Meeting Summary – 09/24/24 WMWG Meeting

1 – Antitrust Admonition – Blake Holt

2 – Questions on Standing Report – Blake Holt

• Blake asked the group if there were any questions about the standing reports..
• Ryan King confirmed that the listed reports are accurate.
• Blake mentioned that this will be included in future agendas to ensure nothing is missed.

3 – NPRR1229, RTM CMP Energy Payment – Status of Comments – Lucas Turner

ERCOT_Questions_on_NPRR1229.pdf

• Lucas Turner provided new comments and a presentation deck for NPRR1229.
• ERCOT had proposed questions on NPRR1229, and these were addressed in the submitted comments.
• NPRR1229 aims to provide a payment or make whole whenever a trip occurs due to ERCOT’s grid reliability procedures.
• Detailed discussion regarding the payment mechanisms and specific scenarios where these would apply.
• ERCOT’s concern about the process of identifying and quantifying costs directly caused by the CMP or ERCOT actions.
• Clarifications provided about what would be covered under the NPRR, focusing on directly related costs and not longstanding maintenance issues.
• ERCOT expressed concerns over paying for real-time opportunity costs along with incremental and bilateral contract costs; NPRR intends for only one of these to be recoverable at any given time.
• Need to limit the duration for which payments would be allowed to ten operating days.
• Concerns from stakeholders about the broadness of NPRR1229 and potential unintended incentives for ERCOT.
• Discussion about potential improvements through better communication and limitation on compensation to be more aligned with existing protocols.
• ERCOT’s position remains cautious, indicating that more work and stakeholder discussion is needed before moving forward.
• Decision to continue discussions in the next month to seek more feedback and assess further improvements.

4– NPRR1235, Dispatchable Reliability Reserve Service – IMM Concepts/ERCOT Next Steps – Andrew Reimers / Ryan King

• Andrew Reimers discussed the need for an explicitly defined sloped demand curve.
• Options proposed by Dave Maggio, including a linear demand curve from $150/MWh to zero.
• Importance of defining and implementing the ultimate DRRS methodology.
• Suggestions for real-time processes to ease physical obligations.
• Andrew’s overall support for NPRR1235 with changes to the demand curve and room for further iterations.
• Dave Maggio’s support for a linear demand curve, similar to non-spin products.
• Shams Siddiqi representing Hunt Energy Network emphasized the importance of defining the purpose of DRRS before finalizing the demand curve.
• Katie Rich from Luminant discussed comments linking DRRS and reliability standards, supporting the commission’s recent adoption.
• Michael Jewell raised the concern about DRRS procurement costs and need for inclusive resource eligibility.
• Bryan Sams noted ongoing discussions with ERCOT about participation by online combined cycle resources.
• Dave Maggio specified ERCOT regards DRRS more as an operational tool than a resource adequacy tool.
• Laurie Block asked about the timeline for phase two of DRRS, Ryan King indicated an NPRR might be filed by November.

Next Steps:

• Continue discussions in the next meeting.
• Address Bryan Sam’s issue concerning online resource participation.
• Potential filing of additional NPRR related to DRRS phase two including ESR participation.

5 – NPRR1238, Voluntary Registration of Loads with Curtailable Load Capabilities – Clarification of Comments – Blake Holt

• Blake Holt introduced NPRR1238, noting initial concerns from Luminant about price formation that dissipated with RTC and were withdrawn.
• Katie Rich acknowledged gratitude for the forum, crediting Steve Reedy’s comment which clarified the function of RDPA under RTC, negating the need for changes since NPRR1238 would likely be effective post-RTC.
• Blake Holt affirmed no market side concerns remain for NPRR1238, though operational issues are under discussion at ROS, and ERCOT may file additional comments.
• LCRA has operational concerns they want addressed but market-wise, NPRR1238 seems resolved.
• Ryan King committed to following up on any market-related updates from the large load integration team.

6 – NPRR1241, Firm Fuel Supply Service (FFSS) Availability and Hourly Standby Fee – Katie Rich

• NPRR1241 now formally referred to WMWG.
• Changes in paragraph to reflect proportionality for clawbacks and withholding amounts.
• ERCOT’s feedback was sought, but no formal comments yet.
• Discussion on price incentives and clawbacks to ensure availability during watch periods.
• Prices during watch periods not always high; clawbacks remain important.
• Breakdown of clawbacks being discussed.
• Further stakeholder discussion requested.

Key Points:

• Speaker: Katie Rich
  Summary: Provided overview and changes on proportionality for clawbacks.
• Speaker: Ino Gonzalez
  Summary: ERCOT is still evaluating the percentages and format; data shows inconsistent prices during watch periods.
• Speaker: Bryan Sams
  Summary: Highlight operational constraints of thermal units during critical periods; validates Eno’s points.
• Speaker: David Detelich
  Summary: Questions origin and necessity of original clawback protocol; concerns about overturning government-mandated rules.
• Speaker: Blake Holt
  Summary: Believes current strict clawback standards necessary to ensure service quality and availability.
• Speaker: Katie Rich
  Summary: Open to moving forward and working out details at WMS.

7 – IMM Card Analysis – Andrew Reimers

Main Presentation:

• Camron Barati from Potomac Economics presented on behalf of IMM.
• Discussion on revenue split and trends by load class based on current CARD methodology.
• Incentive for loads to increase consumption during peak intervals to maximize CARD revenue.
• Proposal to include more intervals or entire month in load ratio share calculation to mitigate adverse incentives.
• Analysis showed shifting revenue from residential to larger commercial and industrial loads with increased intervals.
• Recommended increasing intervals to 500 hours, aligning with load exposure to congestion rent.

Key Questions and Comments:

• Blake Holt from LCRA asked about splitting load into classes and specific data used.
• Camron Barati explained data was from ERCOT, metered level data assigned to specific classes.
• Trevor Safko from LCRA suggested analyzing congestion rent trends over a longer period.
• Randy Roberts clarified load data provided and definitions of classes.
• Shams Siddiqi, representing City of Georgetown, proposed a solution that eliminates price distortion caused by CARD and CRRBA while also minimizing 4-CP allocation price distortion..
• Discussions about impacts of various allocation methods on behavior and efficiency ensued.

8 – Group Discussion on CARD Allocation Methods – WMWG Participants

CARD_Allocation_Proposal_(Final).pdf

• Discussion about Luminant and Vistra suggestions on allocation methods.
• Updated methodologies to include more load hours and peak hour variability.
• New approach considers top 60 hours for each month and top 4 hours of the top 15 days each month.
• Revised approach is conceptually straightforward but difficult to predict.
• Behavioral changes may incur additional costs to loads.
• New methodology spreads behavior adjustment across 102 unique hours in January and 76 unique hours in May.
• Behavioral multiplier effect requires loads to respond multiple times to meet top hour requirements.
• Proposal aims to disincentivize undesirable behavior while minimizing unintended consequences for market participants.
• General agreement that the multiplier effect is valid but varies by types of loads and arrangements.
• Emphasis on removing incentives for loads to artificially increase consumption.
• Need for a larger window to wash out bad behavior while preserving existing allocation structures.
• No confirmed cases of bad behavior; actions are preemptive.
• Consensus to take additional time for consideration and revisit in next month’s discussion.
• No specific timeline urgency from ERCOT; discussion intended to precede NPRR process.

9 – Other Business – Blake Holt

• No other business.

10 – Adjourn – Blake Holt