Local RDPA Approach Impact on Revenue Neutrality Allocation
Explore the impact of a local Reliability Deployment Price Adder (RDPA) approach on Revenue Neutrality Allocation through illustrations and analyses based on a specific scenario. Understand how changes in generator offers and binding constraints influence revenue allocations. Learn from examples and insights shared in the presentation by Shams Siddiqi on June 13, 2022.
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Presentation Transcript
Illustration of Potential Revenue Neutrality Allocation Due to a Local RDPA Approach CMWG Dave Maggio July 18, 2022
Introduction This short presentation is to follow up on questions that were raised during the meeting on June 13, 2022, regarding potential impacts of a local Reliability Deployment Price Adder (RDPA) approach on Revenue Neutrality Allocation. The following illustration uses the previous example shared by Shams Siddiqi with a change to one of the Generator offer prices. o https://www.ercot.com/files/docs/2022/06/07/RDPA_Flawed_but_Fixable.ppt The specific circumstance that leads to Revenue Neutrality Allocation is the case in which a transmission constraint is not binding in the dispatch run, but becomes binding in the pricing run, and there are Point-to-Point (PTP) Obligations that must be paid out do the local RDPA differences. 2 PUBLIC
Illustration using last months example setup Dispatch run Bus B Bus A B1: 28000MW offered @ $50/MWh (1000MW AS) A1: 15000MW offered @ $0/MWh T: 2000MW B2: 5000MW offered @ $250/MWh with LSL = 2000MW Instead, assume a $60/MWh offer. No other changes. Load Zone A: 10000MW Load Zone B: 30000MW Generator dispatch in dispatch run: o A1: 11000 MW (Slightly more expensive than B1) o B1: 27000 MW (Cheapest Resource, so dispatched to its High Ancillary Service Limit (HASL)) o B2: 2000 MW (RUCed Resource dispatched to its Load Sustained Limit (LSL)) With a line flow of 1000 MW between A and B, there is not a binding constraint and the price at both A and B is $60/MWh. Basic setup taken from the presentation by Shams Siddiqi on June 13, 2022 (https://www.ercot.com/files/docs/2022/06/07/RDPA_Flawed_but_Fixable.ppt) 3 PUBLIC
Illustration using last months example setup Pricing run Bus B Bus A B1: 28000MW offered @ $50/MWh (1000MW AS) A1: 15000MW offered @ $0/MWh T: 2000MW B2: 5000MW offered @ $250/MWh with LSL = 2000MW Instead, assume a $60/MWh offer. No other changes. Load Zone A: 10000MW Load Zone B: 30000MW Generator dispatch in pricing run: o A1: 12000 MW (Dispatch increased but limited by transmission limit. Setting price at A) o B1: 27000 MW (Cheapest Resource, still at HASL) o B2: 1000 MW (LSL relaxed and dispatch decreased. Setting price at B) Constraint is now binding and with price at A of $60/MWh and price at B of $250/MWh Basic setup taken from the presentation by Shams Siddiqi on June 13, 2022 (https://www.ercot.com/files/docs/2022/06/07/RDPA_Flawed_but_Fixable.ppt) 4 PUBLIC
Illustration using last months example setup Settlement Bus B Bus A B1: 28000MW offered @ $50/MWh (1000MW AS) A1: 15000MW offered @ $0/MWh T: 2000MW B2: 5000MW offered @ $250/MWh with LSL = 2000MW Instead, assume a $60/MWh offer. No other changes. Load Zone A: 10000MW Load Zone B: 30000MW Generator settlement: o (-11000 MW*$60/MWh)+(-27000 MW*$250/MWh)+(-2000 MW*$250/MWh) = - $7.91M Load settlement: o (10000 MW*$60/MWh)+(30000 MW*$250/MWh) = $8.1M Congestion rent collected: o $8.1M $7.91M = $190k Assuming the same PTP Obligation from the original example: o -2000 MW*($250/MWh-$60/MWh) = -$380k o Funding insufficient with $190k collected through Revenue Neutrality Allocation Basic setup taken from the presentation by Shams Siddiqi on June 13, 2022 (https://www.ercot.com/files/docs/2022/06/07/RDPA_Flawed_but_Fixable.ppt) 5 PUBLIC
