NOTICE DATE: April 4, 2022

NOTICE TYPE: M-A040422-01 Operations

SHORT DESCRIPTION: Issue with the Three-Part Supply Offers used in the Reliability Unit Commitment (RUC) Optimization

INTENDED AUDIENCE: All Market Participants

DAYS AFFECTED: June 22, 2016, through March 30, 2022

LONG DESCRIPTION:  ERCOT staff has identified an error in the RUC process. The issue stems from a parameter setting that caused the RUC optimization to consider incorrect startup and minimum energy costs for some Resources. It has been determined that the setting error was most likely introduced with the implementation of Nodal Protocol Revision Request (NPRR) 617, Energy Offer Flexibility, implemented in 2016.  For the RUC process, this error incrementally reduced the amount of Resource commitment recommended by the optimization in some cases.  It has been confirmed that this issue impacted only the RUC optimization and did not feed into RUC settlement.  Consequently, this also would not have directly impacted Day-Ahead Market (DAM) or Real-Time Market (RTM) pricing outcomes or any associated Settlement.

The identified issue impacted the calculation of certain Resources’ startup and minimum energy costs in the process of DRUC/HRUC in the following two ways:

1. According to Protocol Section 5.5.2 (8), “ERCOT shall create Three-Part Supply Offers for all Resources that did not submit a Three-Part Supply Offer, but are specified as available but Off-Line, excluding Resources with a Resource Status of EMR, in a QSE’s COP.” Specifically, for any Off-Line but available Resource without a Three-Part Supply Offer, excluding any Resource with a cold start time of one hour or less, ERCOT is required to use 150% of any approved verifiable Startup Cost and verifiable minimum energy cost in the RUC process. However, due to the incorrect parameter setting, the ERCOT Market Management System (MMS) has been applying the 150% twice, using 225% of approved verifiable Startup Cost and verifiable minimum energy cost in the RUC optimization.

System functionality before correction

If Three-Part Supply Offer not available, create the startup and minimum energy costs using:

225% of verifiable costs, if verifiable costs available; or

150% of generic costs, if verifiable costs not available

Correct system functionality

If Three-Part Supply Offer not available, create the startup and minimum energy costs using:

150% of verifiable costs, if verifiable costs available; or

150% of generic costs, if verifiable costs not available

2. According to Protocol Section 5.1(4), “The DRUC uses Three-Part Supply Offers, capped at the maximum of generic or verifiable minimum energy and Startup Costs, submitted before the DAM by Qualified Scheduling Entities (QSEs) that were considered in the DAM but not awarded in the DAM”. However, due to the same incorrect parameter setting, the ERCOT MMS has been using 150% of verifiable costs in this capping process for Resources with approved verifiable costs.

System functionality before correction

If Three-Part Supply Offer available, cap the minimum energy and startup costs to:

Min (Offer, Max(150% of verifiable costs, 100% of generic costs))

Correct system functionality

If Three-Part Supply Offer available, cap the minimum energy and startup costs to:

Min (Offer, Max(100% of verifiable costs, 100% of generic costs))

ADDITIONAL INFORMATION: This error was corrected in production systems on Operating Day March 31, 2022. Given that this issue did not affect RUC settlement or DAM and RTM pricing more generally, ERCOT will not be correcting any prices or performing any Market resettlement.

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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