PRR650

Title:	Balancing Energy Price Adjustment Due to Non-Spinning Reserve Service Energy Deployment
Next Group:
Next Step:	Commission filing
Status:	Approved on 08/15/2006

Date	Gov Body	Next Steps
08/15/2006	Board of Directors	Approved	Commission filing
08/03/2006	TAC	Recommended for Approval
06/20/2006	Board of Directors	Remanded	Address issues raised by the Board.
05/04/2006	TAC	Recommended for Approval	Board approval
04/21/2006	PRS	Recommended for Approval	Consideration bt TAC
03/23/2006	PRS	Recommended for Approval	Review of Recommendation Report and Impact Analysis
03/23/2006	PRS		Initial review

Date	Gov Body	Motion	Result	Against	Abstentions
08/15/2006	Board of Directors	Approve as submitted and direct ERCOT staff to present report of impact of this PRR on prices at the end of the third quarter and the end of the year.	Passed	0	0
08/03/2006	TAC	Recommend approval as modified by ERCOT staff comments.	Passed	2 Consumers	1 IOU
06/20/2006	Board of Directors	Remand this PRR to TAC for an analysis of how to ensure that consumers pay only one time for the Ancillary Services needed for reliability reasons and to ensure that PRR650 is the best way to ensure reliability.	Passed	0	0
05/04/2006	TAC	Recommend approval as submitted by PRS.	Passed	1 Consumer	7 Cooperative (2); MOU (2); IOU (2); and Consumer
04/21/2006	PRS	Review of the Recommendation Report and Impact Analysis and forward documents to TAC.	Passed	0	1 Consumer
03/23/2006	PRS	Recommend approval of PRR650 as revised by selected ERCOT comments	Passed	3 --MOU (1); Consumers (1); IREP (1)	4 -- MOU (2); IOU (1); IPM (1)

Status:	Approved
Date Posted:	02/24/2006
Sponsor:	TXU Energy
Urgent:	No
Sections:	6.7.4, 6.8.1.12, 6.9.5.1
Description:	Adjusts the Market Clearing Price of Energy (MCPE) when the deployment of Non-Spinning Reserve Service (NSRS) occurs to provide correct price signals via a post-deployment adjustment to separate the pricing solutions from the deployment on NSRS. This adjustment will still be subject to MCSM, if the Balancing Energy Service Up bids are depleted and no zonal congestion occurs, as detailed in Protocol Section 6.9.5.1(2). ERCOT will provide a notice to all market participants that highlights the interval beginning the NSRS deployment and another notice when NSRS deployment is being discontinued. The adjusted MCPE price signal would remove NSRS deployments and manually re-run SPD, sending accurate price signals in an energy-only market design.
Reason:	The foremost concern is the reliability issues that arise every time NSRS is deployed for depletion of balancing energy bid stack. The original intent of NSRS is deployment in response to loss-of-Resource contingencies on the ERCOT system or for the depletion of the responsive reserve stack. In the relatively few intervals when ERCOT deploys NSRS, the resulting MCPE is improperly depressed. This causes an incorrect price signal to the market during a time when more, not less, generation is needed. This creates a greater reliability concern. Currently, when the Bid Stack for BES Up is estimated by ERCOT to reach 95% deployment, ERCOT deploys NSRS in accordance with Protocol Section 6.7.4 (1) to replenish the BES Up stack. The resulting MCPE applied to all Balancing Energy is improperly distorted due to the fact that a large block of price-taking NSRS is suddenly deployed. The result is a distorted MCPE price that signals to the market that less capacity should be committed and carried online, when the economically correct price signal should be that the market is capacity short and additional capacity that can cost effectively be brought into the market is needed.