Meeting Summary - 08/07/24 WMS Meeting

1 - Antitrust Admonition - Eric Blakey

2 - Agenda Review - Eric Blakey

3 - Technical Advisory Committee TAC Update - Eric Blakey

• ERCOT and joint commenters instructed to bifurcate NOGRR245 into less controversial NOGRR and a second for equipment requirements. Board priority revision request to be made for February consideration and April implementation.
  
  
• SAWG had been working on NPRR1219; urgency status requested by ERCOT at PRS meeting. Now passed through PRS and TAC. Protocols indicate WMS and SAWG to oversee these CDR issues.
  
  
• Commissioners raised concerns regarding ECRS manual deployment triggers (vote 1224), rejecting board recommendation. Workshop scheduled for September 5 to discuss stakeholder process.
  
  

3.1 - TAC Assignment re - NPRR1230 Methodology for Setting Transmission Shadow Price Caps for an IROL in SCED

• Introduction of TAC assignment regarding NPRR1230 and its potential cost increase.
• Request by David Key to monitor the implementation and performance effects by WMS.
• Decision to involve both WMS and CMWG initially to determine which group it fits better under.
• Suggestion to include cost impact monitoring by IMM in their monthly report.
• Agreement to revisit the decision after receiving feedback from the working groups.

4 - ERCOT Operations and Market Items

4.1 - 2023 State of the Market Recommendations Report - Jeff McDonald

• Jeff McDonald, IMM, discussed a small reduction in real-time electricity prices in 2023 (13% compared to 2022), despite a significant 60% drop in natural gas prices.
• Natural gas often sets the wholesale electricity price in Texas; thus, a larger decrease in electricity prices was expected.
• The administration of ERCOT products in 2023 influenced electricity prices, preventing them from falling as much as natural gas prices.
• Price range across different zones was tighter in 2023 compared to 2022, indicating reduced inter-zonal congestion.
• Discussions on electricity price impact from ECRS revealed that real-time prices did not follow natural gas prices consistently.
• Observed a trend of increasing total load over the past three years, with a peak load of 85.7 GW in 2023.
• Supply changes noted included increased wind and solar energy, and about 970 MW of new gas-fired generation.
• Jeff explained a potential discrepancy between new entry costs and market signals, with mixed input from consultants and real-world conditions.
• Discussion on Cost of New Entry (CONE) and market revenues, reflecting on how financial factors and policy risk influence decisions on new builds.
• New generation is impacted by numerous factors including financing, policy risk, market revenues, and supply chain issues.

4.2 - 2024 Q2 Settlement Stability Report - Judy Luu

• Discussed price correction changes affecting a few days in January and February 2024.
• Mentioned CRR balancing account resettlement due to DN resettlements.
• Reviewed resettlements due to non-price errors for November 2022 operating days.
• Addressed quarter disputes for Q1 and Q2, all resolved timely.
• Highlighted percent changes from previous real-time settlements and displayed data for changes from initial to final and final to true-up.
• Identified a spike in November due to an issue in the calculation of ERS contract period from June 1 to September 30, 2023.
• Presented real-time market average prices and DAM total charges from 2011 to 2024.
• Provided data on load volume availability percentage and ESI ID account availability percentage.
• Discussed net allocation to load over a 13-month period and its breakdown by congestion management zones.
• Covered information on securitization default charge and security authorization uplift charge for the period from June 2023 to June 2024.

4.3 - 2024 Q2 Unregistered Distribution Generation - DG - Report - Dan Mantena

• Total DG was over 2600 MW with 67 MW from DG battery energy storage.
• This is the first update excluding DG battery storage units from the main reporting table.
• DG battery storage units are not required to be reported based on protocol language.
• Started seeing voluntary submissions of DG battery systems.
• Current report excludes DG battery systems from main table and lists them as a footnote for transparency.
• There was an aggregate 35 MW increase in Q2 with a decrease from DG storage units removed from the main table.
•  No current plans for a new category for DG energy storage due to required protocol changes. Current method is reporting as a footnote.
• Suggestion for continued reporting and tracking DG battery systems with breakdown below and above 50 kW.
• Clarification on 'other non-renewable' category  provided in chat, confirming some classifications under renewable and others under non-renewable.
• Potential protocol revision mentioned for classification consistency.

4.4 - Auction Revenue Distribution - CARD - and CRR Balancing Account - CRRBA - Randy Roberts

• Multiple options for auction revenue distribution were initially presented, with a new fourth option added:
• Monthly load ratio share previously discussed.
• Daily load ratio share based on 15 mins peak interval.
• Combination of monthly and daily load ratio share with weighting percentage.
• New option using eight peak hours per day for all days of the month.
• Discussion on whether additional options needed to be considered from Market Participants (MPs) and IMM (Independent Market Monitor).
• IMM favors proposals more directly connected to hourly congestion rent but acknowledges potential high implementation cost and delays.
• Ken Lindbergh suggested using the previous year's 4CP calculation for setting ratios.
• ERCOT and IMM opposed linking CARD allocation directly to 4CP, citing different objectives.
• Shams Siddiqi highlighted that sunk cost allocation should not distort market prices, criticized 4CP for potential inefficiency.
• Various participants voiced concerns about shifting costs between residential and industrial users.
• Alternative ideas included billing card based on eight peak hours of the peak day of the month or using top ten peak hours of the month.
• Discussion on whether to strike certain options like alternate option one and two, maintaining focus on more viable options.
• Emphasis on achieving balance in objectives, minimizing perverse incentives and maintaining particular distribution among load classes.

4.5 - HDL-LDL Override Report - Cory Carswell

• Presentation on low dispatch limit (LDL) overrides during the solar eclipse on April 8, 2024.
• No energy payments for LDL overrides, unlike HDL override energy payments.
• ERCOT procured additional Non-Spin ancillary services and committed additional capacity via reliability unit commitments leading up to the event.
• LDL overrides were used to pre-position slower ramping resources and increase ramp rates for the expected net load ramp.
• ERCOT deployed ~2.4 GW of Non-Spin during the eclipse, Hubbus prices averaged ~$200/MWh without significant binding constraints.
• Query about the reliance on coal plants for HDL overrides instead of more flexible gas units.
• Coal resources with lower ramp rates were identified as slower ramping units that could benefit from ramping up earlier.
• Query about impact on SCED and pricing outcomes if LDL overrides had not been initiated.
• Focus on operational standpoint for increased ramping capability; economic impact discussion suggested for market analysis at WMS.
• Clarification on values for override intervals and recent updates to the presentation.
• Next Steps include a manual report on the large load interconnection, indicating an increase of interconnection capacity from 4,636 MW in the past year.
• Request for periodic updates on large load interconnection with detailed load type categories and contractual statuses with Transmission Service Providers (TSPs).
• Clarification on the absence of large load projects in specific load zones.
• General consensus for monthly updates, with consideration for ERCOT's operational workload.

5 - Congestion Management Working Group - CMWG - Alex Miller

CMWG Update

• Topic: CRR long term auction solution time and transaction limits
• Enforcement of 400,000 transaction limit has been lifted after implementing software changes on 6/28 
• Considering solutions: increasing point-to-point option bid price, charging bid fees on uncleared bids, removing the multi-month bid functionality.
• 44% of bids currently use multi-month functionality.
• ERCOT performing more testing on removing the multi-month product and increasing bid limits.
• Topic: Load zone analysis update
• Load zone definitions unchanged since 2003.
• Using k-means clustering to propose new load zones based on latest LMP data.
• Concerns about impact on planning studies, congestion management efficiency, protocol changes, and data continuity.
• Bill Barnes raised concerns about the impact on retail market; increased complexity and risk premium for retail products.
• Discussion about practical need for change, considering impacts on smaller retailers, potential benefits of discrete nodal prices.
• Topic: Mitigation for Electricity Storage Resources - ESRs
• ERCOT staff introduced NPRR draft with just-in-time framework.
• Considerations included high system lambda prices and handling of multiple constraints.
• Stakeholders concerned about over-mitigation and maintaining as obligations.
• CMWG releasing NPRR for formal stakeholder process.

6 - Demand Side Working Group - DSWG - Nathaniel Mancha

• Request for WMS to endorse NPRR1226
  
• Needs for more transparency on demand response data.
• 4CP discussion and the need for clarification.
• Comparison between WSL and ESR calculations.
• Release of ERCOT notice on equivalent numbers.
• Difficulty in backing ESR charging numbers.
• Market asks for clarification to avoid manual calculations.
• Issues around forecasting and energy storage impacts.
• Desire for better visibility into the market for load participants.
• Clarification needed on data published post-month end from WMS.
• Discussion about the equivalence of numbers in WMS.
• Transparency and understanding of reports for market participants.
• Importance of real-time combination of data for market participants.
• Need for further ERCOT guidance on making data changes real-time.
• Exploration of data availability and meeting market needs.
• Acknowledgment of the need for additional tools beyond current dashboards.
• Some data available via ICCP points but needs internal discussion.

7 - Meter Working Group - MWG - Michael Blum

• Proposal to consolidate the naming convention to 'Meter Working Group' across all documents and website.

7.1 - Procedure Update - Vote

• Consolidated name to meter working group.
• Motion to endorse MWG procedures as submitted added to combo ballot.

8 - Resource Cost Working Group - RCWG - Blake Holt

• See items 10 and 11.

9 - Wholesale Market Working Group - WMWG - Blake Holt

• ERCOT presented initial analysis on 2025 AS methodology. Data not final; updates due in August.
• No changes to 2024 methodology for RRS Non-Spin and ECRS. Values pending NERC’s updated IFRO number.
• Changes include using net load ramp, historical regulation deployment, and SCED net load forecast error.
• Stakeholder questions on ERCOT's inertia data; ERCOT refreshing 2016 inertia white paper in the context of PUC study.
• ERCOT's state of charge monitoring analysis in line with NPRR1149 using mock data. Production data refresh expected for August 30 meeting.
• Proposes calculating state of charge shortfall based on each resource's state of charge expectation; reporting at system level.
• Feedback on inadequate ESRs responses discussed; feedback being incorporated by ERCOT.
• Skipped discussion on NPRR1232; update to be provided later in the meeting.

10 - WMS Revision Requests

10.2 - VCMRR042, SO2 and NOx Emission Index Prices Used in Verifiable Cost Calculations

Katie Rich

• Discussed the need for revisions to address ERCOT comments.
• Noted annual prices are flat, but seasonal index prices have value due to opportunity cost.
• VCMRR042 ensures ERCOT access to seasonal prices, reflecting market volatility and reduction in allowances.
• Emphasized difference in cost between seasonal ($750-$1,200 per short ton) and ERCOT proposed NOx prices ($3 per short ton).
• Manual input for prices could be used temporarily if system change is needed.
• Outlined language changes in VCMRR042 for using seasonal index prices for NOx and SOx from May through September.
• NPRR proposes a user fee to cover ERCOT's subscription fee.

Ino Gonzalez

• VCMRR042 removes the manual process for calculating emission prices.
• Current process collects prices daily and sets a fixed price for the next month.
• System change required to handle seasonal prices.
• Subscription fees for annual prices have been increasing without practical value.
• ERCOT disagrees with the user fee proposal in NPRR1242, citing it goes against board policy.

Eric Goff

• Emphasized importance of including all fuel costs in real-time prices.
• Expressed sympathy for avoiding ongoing fees with little practical value.
• Suggested user fee makes sense if board policy is changed.
• Recommended reviewing manual workarounds or system changes before making final decision.

Blake Holt

• Agreed with Eric's and Katie’s points on maintaining the subscription for seasonal values.
• Supported moving forward with VCMRR042 and NPRR1242.
• Highlighted the importance of systematic implementation through the IA process.

Katherine Gross

• Explained background check fee ($350 per principal) often meets the million-dollar threshold due to multiple principals per entity.

Motion

• Motion to table VCMRR042 and refer to RCWG added to combo ballot

10.4 - NPRR1242, Related to VCMRR042 SO2 and NOx Emission Index Prices Used in Verifiable Cost Calculations - Possible Vote

• Clarification made that NPRR1242 is not officially before the committee; it has not gone to PRS yet. Recommendations can still be made.
• Bill Barnes emphasizes the importance of incorporating accurate information into prices and support for the direction of the proposal.
• Concerns noted regarding the subscription fee of $50,000 per year.
• Ian Haley from Morgan Stanley supports accurate market prices and voices concern over potential difficulty in recovering costs if the proposal is delayed.
• Eric Goff  raises two concerns: the annual subscription's value versus seasonal impact and the specific calculation methods.
• Potential need to table VCMRR042 for revisions and reject VCMRR041 to avoid redundancy.
• Consensus leans towards wanting VCMRR042 but acknowledges it needs more work before approval.
• Discussion on costs of emissions allowances and the need for policy discussion on adopting a fixed summer price.
• General agreement about keeping the $50,000 subscription, emphasizing market stability and benefits.
• Addresses multiple opinions on the practicality of user fees versus keeping costs within the administrative fee.
• Motion to request PRS table NPRR1242 for further discussion by RCWG considering user fees as an option for covering the subscription cost added to combo ballot

11 - WMS Revision Requests Tabled at WMS - Possible Vote - Eric Blakey

11.1 - SMOGRR028, Add Series Reactor Compensation Factors - MWG

• No updates on the item.

11.2 - VCMRR041, SO2 and NOX Emission Prices Used in Verifiable Cost Calculations - RCWG

• VCMRR041 aims to eliminate the current index price subscription for NOx and SO2, which has remained stagnant over the last five years.
• VCMRR041 proposes to hard code emission prices into verifiable cost formulas.
• Luminant presented a draft NPRR and VCMRR and expressed the desire to retain the index price subscription for flexibility in rapidly changing emission rules.
• NPRR proposes a new ERCOT fee for emission cost subscription, allocated to resource entities based on megawatt capacity ratio.
• Verifiable cost manual revision includes flexible calculations for seasonal index pricing (May-September) and annual index pricing (October-April).
• Board policies prevent the creation of a new user fee unless it generates at least $1 million in annual revenue, which the proposed fee does not.
• Motion to reject VCMRR041 added to combo ballot

12 - NPRR1238, Voluntary Registration of Loads with Curtailable Load Capabilities

• Discussion is ongoing for NPRR1238; it was referred to WMS and ROS.
• Golden Spread is addressing compliance issues related to load shed allocation, particularly due to large loads significantly exceeding their native load.
• Golden Spread seeks voluntary registration for curtailable loads to prevent non-compliance during EA events.
• The initiative aims to exclude large, curtailable loads from load shed obligations, focusing only on native loads.
• Originally urgent, the proposal faces alignment needs with other ERCOT issues, preventing immediate urgency.
• PRS voted to refer the issue to WMS and WMWG for further discussion.
• Concerns include broader price formation issues and ORDC impacts.
• System changes and interconnection requirements for large loads may be needed.
• Market-related and systemic issues will be discussed to ensure comprehensive solutions.
• Request for PRS to continue to table NPRR1238 for further review by WMWG added to combo ballot

13 - Revision Requests Tabled at PRS and Referred to WMS - Possible Vote - Eric Blakey

• Discussion on maintaining most revision requests tabled based on prior discussions.

13.4 - NPRR1214, Reliability Deployment Price Adder Fix to Provide Locational Price Signals, Reduce Uplift and Risk - CMWG

• Request for more analysis and data faced challenges in data retrieval.
• Qualitative discussion highlighted the need for locational price signals.
• General agreement on the philosophy and need for proper incentivizing of generation.
• Impacts of the change still unclear without specific historical data.
• Discussion to continue next month with or without additional historical data.
• Request for update on SCR819 implementation and its impacts on GTC limits.

13.5 - NPRR1226, Demand Response Monitor DSWG

• Suggestion to table the discussion for another month to allow further consideration.
• Mark Smith confirmed consensus at the DSWG meeting and received favorable feedback elsewhere.
• Floyd Treffney provided clarification on the nature of the demand response monitor.
• Concerns from ERCOT regarding the mandate for specific dashboard content and format.
• Historical context provided by Floyd Treffney on protocol language changes.
• General support for NPRR1226 but recognition of the need for further discussion and potential edits.
• Motion to endorse NPRR1226 as submitted added to combo ballot.

13.6 - NPRR1229, Real-Time Constraint Management Plan Energy Payment - WMWG

• Discussion on NPRR1229 related to payments due to congestion management plan actions.
• Author of NPRR1229 explained its purpose: to allow compensation when ERCOT takes a manual action impacting a resource.
• ERCOT operations presented congestion management plan and issues with NPRR1229 language.
• Settlement issues and policy questions needing answers were highlighted.
• Participants were requested to provide feedback before the August meeting.
• Updates were given on design defects with NPRR1149 and NPRR1058.
• NPRR1058 update: backward compatibility added for reason code in offer curves.
• Discussion on NPRR1235 and legislative priority to move it forward.
• Concerns on how DRRS and RUC interact, and the impact on market design.
• Feedback on potentially allowing self-commitment for DRRS resources.
• Operational perspective discussed: DRRS resources to be prioritized for commitments.
• Concerns raised about behavioral impacts of DRRS on other resources.
• Confirmation that NPRR1235 implementation timeline aligns post-RTC.

13.7 - NPRR1235, Dispatchable Reliability Reserve Service as a Stand-Alone Ancillary Service - SAWG and WMWG

• No action items, strictly a discussion
• TSPA and joint commenters presented filed comments on NPRR1235
• Encouragement for inclusion of Energy Storage Resources (ESRs) into DRRS
• ERCOT explained reasons for excluding ESRs in initial proposal with agreement to consider future integration
• Placeholder to discuss NPRR1235 in the next month's meeting

14 - Combo Ballot - Vote - Eric Blakey

• Combo ballot passed unanimously.

15 - Other Business - Eric Blakey

15.1 - Withdrawn – NPRR1232, Standing Deployment of ECRS in the Operating Hour for a Portion of ECRS that is Provided from SCED-Dispatchable Resources

• NPRR1232 was withdrawn following the board vote on NPRR1224.

15.2 - Review Open Action Items - Jim Lee

• The previously discussed item was withdrawn under open action items.
• New assignment was discussed and assigned to WMS and congestion management working group.
• Reminder for WMWG and SAWG about their EPA item assignments.
• Request for WMWG and SAWG to keep the council informed through their meetings about any pertinent updates.

15.3 - 2025 Block Calendar - Pamela Hanson

• Highlighted the change of the October meeting from Monday to Friday the 3rd.
• Suggestion to move the October meeting to Thursday the 9th, considering potential conflicts with PUC open meetings.
• Acknowledgement that PRS will meet on Wednesdays and WMS on Tuesdays, except for one month.

15.7 - Adjourn