January, 2012

QMWG

S&B Protocol ClarificationsQSE-Requested Decommitment of a DAM Commitment

ERCOTMandy Bauld

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Agenda

Revisit the purpose of the discussion Analysis of difference when applying the QSE-Requested

Decommit of a DAM-committed Resource (a.k.a. “QRD”) “exclusion” rule vs. not applying the rule

Decisions

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Purpose for the discussion

When considering implementation of an automated solution for the manual QRD process, we had questions and wanted to ensure the appropriate rules are in place

Is the “exclusion” provision in 6.4.6 (5) necessary, given the DAM Make-Whole Payment eligibility rules?

If the resource was online in an Operating Hour which was originally DAM-committed (regardless of what is indicated in the COP) has the resource “fulfilled” its DAM commitment? DAM committed the resource to be on in the hour, and the resource ultimately was on in the hour... should the COP status matter?

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Relevant Protocol References

QRD Language

6.4.6 QSE-Requested Decommitment of Resources and Changes to Ancillary Service Resource Responsibility of Resources

(4) In the Adjustment Period, a QSE may request to decommit a Resource for any interval that is not a RUC-Committed Interval by indicating a change in unit status in the QSE’s COP.

(5) A Resource cannot be decommitted for just a portion of a Day-Ahead Market (DAM)-Committed Interval, which is a one-hour interval. If a Resource that is decommitted for a DAM-Committed Interval, that one-hour DAM-Committed Interval is excluded from the calculation of any Day-Ahead Make-Whole Payment for that Resource.

DAM Make-Whole Eligibility Language

4.6.2.3 Day-Ahead Make-Whole Settlements

(2) A QSE that has a Three-Part Supply Offer cleared in the DAM is eligible for Day-Ahead Make-Whole Payment energy cost compensation in a DAM-committed Operating Hour, if, for the Resource associated with the offer the generator’s breakers were closed for at least one minute during the DAM-committed Operating Hour.

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Current Process

Current QRD process is manual ERCOT detects a QRD by looking at the COP snapshots for each DAM-committed Resource.

• If the DAM-commitment was accepted as indicated by an online COP status but was later modified to an offline COP status, ERCOT removes the DAM-committed interval.

• The bill determinants that contain the awarded value are NOT changed. • There is no consideration of the reason for the change (i.e., could have been an

intentional request for decommit or possibly some sort of inadvertant action by QSE. Result: the QRD hour is completely excluded from the DAM Make-Whole Payment calculation,

as is literally required by protocol. Result: if the QRD interval is embedded within a larger block of intervals, this can create 2

distinct blocks of DAM commitments. Per the current rules, both may be eligible for startup compensation. Is the 2nd startup payment appropriate when the QSE has chosen to take the resource offline in the middle of a block of DAM-committed hours, after receipt of the DAM Award?

Current DAM Make-Whole Payment eligibilty process is automated• Provides a similar type of evaluation • If the resource is online in the DAM committed interval, it will not receive an energy payment in

that interval.• A resource which is online for at least a minute in the DAM-committed hour may be eligible for

energy payment in that interval.• Even if the resource is not online in the interval, the interval is part of the block of DAM-

committed intervals and if make-whole is due to the resource, a portion of the make-whole payment is allocated into that interval

• A block of DAM committed intervals can only be eligible for one start

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Analysis

Sample period 11/1/11 – 11/10/11 (excluding DST 11/6)

Analysis included 35 instances of QRD (note: this is not 35 intervals, because some instances contained multiple intervals) The month of November 2011 had 144 instances of QRD, but due to time

constraints, only the limited sample set was analyzed

Analysis included running the DAM make-whole eligibility logic without doing the QRD process (i.e., did not remove the QRD interval from the DAM commitment)

Bottom line – results can vary. There is potential for : no change to energy or startup payments increased energy payments removal of an extra startup payment

February 10, 2009

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Analysis

February 10, 2009

For the 40% and 71% that had “No Change” the end result would have been the same had we not done the manual QRD process.

60% of the QRD instances would’ve seen potential for increased energy payment because the resource was online in the QRD interval.

• 42% online <15 minutes• 4% online between 15 and 30 min• 19% online between 31 and 45 min• 35% online the entire interval

26% of the QRD instances would’ve had a startup removed (this is the “extra” startup caused by QRD removal of the commitment)

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Comparison QRD Treatment to Eligibility Rules

Exclude the QRD interval, per the current protocol

Keep the QRD interval & follow DAM Make-Whole Payment eligibility logic

Startup Compensation

Creates potential for an additional startup payment (consider a block of DAM-committed hours where the QRD interval is embedded within the block of hours – removal of the QRD interval creates a gap and potentially an additional eligible start)

No impact on startup determination

Energy Compensation

Removes potential for energy compensation

- If resource is not online there is no potential for energy compensation

- Potential compensation for energy cost up to DAM Award if the resource is online for at least 1 minute in the DAM-committed interval

Impact to those paying for DAM Make-Whole

- Shifts make-whole cost out of the QRD intervals in the block and into the other DAM-committed intervals in the block, potentially changing the ratio share of the cost to a given entity

- Reduces cost related to energy- Potentially increases costs

related to startup

- Spreads the make-whole cost (for both startup and energy) across all of the DAM-committed intervals in the block, consistent with all DAM Awards

- Compensates for energy consistent with all DAM Awards

- Compensates for startup consistent with all DAM Awards

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Decisions

If the resource was DAM-committed and fulfilled the DAM-commitment by actually operating in the hour, should the COP status matter?

Yes: • Leave the QRD rule in place (ERCOT will proceed with

automation of the process)• Consider whether or not the 2nd startup resulting from the

QRD should be prevented (potential for NPRR)

No:• ERCOT to draft an NPRR to modify the language in 6.4.6• If approved ERCOT would stop performing the QRD process