SCR747

Title:	Removal of Price Administration for Zonal Congestion
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Status:	Approved on 12/13/2005

Status:	Approved
Date Posted:	08/01/2005
Sponsor:	Constellation Energy Commodities Group
Urgent:	No
Sections:
Description:	Eliminate violation on Commercially Significant Constraints (CSCs) as a trigger for Price Administration in the Real Time Balancing Market Clearing Engine (also known as Scheduling, Pricing and Dispatching (SPD)). Instead of triggering Price Administration when a CSC is violated, SPD should allow the Shadow Price to be equal to the Penalty Factor for OC1 congestion, currently $2,500.
Reason:	The Price Administration is a set of procedures and formulae ERCOT uses to calculate Market Clearing Prices for Energy (MCPEs) when SPD cannot solve constraint violations. Price Administration is post-processing of solutions generated by SPD and occurs as described in Market Bulletin #20. MCPEs set by Price Administration often do not correctly indicate scarcity or oversupply of energy in Congestion Management Zones since the differences in prices between zones do not always indicate which zones have too much or too little Balancing Energy. By eliminating CSC violation as one of the triggers this change to the SPD would result in a decrease in the number of intervals where Price Administration is triggered thus leading to more accurate zonal prices.