Wholesale Market Working Group Report - Alternative Solutions & Analysis

Wholesale Market Working Group Report to WMS David Detelich Julia Harvey September 2, 2020 From August 17 WMWG Meeting

Alternative Solutions to NPRR 991 issue ERCOT presented their analysis that showed how often the price floor impacted the results Observed increase in 2020 instances, where DAM price floor applied, is attributed to congestion in West Texas Market participants concerned this could continue to increase IMM states the price floor can be removed Not all participants concur Request additional analysis from ERCOT analyze operating days impacted with out the price floor and present to next WMWG Error related to implementation of NPRR833 caused improper deletion of one PTP award when price floor caused PTP settlement price to exceed bid price Implementation error was corrected in July, but programming could be reinstated if Protocols are revised to require deletion of PTP awards that exceed bid price due to application of price floor. This option may have cost (RENA) impacts Participants wary of RENA impact if DAM is not reprocessed not a possible solution

Analysis of price floor of -$251 in the DAM Request ERCOT review when DAM has cleared below-$251 and calculate the settlement impacts if the price floor was not present Change in revenue and charges for awarded MW Any other information ERCOT finds that is pertinent. Analyze the following Operating Dates 7/18/2016 3/14/2019 10/27/2019 2/21/2020 2/26/2020 2/27/2020 3/4/2020 3/25/2020

NPRR1024 Determination of Significance with Respect to Price Correction Market participants want a high price bar Creates more certainty in the results May hurt smaller market participants ERCOT has analyzed the market collateralization and the impact of previous price corrections This information presented to WMS may help WMS coalesce around the dollar values in order to make a motion

NPRR1024 Determination of Significance with Respect to Price Correction Indices for the price corrections in the NPRR are for both Before the prices are final When the price corrections require board review As shown on the next three slides WMWG only discussed the absolute value impact to any single Counter-Party at the last meeting

Day Ahead before Prices Become Final Use the system-wide price changes as indices when determine to perform the price correction before the prices become final Type of Price Correction Market Definition of Significant Price correction before the prices become final DAM For the Operating Day considering price correction, the absolute value change to any single DASPP or MCPC on Resource Nodes is greater than $0.05/MWh; or the number of changed DASPP or MCPC is more than 10; or the absolute value change to any DASPP on LZ or HB is greater than $0.02/MWh

Real Time Price Correction before Prices Become Final Type of Price Correction Market Definition of Significant Price correction before the prices become final RTM For the Operating Day considering price correction, the absolute value change to any single RTSPP on Resource Nodes is greater than $0.05/MWh; or the number of changed RTSPP is more than 50; or the absolute value change to any RTSPP on LZ or HB is greater than $0.02/MWh; or the total estimated dollar impacts with all RTRMPR changes are greater than $500

Significant Price Correction with Board Review Use the dollar impact on individual Counter-Parties as indices when determine to bring the price correction cases to ERCOT Board Type of Price Correction Market Definition of Significant Price correction with Board Review DAM For the Operating Day considering price correction, the absolute value impact to any single Counter-Party is greater than: the 2% of the total DAM Statement amount of this Counter-Party; and $500 Price correction with Board Review RTM For the Operating Day considering price correction, the absolute value impact to any single Counter-Party is greater than: the 2% of the total RTM Statement amount of this Counter-Party; and $500

NPRR1024 Possible motion WMS recommends approval of NPRR1024 with the following prices ERCOT shall seek ERCOT Board review of prices if the change in DAM Settlement Statements(s) would result in the absolute value impact to any single Counter-Party, based on the sum of all original DAM Statement amounts of Market Participants assigned to the Counter-Party, to be greater than 2% and also greater than $500. May also include provision for TAC review of the price correction impacts annually and reevaluate the price levels

SCR811 Addition of Intra-Hour PhotoVoltaic Power Forecast to GTBD Calculation ERCOT presented that the PhotoVoltaic forecast should be included in GTBD just as the Wind Power forecast is in the GTBD Solar continues to grow and the morning and evening ramps grow in significance Frequency Measurable Events have occurred during the ramps with increased recovery times This SCR could reduce the regulation amounts required WMWG in general support no opposition voiced ERCOT would like WMS support of this NPRR with high priority

NPRR1028 RUC Process Alignment with Resource Limits NPRR author presented background information and the need for the NPRR Not all resource limitations can be described in the RARF or programmed in the RUC software ERCOT provided comments to the NPRR that they believe makes a workable solution WMWG did not discuss recommending endorsement because not all had reviewed the ERCOT comments WMS may want to endorse

IMM SOM recommendations - Remove RUC opt-out IMM presented the case for removing the RUC Opt Out provision An observed behavior change did occur Information on resources that will be committed is not being presented to ERCOT or the market Disagreement on whether this is the cause of the behavior change Gas prices and renewable energy have cause binary market price outcomes WMWG has looked at the issue of inaccurate COPS previously Should the RUC opt out be removed, would the clawback be subject for review and possible change? WMWG will continue to review

Next meeting WMWG September 21 Any questions?