NPRR1092 Reduce RUC Offer floor and restrict RUC Opt Out - CIMView

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NPRR1092 Reduce RUC Offer floor and restrict RUC Opt Out

Table of Contents

The Gist

NPRR1092 was proposed by the independent market monitor (IMM) for ERCOT and originally set out to reduce the current RUC offer floor of $1500/MWh to $75/MWh.  Later, an additional concept was added which would remove the “OPT OUT” choice for resources that get RUC’d.  The thought behind the original concept is that there is currently an incentive for fleet owners to tell ERCOT they are planning to not run and get RUC’d and then be forced to offer their resources at $1500/MWh.  If 1) those resources set the price or drive the price significantly higher with their absence, and 2) the fleet owners are long, then they stand to profit.  It is basic economic withholding, but with the benefit of being state sanctioned and harder to prosecute.  With RUC’s becoming more frequent in the era of conservative operation (after June 2021) the IMM decided that this could be a real problem and that ERCOT should remove the state-sponsored economic withholding opportunity by lowering the RUC offer floor to $75.

Generators were predictably opposed to this.  While it is possible that this withholding is occurring and driving up prices to their benefit, they have not (of course) argued that in public.  Some argued that having reliability/non-market ordered units offering at $75 would lower the price below the market equilibrium to their detriment.  Others argued that a fixed price ($75) did not reflect all possible gas prices.  Originally the IMM responded to these complaints by changing the offer floor to $18 * Fuel Index Price + $5, but that section was removed at Chairman Lake’s behest.  Others (Luminant) pointed out that they have Voluntary Mitigation Plans approved by the Public Utility Commission with caps at about $1500/MWh, thus at $75 the RUC’d units would be undercutting their (state declared) competitive offers.  Finally, Luminant pointed out that one of their resources had been RUC’d after it had switched its status to online for the RUC hour (when the snapshot to determine which, if any, resources needed to be RUC’d happened, it was shown to be offline for that hour, thus the RUC instruction.)  I truly am not sure how that relates to NPRR1092, but it has been raised repeatedly.

The issue has passed PRS and is coming back for Impact Assessment.

Important Actions

  • 8/11/21 ERCOT files original NPRR
  • 11/19/21 IMM files comments changing fixed price to 16 times the fuel index price, and removing the RUC OPT OUT option.
  • 12/14/21 PRS votes (52/48) to keep the NPRR tabled at PRS.
  • 12/23/21 ERCOT files comments describing what they will do if someone switches their planned status (Current Operation Plan, aka COP) from offline to online in between the RUC snapshot and the RUC instruction – namely to consider the entire block NOT RUC’d.
  • 1/5/22 NPRR with 12/23/21 ERCOT comments endorsed by WMS 65/35.
  • 1/13/22 NPRR with 12/23/21 ERCOT comments passes PRS 70/30.
  • 1/26/22 Chairman Lake files a memo instructing ERCOT to remove the 18 * Fuel Index price + $5 portion of the NPRR and strongly urging passage of NPRR with that edit. 
  • 2/23/22 Robust discussion at TAC; the NPRR is tabled for one month and a workshop is scheduled for the afternoon of 3/10/22 to discuss the issues further.
  • 2/24/22 Chairman Lake writes a memo walking back support for NPRR1092 and telling Market Participants to engage with written comments on the NPRR.
  • 2/25/22 Commissioners (particularly Cobos and McAdams) agree with Lake’s memo.  Cobos states that she believes that $75 is too low.
  • 3/30/22 A compromise version that lowers the offer floor to $250 and allows RUC OPT OUT, but only until two hours before the resource start time passes in a very contentious vote.



Chairman Lake 1/26/22 Memo

Chairman Lake 2/24/22 Memo

Meeting Notes

3/30/22 TAC

2/25/22 PUC

2/23/22 TAC

2/9/22 PRS

1/27/22 PUC

1/13/22 PRS

1/5/22 WMS

12/14/21 PRS

12/1/21 WMS

11/15/21 WMWG

10/25/21 WMWG

10/6/21 WMS