWh

Real-Time Settlement

Resource Node A

$30/MWh

$40/MWh

$50/MWhWestLoad Zone

Payment at West Hub

Charge at West Load Zone Real-time Net Cost

$200 $250 $50

West Hub

Day-AheadDAM Energy Charge N/APayments for CRRs Settled in DAM N/ACharge for DAM PTP Obligations N/A

Energy Trade Cost to LSE for Energy Traded $125.00

SCORECARD

Costs Tools

Energy

Congestion

Capacity

Ancillary Services

Day-Ahead Market

Managing Congestion Costs

Costs Tools

Energy

Congestion

Capacity

Ancillary Services

Day-Ahead Market

Congestion Cost exposureSCENARIO 4

Resource Node A

$??/MWh

$??/MWhWestLoad Zone

• 5MW Trade Energy Purchase at West Hub• 5MW Load at West Load Zone

West Hub

Types of Bids:• Energy Bid• PTP Obligation Bid

Day-Ahead Market PTP ObligationsSCENARIO 4

Price in Day Ahead Market = $5

Value in Real Time = $10 ?

$25/MWh $30/MWh

DAMPTP Obligation

DAM Prices:

$40/MWh $50/MWhReal-Time Prices:

WestLoad Zone

Source SinkWest Hub

DAM PTP Obligation Purchase:SCENARIO 4

5MW X $5.00/MW = $25.00

• QSE buys 5MW of PTP Obligations from West Hub to West Load Zone for hour ending 1200

• Day-Ahead Price = $5/MW

Resource Node A

$30/MWh

$40/MWh

$50/MWhWestLoad Zone

• 5MW Trade Energy Purchase at West Hub• 5MW Load at West Load Zone• 5MW PTP Obligation Hub to Load Zone

West Hub

Payment at West Hub

Charge at West Load Zone

Payment for PTP Obligation

Real-timeNet Cost

$200 $250 $50 $0

Resource Node A

$30/MWh

$40/MWh

$50/MWh

WestLoad Zone

West Hub

Real-TimeReal-Time Energy Imbalance $50.00Payment for DAM PTP Obligations -$50.00-

Day-AheadDAM Energy Charge N/APayments for CRRs Settled in DAM N/ACharge for DAM PTP Obligations $25.00

SCORECARD

Don’t forget: A PTP Obligation can result in a charge in Real-Time

Costs Tools

Energy

Congestion

Capacity

Ancillary Services

• CRR Auction• Monthly and Semi-Annual Auctions• Based on Network Operations Model

MegaLoad buys CRRs in Monthly Auction

MegaLoad

5 MWs of Peak Weekday CRRs

Clearing price is $5 per MW per hour

ERCOT will charge MegaLoad for all hours in the Time-Of-Use block

CRR Purchase:SCENARIO 6

5MW X $5.00/MW = $25.00

for Hour Ending 1200

MegaLoad

CRR Account Holder buys 5MW Peak WD PTP Option from West Hub to West Load Zone

Auction Clearing Price = $5/MW

Congestion Revenue RightsSCENARIO 5

$25/MWh $30/MWh

PTP Option

DAM Prices:

WestLoad ZoneSource Sink

• 5MW Trade Energy Purchase at West Hub• 5MW Load at West Load Zone• 5MW PTP Option from Hub to Load Zone

West Hub

CRR Payment in DAM $25Real-Time Congestion Cost $50

$25/MWh $30/MWh

PTP Option

DAM Prices:

WestLoad ZoneSource SinkWest Hub

Day-AheadDAM Energy Charge N/APayments for CRRs Settled in DAM -$25.00-Charge for DAM PTP Obligations N/A

CRR Auction Charge for Awarded CRR Auction Bid $25.00

SCORECARD

CRR Payment in DAM $25Real-Time Congestion Cost $50

Might bridge with DAM PTP Obligation

$25/MWh $30/MWh

PTP Option

DAM Prices:

WestLoad ZoneSource SinkWest Hub

Real-TimeReal-Time Energy Imbalance $50.00Payment for DAM PTP Obligations -$50.00-

Day-AheadDAM Energy Charge N/APayments for CRRs Settled in DAM -$25.00-Charge for DAM PTP Obligations $25.00

SCORECARD

Day-Ahead Congestion HedgingSCENARIO 7

• 5MW DAM Energy Purchase at West Load Zone• 5MW PTP Option from Resource Node A to West Load Zone

WestLoad Zone

Resource Node A

West Hub

CRR Purchase:SCENARIO 7

5MW X $8.00/MW = $40.00

for Hour Ending 1200

MegaLoad

CRR Account Holder buys 5MW Peak WD PTP Option from Resource Node A to West Load Zone

Auction Clearing Price = $8/MW

Day-Ahead Congestion HedgingSCENARIO 7

Energy Purchase PTP Option Payment Net Day-Ahead Cost$150 $50 $100

$20/MWh

$25/MWh

$30/MWh

WestLoad Zone

Resource Node A

West Hub

_5 (-1) $50.00 = $0.005 xSupplies

(Obligations

Load is not exposed to Real-Time Prices

Settlement Point PriceWest Load Zone: $50/MWh

Day-AheadDAM Energy Charge $150.00Payments for CRRs Settled in DAM -$50.00-Charge for DAM PTP Obligations N/A

SCORECARD

CLASSACTIVITY

Class Activity

Split into groups:• Maximum of 5 people per group• Minimum of 3

• Analyze pricing information for Interval 0800• Minimize MegaLoad’s costs for serving 5MW of Load at the

West Load Zone

Hour Ending 0800

Resource Node A West HubWest Load

Trade Price $25 30 $35DAM SPP $20 25 $30RT SPP $15 20 $28

Class Activity Conditions

Peak Weekday Block PTP Option Clearing Price

West Hub to West Load Zone $3Resource Node A to West Load Zone $5

A Few Other Risks Impacting Market Costs

• Funding of CRRs

• CRR Balancing Account

• Derations

A few other things you should know about . . .

CRRs – A Few Other Risks

Payment due toCRR Account Holders

Hourly

Funding of CRRs

Hourly

CRR Settlement

may be short paid in some hours

Pay to QSEs representing Load

Monthly

CRR Balancing Account Fund

CRR Rolling Balancing Account

Monthly

may remain short paid

• Transmission elements are oversold

• The Target Payment is a positive value

• CRR source or sink is a Resource Node

CRR payments may be derated if:

Resource Node A

WestLoad Zone

PTP Option

West Hub

Managing Capacity Costs

Costs Tools

Bilateral Trades

Energy

Congestion

Capacity

Ancillary Services

Day-Ahead Market

It ensures:

• Enough capacity is committed to serve the forecasted load

• Committed capacity is in the right locations

Reliability Unit Commitment (RUC)

If ERCOT commits a Resource through RUC

• ERCOT provides QSE with a payment guarantee

• May provide “Make-Whole Payment”

Cost recovery

• QSEs are responsible for capacity

• QSEs who are capacity short responsible for Make-Whole

• Load (Adjusted Metered Load )

• Capacity Trades where the QSE is a seller

• Energy Trade where the QSE is a seller

• Cleared DAM Energy Offer

What is included in the QSE’s capacity obligation?

Capacity Required to meet QSE Obligations

• Show capacity from its Resources in its COP

• Capacity Trades where the QSE is a buyer

• Energy Trades where the QSE is a buyer

• Cleared DAM Energy bids

How can a QSE arrange to meet these obligations?

Capacity arranged by QSE

QSEs that do not arrange enough capacity to cover obligations are responsible for the costs of RUC

Capacity Short Charge

Capacity Required to meet QSE Obligations

Capacity arranged by QSE

Capacity Shortfall

• RUC Capacity-Short Charges are subject to a cap• Remaining Make-Whole funds are collected on a Load

Ratio Share basis.

RUC Make-Whole Uplift Charges

Make-Whole Payments

Capacity Short Charges

Make-Whole Uplift Charge

Settlement

Managing Ancillary Service Costs

Costs Tools

Bilateral Trades

Energy

Congestion

Capacity

Ancillary Services

(AS Price) * (AS Quantity)

A QSE’s share of the Ancillary Service cost for an Operating Hour is

=AS Price ERCOT Total AS Cost( )MW procured by ERCOT

=AS Quantity ( )QSE Obligation - ( )Self-Arranged Qty

TotalAS Costs

QSE chooses how to fulfill Obligations

Self-Arrange Allow ERCOT to procure

DAM SASM

• May become part of QSE’s Self-Arrangement

• Reduces AS cost exposure in DAM or SASM

LSE may have Ancillary Service trades

• The risks of “doing nothing”

• The impact of forward energy purchases on costs

• The risks associated with delivery points for energy

• Hedging congestion costs

• Real-Time congestion costs

• Day-Ahead congestion costs

• Hedging capacity costs

• Managing Ancillary Service costs

You’ve learned about. . .

Summary

Wow!That’s a

Course Conclusion

• Identify key Wholesale Market costs associated with serving load in the ERCOT Market

• Energy

• Congestion

• Capacity

• Ancillary Services

• Describe several means of hedging these costs

• Evaluate your current strategies against your need

You should now be able to …

Course Objectives

ERCOT Nodal Market Protocols http://www.ercot.com/mktrules/nprotocols/

ERCOT Training

http://www.ercot.com/services/training/

Nodal Market Education Contact

Training@ercot.com

Additional Resources

ercot market education load serving entities 201 · please turn off cell phones & other...

Documents

d7 entities

manitoba rsdp filing - nerc.com filings and orders... · 1...

prepared by - moreno valley, california · o integrated...

food product description - · pdf filefood product...

draft tariff language - 2019 tariff clarifications€¦ ·...

5780 certified community development entities (with ... ·...

who are our neighbors?. the themes of vbs serving family...

existing electrical conditions and building load summary ·...

flickr30k entities: collecting region-to-phrase...

ace- - ct.gov-connecticut's official state website · web...

pfrs for small entities - acpaci.com.ph€¦ · brief...

wireless intelligent networking -...

alufixsolid fall protection system · soliduorks premium...

applicant entities / designated operational entities...

business entities

resource adequacy - wecc · 6/11/2020 · the north...

how is covid-19 influencing intent to visit cultural...

white river large load serving study report · as described...

vrealize automation load balancing - vmware · load...

spp lole efforts - ieee · •current prm requirement each...