Update on CRR Auction Discussion - Performance Enhancement Strategies
ERCOT's CRR Auctions face performance challenges due to increasing bid population. Explore resolution paths focusing on administrative guardrails, market incentives, and market redesign strategies to enhance performance and reduce risks. Updates on administrative limits, bid pricing, and market incentives are discussed to optimize auction participation within established guardrails.
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Presentation Transcript
Update on CRR Auction Discussion Items Samantha Findley CRR Market Operations CMWG October 14, 2024
Recap from last CMWG: ERCOTs 3 types of paths forward Problem statement: ERCOT CRR Auctions have increasing performance issues and risks due to increasing population of bids. Resolution path #1- Administrative guardrails (priority to reduce risk of a TAP and risk of long-running solution times) Resolution path #2- Market Incentives to scale back participation to within administrative guardrails Resolution path #3- Market redesign to increase performance 2 PUBLIC
Resolution path #1- Administrative guardrails (priority to reduce risk of TAP and long-running solution times) 1. Administrative TOU limits- Mitigation has already been introduced (new per- TOU limit for current SEQ6) 2. Administrative lowering of bids per CRRAH- reducing per-CRRAH limit by xx % will reduce risk of Transaction Adjustment Period Update TAC-approved CRR transaction limits, both at total auction level and for per-CRRAH limits In parallel, ERCOT will explore appropriate limits for each LTAS auction in a TAC approved document like CRR Activity Calendar Examples: SEQ 1 450kOverall/150kTOU/4000CRRAH and SEQ6 300k/100kTOU/2500CRRAH 3 PUBLIC
Update on Administrative Guardrails ERCOT is currently bound by a single transaction limit for all auctions (400K). ERCOT discussed with ERCOT Legal and cannot use TAC-approved limits going forward. ERCOT will propose an NPRR to enable Market Operations to specify operational limits in each auction notice to maximize liquidity while protecting performance (i.e., to avoid applying a single conservative limit to all auctions.) Example 4 PUBLIC
Resolution path #2- Market Incentives to scale back participation to within administrative guardrails 1. Minimum Option Bid Price - Increasing existing min bid price from $0.01 to TAC approved value (example, $0.25) would create downward pressure on volume of CRR Option bids ERCOT-sponsored NPRR 2. Unawarded Bid fee for Options - Introduce bid fee for unawarded Options to create downward pressure on bid levels- NPRR and system change Based on feedback, ERCOT is pausing on this resolution path. 5 PUBLIC
Resolution path #3- Market redesign to increase performance 1. Discontinue multi-month bids in LTAS - ERCOT to begin a study to convert multi-month bids into single-month bids and assess expected gain in performance (although would create more bids, reduces strain on optimization solving over multiple models/months). (update on next slide) 2. Different levels of Network Model Percentages - smaller scale network models <30% have performance issues (SEQ4 SEQ6 auctions). May reconsider current scaling percentages in protocols. (Pausing this) 3. Other ideas? 1. Option pricing report to curb option bids for price discovery (update on next slide) 2. Concept of new times-of-use to split 5x16 and 2x16 into additional super/solar peak TOUs 6 PUBLIC
Update for Resolution path #3 Removing Multi-Month Bid Functionality Study In progress; so far, hypothesis of significantly improved performance is being realized. ERCOT will continue to run studies in the coming weeks/months. ERCOT commits to submitting a new NPRR to propose this market design change to improve liquidity; however, we recognize some MPs may rely on this functionality. Request for Option Pricing ERCOT agrees with the value of providing option pricing (to curb price discovery option bids that currently exist). ERCOT is working with vendor to explore possible concepts for how this could work. Will provide more info at the next CMWG meeting. 7 PUBLIC
Next steps Removal of multi-month bid functionality studies continue NPRR development for removing multi-month bid functionality and providing operational flexibility with total auction, per-TOU and per-CRRAH transaction limits 8 PUBLIC
