PRR731
| Title: |
Fuel Oil Index Price (FOIP)
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| Next Group: |
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| Next Step: |
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| Status: |
Approved
on 11/13/2007
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| Effective Date: |
12/01/2007
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| Date |
Gov Body |
Motion |
Result |
Against |
Abstentions |
|
11/13/2007
|
Board of Directors
|
To approve as recommended by TAC.
|
Passed
|
|
|
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10/05/2007
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TAC
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To recommend approval of PRR731 as recommended by the PRS
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Passed
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5 Consumer
|
0
|
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09/20/2007
|
PRS
|
To forward this PRR and its IA to TAC
|
Passed
|
0
|
1 Consumer
|
|
08/23/2007
|
PRS
|
To recommend approval of the PRR language as amended by Austin Energy comments and PRS.
|
Passed
|
0
|
1 IREP
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Vote tallies here reflect individual votes, not the weight of the votes by market segment. Affirmative votes are not recorded in these vote tallies. For additional details on the voting record, please consult the Recommendation or Action Report, or the official vote tally if available, as posted in the key documents.
| Status: |
Approved
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| Date Posted: |
07/02/2007
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| Sponsor: |
TXU Wholesale
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| Urgent: |
No
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| Sections: |
2, 6.8.1.11, 6.8.2.2, 6.8.2.3
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| Description: |
This Protocol Revision Request (PRR) adds Fuel Oil Index Price (FOIP) definition in Protocol Section 2 and revises language in Sections 6.8.1.11, Section 6.8.2.2 and Section 6.8.2.3 to allow the use of FOIP to meet verifiable cost documentation requirements.
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| Reason: |
The current ERCOT Protocols allow the use of a published natural gas price index to satisfy the verifiable cost documentation requirements for Ancillary Services payments to Qualified Scheduling Entities (QSEs). However, on many occasions, Market Participants (MPs) may be required to utilize fuel oil in lieu of natural gas (due to fuel curtailments, gas deliverability issues, or economics) to provide necessary Ancillary Services to ERCOT. Since the current ERCOT Protocols contain no direction on the proper pricing of fuel oil, ERCOT has assumed, for purposes of verifiable cost documentation that the only permissible index that can be used for verifiable fuel costs is natural gas prices as reflected by a published natural gas price index. Clearly, use of a natural gas price index does not properly compensate a MP for fuel oil used in the provision of Ancillary Services. Furthermore, use of an average inventory cost of fuel oil does not properly reflect the true cost of replacement of the fuel oil. Instead, it is more appropriate to use a FOIP, which accurately represents the price paid by a MP to replace fuel oil burned to provide Ancillary Services since such fuel oil must be replaced quickly at the prevailing market price in order to maintain adequate system reliability. Finally, use of a FOIP for the ERCOT zonal market design is consistent with the concept of a Fuel Oil Price (FOP) in the ERCOT Nodal Protocols (see Section 2, Definitions and Acronyms and Section 4, Day-Ahead Operations of the Nodal Protocols). This PRR addresses this issue by adding a Fuel Oil Index Price (FOIP) definition and changing the language in several Section 6 Protocols related only to documentation of verifiable costs associated with payments for Ancillary Services.
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