220.127.116.11 -- Payment for Balancing Energy Provided from Ancillary Services During the Operating Period
This PRR is an alternative to PRR 739. It adjusts the Market Clearing Price of Energy (MCPE) when the deployment of Out of Merit Capacity (OOMC), or Out of Merit Energy (OOME) or Responsive Reserve Service (RRS) occurs during an Alert or Emergency Notice condition. This adjustment is similar to that applied to Non-Spin Reserve Service as described in PRR 650, Balancing Energy Price Adjustment Due to Non-Spinning Reserve Service Energy Deployment, which was approved by the ERCOT Board on August 15, 2007. However, in this PRR, these adjustments are effective only during intervals in which an ERCOT-declared Alert or Emergency Notice condition exists. Although ex-post pricing is not a perfect solution, it does allow the market to establish prices during emergency conditions rather than an administratively-set price.
During Alerts or Emergency conditions, the deployment of OOMC, OOME or RRS improperly depresses the resulting MCPE. This price depression distorts the market, sending inappropriate price signals during a time when higher prices are needed to attract more generation to the market and stimulate demand reduction (by those loads capable of reducing demand), creating greater reliability concerns. The resulting distorted MCPE price signals to the market that less capacity should be committed when the economically correct price signal would signal that the market is capacity short and additional capacity that can cost effectively be brought into the market is needed.