NOTICE DATE: June 05, 2025

NOTICE TYPE: M-A060525-01 Operations

SHORT DESCRIPTION: Execution of Emergency Generation Service Agreement with Life Cycle Power

INTENDED AUDIENCE: All Market Participants

DAYS AFFECTED: June 5, 2025 through March 31, 2027

LONG DESCRIPTION: On June 4, 2025, ERCOT executed an Emergency Generation Service Agreement (Agreement) with Prime Power Solutions, LLC, d/b/a Life Cycle Power, to provide additional generation capacity to mitigate significant risks to the reliability of the ERCOT System.  A copy of the executed version of this Agreement is attached to this Notice and will be posted on the ERCOT website. 

Under this Agreement, Life Cycle Power will move 15 of its mobile generators from the Houston area to the San Antonio area this summer, interconnect them to CPS Energy distribution system facilities, and make them available for ERCOT emergency commitment and dispatch.  Each of the generating units being provided by Life Cycle Power are aeroderivative combustion turbines that are capable of providing approximately 30 MW of power (at ISO -- International Organization for Standardization -- conditions) and can be turned on and ramped to maximum output within ten minutes.  The mobile generators are currently under lease to CenterPoint Energy Houston Electric (CenterPoint).  CenterPoint has made the generators available to ERCOT through as late as March 31, 2027, without requiring ERCOT to provide any compensation to CenterPoint for the use of the generators.

ERCOT has entered into this Agreement pursuant to its authority to ensure the reliability and adequacy of the regional electrical network.  Tex. Util. Code Section 39.151(a)(2); 16 Tex. Admin. Code Section 25.361(b).  Specifically, ERCOT has determined this arrangement is necessary to mitigate emergency load-shed that may be necessary to avoid overloads of the transmission lines associated with the South Texas Export Generic Transmission Constraint (GTC).  Relying on this reliability authority, the ERCOT Board of Directors authorized ERCOT Staff on February 25, 2025, to pursue this Agreement with Life Cycle Power as an alternative to committing Braunig Units 1 & 2 through a Reliability Must-Run Agreement (RMR). 

Under this Agreement, the Life Cycle Power units will be registered, interconnected, and operated in accordance with ERCOT Protocols, ERCOT's Other Binding Documents, and the rules of the Public Utility Commission of Texas (Commission).  However, in some cases, strict adherence to Protocols is not possible.  Consequently, at ERCOT's request, the Commission on April 22, 2025 issued an order granting ERCOT good cause exceptions to deviate from the Protocols and Commission rules to the limited extent necessary to achieve the reliability purposes of this arrangement.  The specific Protocol and Commission rule provisions that ERCOT anticipates it will not be able to observe are identified in the Commission's order, which also provides for a narrowly tailored form of prospective relief in the event ERCOT needs to deviate from Commission rules or Protocols in other respects to achieve the reliability purposes of the order. 

In developing the Agreement, ERCOT has endeavored to leverage the existing RMR framework for purposes of dispatch, operation, and settlement of the generators to the greatest extent possible.  Accordingly, the anticipated cost of the arrangement -- currently expected to be $51 million based on the latest budget submissions from Life Cycle Power and CPS Energy -- will be settled using the existing RMR process.  To that end, the Agreement is entirely based on Life Cycle Power's and CPS Energy's costs of providing and facilitating this service, with the exception of a 10% adder that will be provided for certain categories of costs under the Agreement, similar to the 10% Incentive Factor that applies to RMR Units.  As with RMR service, all costs are subject to documentation and true-up. 

The costs of the arrangement will be uplifted to Qualified Scheduling Entities (QSEs) representing load on an hourly load-ratio share basis using RMR settlement processes. However, for the period preceding the registration of all of the units -- expected to be approximately two months -- ERCOT will compensate Life Cycle using 'Interim Weekly Payments' that will be settled hourly to QSEs representing load through Miscellaneous Invoices issued on a weekly basis.  The current budget and hourly Standby Price that ERCOT will utilize for the Initial Settlement of the Life Cycle Power generators are reflected in Attachment 2 of the Agreement.  

Under the Agreement, the generators will be available for ERCOT dispatch only during an actual or anticipated Emergency Condition.  In the event ERCOT system operators determine the units are needed to address such a condition, ERCOT will issue a Reliability Unit Commitment (RUC) instruction to bring the units online for dispatch via Security-Constrained Economic Dispatch (SCED).  ERCOT will dispatch the units only if it determines that the condition cannot be fully resolved through the use of other ERCOT Resources and only for so long as ERCOT determines that is necessary to address the Emergency Condition.  

CPS Energy has played a significant role in this arrangement by cooperating with ERCOT to facilitate the interconnection and operation of the Life Cycle Power units.  CPS Energy has agreed to allow the units to be located at nine of its substations throughout the San Antonio area with the aim of maximizing the reliability benefit of these generators.  CPS Energy has also worked diligently with ERCOT and Life Cycle Power to study the interconnections at each substation, make the necessary site modifications, and establish the interconnections at these facilities on an expedited timeline.   ERCOT appreciates CPS Energy's efforts to achieve the timely operation of these units.

As provided in the Agreement, ERCOT may use the Life Cycle Power units through March 31, 2027, but retains the flexibility to terminate the Agreement earlier if ERCOT determines that the units are no longer necessary. ERCOT will issue a subsequent Market Notice when it has provided notice of termination of the Agreement.

CONTACT: If you have any questions, please contact your ERCOT Account Manager. You may also call the general ERCOT Client Services phone number at (512) 248-3900 or contact ERCOT Client Services via email at ClientServices@ercot.com.

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