Real Time Mitigation During Real Time Mitigation During Exceptional Fuel Cost EventsExceptional Fuel Cost Events
Challenges/OutlineChallenges/Outline
Allowing for cost recovery during “exceptional fuel cost events
Defining “Exceptional Event”Verifying CostsInterim Settlement Solutions
discussed◦RUC vs Emergency Energy◦Who Pays?
Questions and other discussion
Fuel Cost EventsFuel Cost Events
February and March 2014 movements in spot gas prices created significant change from Day Ahead FIP to spot price
Generators dispatched at MOC versus EOC were settled at Day Ahead FIP resulting in losses based on the gas price move
Current protocols do not allow for cost recovery unless during a RUC
RCWG has discussed ways to allow for cost recovery during such events
Defining Exceptional EventDefining Exceptional Event
Exceptional event will be defined as some deviation from Day Ahead FIP to spot price ranging from:◦ Spot prices are greater than DA FIP + Fuel Adder ◦ Spot prices as a factor of DA FIP
Factors to consider:◦ Frequency of occurrences◦ Interim versus long term solutions◦ Impact of manual settlement process through
disputes and cost verification (Interim)◦ System Changes (Long-term solution)
Verifying CostsVerifying Costs
Cannot simply settle on differences between DA FIP and spot price
Entities must provide proof of purchased fuel
Other costs to be considered?TransportationReal Time fees ImbalancesSwing fees
Building a process that settles these types of conditions forward would be challenging
Interim Settlement SolutionsInterim Settlement Solutions
RCWG discussed the option of treating mitigated resources during such events similar to RUC units that do not recover their costsRUC committed resources not recovering costs
can dispute and recover their true costs RUC costs are paid by entities that are short
in the market up to 2X their short fall and then uplifted to Load on a ratio share basis
RUC costs are defined by protocol for capacity concerns, not transmission constraints
Interim Settlement SolutionsInterim Settlement Solutions
Resources mitigated during real time and settled on their MOC are utilized for transmission constraints not capacity concernsTherefore, is a RUC Settlement solution appropriate?
Transmission issues settle in imbalances through Real Time Energy, CRRs and Revenue NeutralityDoes this set precedent for uplift of costs during an
exceptional event?Interim approach could utilize Emergency
Energy Payment method for settlement of cost recovery
Emergency Energy Settlement Emergency Energy Settlement ApproachApproach
Emergency Energy Volume-Min (BP, RTMG) (minimum of Base Point or
metered output)Current Settlement Price-
MAX (0, EMREPR – RTSPP) (maximum of 0 or Emergency Energy Price minus Real Time Settlement Point Price)
Manual solution would replace EMREPR with the appropriate MOC price recalculated at verified FIP (spot price paid for fuel during event)
Requires dispute and ERCOT capability to calculate (ERCOT does something similar today for LDL overrides)
Questions/DiscussionQuestions/Discussion
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