Recommended Threshold ECI for SCED Competitive Constraint Test

April 12, 2013

• Attempts to implement the CCT logic have not been successful since the market opened.

• Because of the difficulties with the CCT, prior to nodal the 2010 zonal CSCs and CREs were deemed competitive by default. Indeed, the Board passed a motion in Sept. 2012 to “restore the zonal 2010 designated CSCs and CREs as the 2013 Competitive Constraints; and directed TAC to study and develop alternatives to improve the Constraints Competitiveness Tests”

• NPRR520 is the result of the Board motion and appears to be a good step forward.

• Now the question is what are the proper values for the variables in NPRR520, particularly the ECI threshold.

The Constraint Competitiveness Test (CCT)

• There is no “bright line” for the proper ECI threshold value because the market has always deemed the CSCs and CREs as competitive, everything else was deemed non-competitive.

• Even if the historical CCT language had been implemented, there are different values for the import side ECI, depending on the tenor of the test.– Long-Term CCT – ECI of 2,000 or less is competitive– Monthly CCT - ECI of 2,500 or less is competitive– Daily CCT - ECI of 2,500 or less is competitive

• The data provided recently by ERCOT, plus the market’s history of solving CSCs and CREs competitively, indicates an ECI of 2,500 should be the initial value for NPRR520.

What is the Proper Value for the ECI Threshold Value?

• North to Houston has been a CSC (i.e., competitive constraint) since 2004.

• Almost $200M of congestion on North to Houston in the zonal market.

• NPRR 520 methodology shows an ECI of 2,369 for North to Houston.

• North to Houston CSC is a good benchmark for the ECI threshold evaluation.

• 2,500 is recommended as the proper ECI threshold value.

North – Houston CSC as a Benchmark

• West to North has been a CSC since Zonal Market open in 2002.

• $137M of congestion on West to North in the zonal market.

• NPRR 520 methodology shows an ECI of 2,187 for North to Houston.

• West to North CSC is a good benchmark for the ECI threshold evaluation.

West – North CSC as a Benchmark

Additional ExamplesContingency Singleton–Tomball

Singleton–R.PrairieBig Brown - Venus Double Circuit

Lytton Sp - HolmanFppyd 2

Monitored Element

Singleton – Zenith Richland - Trinidad FPP - Lost Pines

ECI 2229 2454 2978

No. Units w/ SF>5%

172 51 28

Largest SF (%) 17.9 19.5 26.9

No. DMEs 22 9 8

No. Units Mitigated

85 78 58

Mitigated DMEs NRG, Calpine Luminant, Nextera, Shell

Austin, LCRA, NRG

% Eff. Capacity Mitigated

62 76 84