NOTICE DATE: January 11, 2024

NOTICE TYPE: M-A121523-02 General

SHORT DESCRIPTION: Additional Details for the Emergency Pricing Program

INTENDED AUDIENCE: All Market Participants

DAYS AFFECTED: Beginning December 20, 2023

LONG DESCRIPTION: As previously communicated, the Emergency Pricing Program (EPP) became effective on December 20, 2023, following approval by the Public Utility Commission of Texas (PUCT) of revisions to 16 Texas Administrative Code (TAC) Section 25.509 in Project No. 54585 .  During the Wholesale Market Subcommittee (WMS) meeting on January 10, 2024, stakeholders had several questions regarding implementation details of the EPP .  This Market Notice is intended to provide EPP implementation information to a wider audience.

Emergency Offer Cap (ECAP) Triggering and Communication

• The “system-wide” price used to determine if the EPP should be activated will be the sum of the Real-Time Market (RTM) System Lambda, the Real-Time On-Line Reserve Price Adder, and the Real-Time On-Line Reliability Deployment Price Adder.  One public source of these values is the Real-Time ORDC and Reliability Deployment Price Adders and Reserves by SCED Interval report.
• For determining “12 hours within a rolling 24-hour period” and when the EPP should be de-activated, ERCOT will use Security-Constrained Economic Dispatch (SCED) level data (i.e., the accumulations will occur one SCED interval at a time).
• Currently, the process for updating the effective System-Wide Offer Cap (SWCAP) to the ECAP is a manual process.  As a result, the transition to ECAP may not take effect immediately.  ERCOT will make an update to the SWCAP and related parameters as soon as practicable.
• For external communication, ERCOT will post Operations Messages when SWCAP is lowered to ECAP and again when ECAP is removed.  ERCOT will also issue Market Notices as soon as possible after ECAP activation and deactivation.

RTM Energy Offer Curve (EOC) Submissions

When the SWCAP is transitioned to the ECAP:

• For existing EOCs already in ERCOT’s system, SCED processes will automatically set any prices in the EOC that are above the ECAP to the ECAP.
• For any submissions after the transition, including new or updated submissions, the submission will be rejected if there is any price point that exceeds ECAP.

Day-Ahead Market (DAM) Offer Submissions and Timing

The processes for DAM will generally depend on when the EPP triggering conditions are met and when the transition to ECAP occurs.

• If the ECAP transition occurs prior to 7:00 am Central Prevailing Time (CPT):
  • For existing DAM offers containing prices that exceed ECAP, these offers will be rejected at 7:00 am as part of the DAM Phase 2 validation process.
  • Any offers submitted after 7:00 am that contain prices that exceed ECAP will be rejected when submitted.
• If the ECAP transition occurs after 7:00 am but before 10:00 am CPT:
  • For existing DAM offers which contain prices that exceed ECAP, DAM processes will automatically set any prices in the offer that are above the ECAP to the ECAP.
  • For any submissions after the transition, including new or updated submissions, the submission will be rejected if there is any price point that exceeds ECAP.
  • In the event that the ECAP transition occurs between 9:00 am and 10:00 pm CPT, ERCOT will extend the DAM submission window up to one hour to allow Qualified Scheduling Entities (QSEs) to have at least one hour to adjust their submissions after the ECAP change as they see fit.
• If the ECAP transition occurs after 10:00 am CPT (i.e., when the execution of the DAM begins), the DAM will use the submissions as they were, including any offers that exceeded ECAP.  There will be no adjustments or correction to prices to account for the EPP activation.

Other Parameters Linked to the Effective SWCAP

While the rules are specifically focused on SWCAP and the transition to ECAP, there are several other parameters that are directly linked to the effective SWCAP and will be adjusted when the EPP is activated. These include:

• The Value-of-Lost-Load (VOLL) that is used in the Operating Reserve Demand Curve (ORDC) process to determine Real-Time On-Line and Off-Line Reserve Price Adders;
• The Power Balance Penalty Curve used in Real-Time;
• Ancillary Service penalty prices for the DAM and Supplemental Ancillary Service Market (SASM); and
• Mitigated Offer Cap (MOC) curves that are linked to the effective SWCAP.

Settlement for the ECAP Effective Period

• During an ECAP Effective Period, the SWCAP used for purposes of calculating the Energy Offer Curve Cost Caps in Section 4.4.9.3.3, shall be set to the maximum value of SWCAP that was effective for the Operating Day.
• ERCOT will use the existing Settlement under Section 6.8, Settlement for Operating Losses During an LCAP Effective Period, for recovery of operating losses during the ECAP Effective Period.
  • The QSE must submit a dispute in accordance with the procedures in Section 6.8.1.
  • The charges will be allocated on a Load Ratio Share (LRS) basis.

ADDITIONAL INFORMATION: As a reminder, ERCOT intends to file a Nodal Protocol Revision Request (NPRR) to update Protocol language to be consistent with the PUCT's rule. Until that time, the statutory requirements in Public Utility Regulatory Act § 39.160 and the rule requirements in 16 TAC § 25.509, Scarcity Pricing Mechanism for the Electric Reliability Council of Texas Power Region, will be the guiding language for EPP implementation.

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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