Coordinate RUC AS Offer Floors and Scarcity Pricing Treatment
Ensure coordination between RUC AS offer floors and scarcity pricing treatment for consistency. Explore pricing options and strategies for effective resource deployment. Address energy and scarcity pricing impacts to optimize operations.
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Presentation Transcript
Offer Floors for ONRUC Resources in SCED (KP 1.3) and the Reliability Deployment Price Adder Process (KP 1.1) Luminant Comments
RUC/RMR Treatments: Today vs. RTC Today s RUC treatment: Energy price impact is mitigated via energy offer floor of $1500/MWh and RDPA run Scarcity price impact is mitigated via removal of RUC/RMR capacity from ORDC adder calculations Under RTC: ERCOT s initial proposal covers the energy price impact (energy offer floor of $1500/MWh and RDPA run) Real-time AS and scarcity pricing are inextricably linked under RTC, however, so need to make two separate but coordinated policy cuts Scarcity pricing impact: not currently addressed in Key Principles AS offer floor: depends on how scarcity pricing impact is addressed Goal: ensure that RUC AS offer floors and scarcity pricing treatment are coordinated and consistent with current treatment 2
RUC Scarcity Pricing Options Option #1: Another pricing run with RUC capacity assigned to AS removed (should result in scarcity pricing by moving further up ASDC), and assign through another adder Option #2: Utilize existing ORDC calculations to estimate value of removing RUC/RMR capacity from aggregate ASDC, then assign through another adder Option #3: Right-shift the aggregate ASDC by the HSL of the RUC/RMR resource, allocate to individual ASDCs (could base on minimum AS requirement share, aggregate ASDC share, or some other allocation scheme) Option #4: Proxy RUC scarcity pricing impact correction via RUC AS offer floors (may require use of AS proxy floors if the required offer floor exceeds SWOC) Set RUC AS offer/proxy floor to 75th percentile of ASDCmax Set RUC AS offer/proxy floor to MAX($1500, ASDC value at the AS Plan quantity) Set RUC AS offer/proxy floor at flat figure (e.g., $1500, $2000, possibly higher) 3
Conceptual Example Option #1 Note: NOT suggesting that a unit should be RUC d for NSRS, only illustrating potential scarcity pricing impact 1,200 Price ($/MWh) 1,000 800 AS Plan for Non-Spin 600 400 (2) 700 MW RUC adjustment corrected ASDC price should be based on 1,550 MW point on ASDC ($79) Adder = $79 - $16 = $63/MWh 200 - - 2,000 4,000 Reserves (MW) (1) Assume NSRS clears at 2,250 MW ($16) but includes 700 MW of RUC d capacity 4
Conceptual Example Option #2 $10,000 $9,000 $8,000 $7,000 $6,000 $/MWh $5,000 $4,000 $3,000 $2,000 Same 700 MW RUC adjustment if reserves ~6,500 MW would be the difference between the ORDC price at 6,500 MW and at 5,800 MW Adder = ~$107 - ~$47 = ~$60/MWh $1,000 $- 1 10,000 10,250 10,500 10,750 11,000 1,001 1,251 1,501 1,751 2,001 2,251 2,501 2,751 3,001 3,251 3,501 3,751 4,001 4,251 4,501 4,751 5,001 5,251 5,500 5,750 6,000 6,250 6,500 6,750 7,000 7,250 7,500 7,750 8,000 8,250 8,500 8,750 9,000 9,250 9,500 9,750 251 501 751 Reserves (MW)
Conceptual Example Option #3 Note: NOT suggesting that a unit should be RUC d for NSRS, only illustrating potential scarcity pricing impact 1,200 Price ($/MWh) 1,000 800 AS Plan for Non-Spin 600 Shifted ASDC 400 (2) 700 MW RUC shift to ASDC new ASDC price at 2,250 MW point on ASDC ($79) Adder = $79 - $16 = $63/MWh 200 - - 2,000 4,000 Reserves (MW) (1) Assume NSRS clears at 2,250 MW but includes 700 MW of RUC d capacity 6
Proposed Principle Concepts KP 1.1(7) Effect of the existing policy of removing RUC and RMR capacity from the calculation of the ORDC adder will be preserved as faithfully as possible Option #1 or #3 would be the most consistent with RTC trend of internalizing costs and adders to LMPs; Option #2 would be most consistent with today s treatment Option #4 permutations not mutually exclusive to Options #1-3 (still need a RUC AS offer floor) but more pressing if Options #1-3 are not workable KP 3(17) Depending on approach taken re: KP 1.1(7) above, may or may not need adjustment (but adjustment may be desired regardless) At a minimum, seems safe to say that RUC AS offer floors should be the same for both the dispatch and pricing runs. Need to consider AS offer floor impacts on ability for SCED to use RUC d capacity for AS 7
