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					ERCOT
Wholesale Market Basics



Module 3
Settlement
Introduction                                                   Module 3




               Can you tell these apart?

    BENAiq= -1 * (Σ (RIiz + LIiz + URCiz+ MISDiz+ MISRiz)z +
                  TCRPAYBei + Σ CSCBei ) * LRSiq




                                2            ERCOT Wholesale Market Basics
Topics                                           Module 3




         Settlement Overview

         Settlement Calculations

         General Fees




                        3      ERCOT Wholesale Market Basics
                             Module 3




Overview




  4        ERCOT Wholesale Market Basics
Overview                                                                  Module 3




      Electricity sellers          Electricity buyers

                         Bilateral         Load
           Resources                      Serving
                       transactions       Entities


                                         Bilateral
                            QSEs                        QSEs
                                      transactions

                              $                      $



    ERCOT SETTLEMENTS

                                      5                 ERCOT Wholesale Market Basics
Overview                                                       Module 3



  “VISA Bill” Rule
   All cash flow defined from ERCOT
   perspective:
           NEGATIVE amounts
           – ERCOT pays Market Participant
           POSITIVE amounts
           – Market Participant pays ERCOT




                              6              ERCOT Wholesale Market Basics
Overview – Market Participant Roles                     Module 3




    QSE:
          Daily review of Settlement Statements
          Download of Data Extracts
          Shadow Settlement and Validation
          Research Discrepancies
          Register Disputes
          Weekly review of Invoices
          Settle with ERCOT

                              7       ERCOT Wholesale Market Basics
Overview – Market Participant Roles                      Module 3




     LSE / Resources:
           Download of Data Extracts
           Research Discrepancies
           Settle with QSE




                              8        ERCOT Wholesale Market Basics
Overview – Market Participant Roles                     Module 3


 ERCOT’s Settlement and Billing Procedures:
       Acquire and Validate Settlement Data
       Validate Market Settlement and Publish
       Settlement Statements
       Publish Weekly Invoices
       Process Weekly Payments
       Validate, Research and Resolve Disputes
       Provide Settlement information (ERCOT,
       PUCT, Market Participants)

                              9       ERCOT Wholesale Market Basics
                              Module 3



Questions




    10      ERCOT Wholesale Market Basics
                                       Module 3




Settlement Calculations




          11         ERCOT Wholesale Market Basics
Settlement Calculations                          Module 3



      ERCOT MUST REMAIN REVENUE
               NEUTRAL!




                          12   ERCOT Wholesale Market Basics
Settlement Calculations                                     Module 3



Revenue Neutrality
       All payments for Market Services will have
       a corresponding cost allocation.
       Common forms of cost allocation
         – Obligation
         – Direct Assignment
         – Load Allocation
         – Balancing Energy Neutrality Adjustment




                             13           ERCOT Wholesale Market Basics
Settlement Calculations                                  Module 3


  Settlement Unit Rules
        Quantity * Price
        MW or MWh
        24 Hours or 96 Intervals
        Hourly MW conversion to 15-min is MW per
        ¼ Hour or MWh
        Some Charge Types are only charges
        Some Charge Types are only payments
        Some Charge Types can be either


                             14        ERCOT Wholesale Market Basics
Settlement Calculations                                Module 3



              Settlement of What?

      ERCOT settles for services procured
       to manage the Texas power grid.

  Capacity Settlement          Energy Settlement




                          15         ERCOT Wholesale Market Basics
Settlement Calculations                          Module 3




          Capacity Settlement




                          16   ERCOT Wholesale Market Basics
Settlement Calculations - Capacity                     Module 3



   Learning Objectives:
        Ancillary Services for Normal Operations
        Replacement Reserve
        Out-of-Merit Capacity
        Emergency Interruptible




                               17    ERCOT Wholesale Market Basics
Ancillary Services for Normal Operations
Settlement Calculations - Capacity                                     Module 3



                                Ancillary Services

       For Normal Operation for System Reliability
                   Regulation Up
                   Regulation Down
                   Responsive Reserve
                   Non-spin



                                           18        ERCOT Wholesale Market Basics
Ancillary Services for Normal Operations
Settlement Calculations - Capacity                                    Module 3



                               Ancillary Services

   For Normal Operation for System Reliability
             There are two main components to the Ancillary
             Services (AS) Market.
                  1. Procurement of Ancillary Services.
                  2. Uplifting the Costs of Ancillary Services
                     procured.




                                           19       ERCOT Wholesale Market Basics
Ancillary Services for Normal Operations
Settlement Calculations - Capacity                                              Module 3



                                   Ancillary Services
        1. Procurement of Ancillary Services.
                    Total AS requirement Based on Day-ahead forecast.
                    QSE obligation based on QSE Load Ratio Share of
                    14 days prior.
                    Quantity procured is calculated by netting total AS
                    requirement less sum of QSEs self-arranged MW.
                    ERCOT will pay for AS awards at Market Clearing
                    Price.


                  How do the QSE’s communicate their Self-arranged Quantity?

                                              20              ERCOT Wholesale Market Basics
Ancillary Services for Normal Operations
Settlement Calculations - Capacity                                                  Module 3



                                  Ancillary Services
       2. Uplifting the Costs of Ancillary Services
          procured.
                   Cost allocated to each QSE by their net
                   obligation.
                   Net Obligation = Load Ratio Share Obligation
                   minus Self-Arranged quantity.
                   Settled using actual metered load to calculate
                   Net Obligation (NOT load 14 days prior).

                 What happens to the Net Obligation at the Initial Settlement?

                                                21                ERCOT Wholesale Market Basics
Ancillary Services for Normal Operations
Settlement Calculations - Capacity                                Module 3



                Ancillary Service Example Calculation




                                           22   ERCOT Wholesale Market Basics
Ancillary Services for Normal Operations
Settlement Calculations - Capacity                                       Module 3



             Procured Ancillary Service Capacity

                     PCASqi = -1 * (CASqi * MCPCASi )

      Terms                                               Subscripts
          PC : Ancillary Service Capacity Payment             i: Interval
          C: Capacity Procured                                q: QSE
          MCPC: Market Clearing Price for Capacity

          Translation: The payment for Ancillary Service Capacity is
          equal to the Amount of Capacity procured times the
          Clearing price for that Service.
                                                                 Protocol 6.8.1.2


                                           23          ERCOT Wholesale Market Basics
Ancillary Services for Normal Operations
Settlement Calculations - Capacity                                     Module 3



                Ancillary Service Cost Allocation

                           LAASqi = ASPi * NTOASqi
    Terms                                                    Subscripts
         LA: Load Allocated Ancillary Service Charge             i: Interval
         ASP: Ancillary Service Price                            q: QSE
         NTO: Ancillary Service Net Obligation per QSE


    Translation: The Load Allocation Charge for an ancillary
    service is equal to the Ancillary Service Price times the Net
    Obligation for the QSE.
                                                                   Protocol 6.9.1

                                           24        ERCOT Wholesale Market Basics
Settlement Calculations - Capacity                       Module 3



   Learning Objectives:
         Ancillary Services for Normal Operations
          Replacement Reserve
          Out-of-Merit Capacity
          Emergency Interruptible




                               25      ERCOT Wholesale Market Basics
Replacement Reserve Service
Settlement Calculations - Capacity                           Module 3



      Providers of Replacement Reserve
      (RPRS) are paid for two types of service:
                Capacity Insufficiency
                Local Congestion




      Section 6.8.1.10 and 6.8.1.11

                                      26   ERCOT Wholesale Market Basics
Replacement Reserve Service
Settlement Calculations - Capacity                             Module 3




    Units selected for Capacity Insufficiency
    are paid:
               The higher of their bid or,
              The highest MCPC for all Replacement
              Reserve procured during the procurement
              processes.
             Their bid contains Start-up and Operating
             values.
     Section 6.8.1.10 and 6.8.1.11

                                     27      ERCOT Wholesale Market Basics
Replacement Reserve Service
Settlement Calculations - Capacity                                      Module 3


                    RPRS Capacity Payment

         PC = -1* MAX [(PABC , MCPC) * ZC]

         PABC = CBP / N + HOBP
    Terms                                    Terms
       PC: RPPS payment to QSE               CBP: Startup Bid Price
       MCPC: RPRS Capacity Price             HOBP: Hourly Operating Bid
       PABC: RPRS Capacity BID Price            Price
       ZC: Amount of RPRS Capacity Awarded   N: Number of hours procured


        Translation: The RPRS Capacity payment is equal to the
        minimum of the bid price times the capacity awarded or
        the sum of startup and operating costs.

                                       28             ERCOT Wholesale Market Basics
Replacement Reserve Service
Settlement Calculations - Capacity                             Module 3




        Units selected for Local Replacement
        are paid:
                  Resource Category Generic Startup
                  Cost for starting.
                  Resource Category Minimum Energy
                  Cost minus MCPE for operating at the
                  unit Low Sustainable Limit (LSL).


        Section 6.8.1.10 and 6.8.1.11

                                        29   ERCOT Wholesale Market Basics
Replacement Reserve Service
Settlement Calculations - Capacity                             Module 3


                    RPRS Local Congestion

                    LPC = -1* (LPS + LPO)

     Terms
        LPC: Price paid for RPRS
        C: Amount of RPRS Qty Awarded
        LPS: Startup Costs
        LPO: Operating Costs


       Translation: The RPRS Local Congestion payment is
       equal to the sum of startup and operating costs.


                                        30   ERCOT Wholesale Market Basics
Replacement Reserve Service
Settlement Calculations - Capacity                            Module 3



                  RPRS Local Congestion
     How are RPRS Local Congestion startup
     and operating costs calculated?
    LPS = RCGSC / N
    LPO = SUM [(RCGMEC – MCPE) * MIN (MINCAP/4, MR)]
        Terms:
           RCGSC = Generic Startup Cost
           RCGMEC = Minimum Energy Cost
           MINCAP = Low Sustainable Limit
           MR = Metered Resource




                                       31   ERCOT Wholesale Market Basics
Replacement Reserve Service
Settlement Calculations - Capacity                                   Module 3


     Payment from the Market is collected
     through the following charge:
      RPRS Uplift Charge
                ERCOT Sums:
                – The total payments for Local and Capacity
                  Insufficiency RPRS and
                Total is uplifted at Load Ratio Share to
                all QSEs.


       Section 6.9.2.1.2

                                      32           ERCOT Wholesale Market Basics
Replacement Reserve Service
Settlement Calculations - Capacity                                                   Module 3


                          RPRS Uplift Charge
     UCRP = -1 * [ Σ ( PCRP + LPCRP ) + TCRPAYRP + Σ CSCRP ]* LRS

                                                                               Not
                                                                              Applied
           Variables                                 Subscripts
           UC = RPRS Uplift Charge                   RP = Replacement Reserve
           PC = Cost of Capacity for Capacity
                  Insufficiency
           LPC = Cost of RPRS for Local
                  Congestion
           US = RPRS Under Scheduled
                  Charge
           TRCRPAY = TCR Payment per Hour
           CSC = RPRS CSC Impact Capacity
                  Charge
           LRS = Load Ratio Share
                                                                  Section 6.9.2.1.2


                                                33                 ERCOT Wholesale Market Basics
Settlement Calculations - Capacity                      Module 3




   Learning Objectives:

          Ancillary Services for Normal Operations
          Replacement Reserve
          Out-of-Merit Capacity
          Emergency Interruptible




                               34     ERCOT Wholesale Market Basics
Out-of-Merit Capacity
Settlement Calculations - Capacity                                Module 3



                                 OOMC
       What is OOMC?
                  Replacement Reserve procured out of
                    merit order.
                  – Support emergency operations
                  – provide voltage support
                  – manage localized transmission limitations

                  ERCOT-wide cost is uplifted to QSEs
                    (LRS)

                                    35          ERCOT Wholesale Market Basics
Out-of-Merit Capacity
Settlement Calculations - Capacity                               Module 3


     Units selected for OOMC are paid:
              Resource Category Generic Startup Cost
              minus energy revenue during ramp (back
              12 intervals), plus
                Resource Category Minimum Energy Cost
                minus MCPE for operating at the LSL
               or
                Replacement Bid, if cheaper.

     Section 6.8.1.10 and 6.8.1.11

                                     36        ERCOT Wholesale Market Basics
Out-of-Merit Capacity
Settlement Calculations - Capacity                                      Module 3



                         OOMC Payment

   PC = -1* MIN [(BP * C), (PS + PO)]
     Terms
        PC: Amount paid for OOM Capacity
        C: Qty of OOM Capacity Awarded
        BP: Sum of Bid Startup and Operating prices
        PS: Startup Costs
        PO: Operating Costs

      Translation: The OOM Capacity payment is equal to
      the minimum of the bid price times the capacity
      awarded or the sum of startup and operating costs.
                                                                  Protocol 6.8.2.2

                                           37         ERCOT Wholesale Market Basics
Out-of-Merit Capacity
Settlement Calculations - Capacity                                         Module 3



                              OOMC
How are OOMC startup and operating costs calculated?

       PS = [RCGSC – (SUMs (MCPE * MR))] / N
       PO = SUM [(RCGMEC – MCPE) * MIN (MINCAP/4, MR)]

         Terms:
            RCGSC = Generic Startup Cost
            RCGMEC = Minimum Energy Cost (HR*FI)
             MINCAP = Low Sustainable Limit
             MR = Metered Resource
             N = Number of hours deployed
             s = 12 intervals prior to the OOMC period

                                              38         ERCOT Wholesale Market Basics
Settlement Calculations - Capacity                      Module 3




   Learning Objectives:

          Ancillary Services for Normal Operations
          Replacement Reserve
          Out-of-Merit Capacity
          Emergency Interruptible




                               39     ERCOT Wholesale Market Basics
Emergency Interruptible Load Service (EILS)
Settlement Calculations - Capacity                                   Module 3



  Emergency Interruptible Load Service
         Service provided by loads (customers) willing to
         interrupt during an electric grid emergency in
         exchange for capacity payment
         To provide ERCOT Operations with an
         additional emergency tool to lessen the
         likelihood of involuntary firm load shedding
         (a.k.a. rolling blackouts)




                                              40   ERCOT Wholesale Market Basics
Emergency Interruptible Load Service (EILS)
Settlement Calculations - Capacity                                       Module 3


     EILS
     EILS capacity payments are calculated as
     follows:
     BIDPrice * BIDCapacity * AvailFactor * EILFactor * TPh
          EILS Awarded Bid Price ($/MW) for each EILS Resource for
          an EILS Time Period.
          Capacity (MW) for an EILS Resource contracted for EILS
          specific to an EILS Time Period
          Availability factor for an EILS Time Period (Section 6.10.13.3)
          EILS event performance factor for an EILS Time Period
          (Section 6.10.13.3)
          Number of hours in an EILS Time Period

                                              41       ERCOT Wholesale Market Basics
Emergency Interruptible Load Service (EILS)
Settlement Calculations - Capacity                                           Module 3



    EILS – Uplift Costs
            No Self-Provision:             EILS costs for an EILS Contract
            Period will be allocated based on the Load Ratio Share (LRS) for
            the EILs Contract Period.


            Self-Provision: EILS costs for an EILS Contract Period will
            be allocated based on the Load Ratio Share (LRS) less the self-
            Provision amount for the EILs Contract Period or zero, which ever is
            greater.




                                              42           ERCOT Wholesale Market Basics
Settlement Calculations - Energy                      Module 3




              Energy Settlement




                               43   ERCOT Wholesale Market Basics
Settlement Calculations - Energy                       Module 3



   Learning Objectives:
          Zonal Balancing Energy
          Resource Imbalance
          Load Imbalance
          OOME/LBES
          Uninstructed Resource Charge
          Congestion
          Mismatched Schedules
          BENA


                               44    ERCOT Wholesale Market Basics
Zonal Balancing Energy
Settlement Calculations - Energy                               Module 3



     Balancing Energy
             Represents the increase or decrease in
             energy dispatched by Settlement Interval in
             Real Time to ensure the balancing needs of
             ERCOT.

             The energy is supplied by ERCOT through
             acquisition of resources (generating units and
             interruptible demands) to meet load
             variations not covered by Regulation Service.


                                  45         ERCOT Wholesale Market Basics
Zonal Balancing Energy
Settlement Calculations - Energy                                Module 3



    Balancing Energy
             Zonal Instructed Deviation (up/down) from
             ERCOT to QSE
             Used to solve power balance and/or
             congestion
             Settled at zonal MCPE




                          How is this paid?

                                     46       ERCOT Wholesale Market Basics
Settlement Calculations - Energy                       Module 3



   Learning Objectives:
          Balancing Energy
          Resource Imbalance
          Load Imbalance
          OOME/LBES
          Uninstructed Resource Charge
          Congestion
          Mismatched Schedules
          BENA

                               47    ERCOT Wholesale Market Basics
Resource Imbalance
Settlement Calculations - Energy                                              Module 3



    Resource Imbalance
             Scheduled Generation - Metered Generation
             Paid/charged at MCPE
             Why an imbalance?
              – Instructed Deviations
              – Uninstructed Deviations (may be subject to
                URC)

                                                                   Protocol 6.8.1.13


               Do all Resource Imbalances result in payments to the QSE?

                                           48               ERCOT Wholesale Market Basics
Resource Imbalance
Settlement Calculations - Energy                                            Module 3



                     Resource Imbalance Example
   Situation: AlphaQSE has scheduled to generate at 208 MW from
   their resource in the South Zone for IE 1630.




  Conditions:
   The Resource actually generates at 220MW.
   The Market Clearing Price for Energy, South CM Zone is $17.09/MWh

                                         49               ERCOT Wholesale Market Basics
Resource Imbalance
Settlement Calculations - Energy                                      Module 3



                     Resource Imbalance Example

    220MW                                  Actual Generation

    208MW                                     Scheduled Generation



                      55MWh   52MWh




             0

                                      50            ERCOT Wholesale Market Basics
Resource Imbalance
Settlement Calculations - Energy                           Module 3


                     Resource Imbalance Example
For a given interval and zone,

RI = (Scheduled Generation – Actual Generation) * MCPE

Therefore, for interval 1630, AlphaQSE’s Resource
Imbalance in the South Zone is

RI = (52MWh - 55MWh) * $17.09/MWh = - $51.57




                                 51      ERCOT Wholesale Market Basics
Resource Imbalance
Settlement Calculations - Energy                                          Module 3



                             Resource Imbalance

                     RIizq   =   (QRSizq - MRizq) * MCPEiz

         Terms                                       Subscripts
            RI : Resource Imbalance Amount             i: Interval
            QRS: Scheduled Resource                    z: Zone
            MR: Metered Resource                       q: QSE
            MCPE: Market Clearing Price for Energy


      Translation: Resource Imbalance is the difference between the
      Scheduled and Actual Resource output times the Clearing Price
      for Energy.
                                                                Protocol 6.8.1.13

                                          52            ERCOT Wholesale Market Basics
Settlement Calculations - Energy                       Module 3


   Learning Objectives:
          Balancing Energy
          Resource Imbalance
          Load Imbalance
          OOME/LBES
          Uninstructed Resource Charge
          Scheduling Control Error
          Congestion
          Mismatched Schedules
          BENA

                               53    ERCOT Wholesale Market Basics
Load Imbalance
Settlement Calculations - Energy                              Module 3



                      Load Imbalance
         Scheduled Load - Adjusted Metered Load
         Paid/charged at MCPE
         Why an Imbalance?
         – UFE
         – Forecast Inaccuracies
         – Relaxed Balanced Schedule (section 4.3.1)
         – LaaR’s
                                                   Protocol 6.9.5.2


                                   54       ERCOT Wholesale Market Basics
Load Imbalance
Settlement Calculations - Energy                                             Module 3



                    Load Imbalance Example
    Situation: AlphaQSE schedules 140 MW (35 MWh / interval) of
    Load in the South Zone for IE 1630




    Conditions:
    Adjusted Metered Load = 160 MW (40 MWh / interval) in the South Zone.
    Market Clearing Price for Energy = $17.09/MWh in the South


                                          55               ERCOT Wholesale Market Basics
Load Imbalance
Settlement Calculations - Energy                                Module 3



                  Load Imbalance Example
                           South Zone

          160                           Actual Load

          140                               Scheduled Load




                 35MWh   40MWh



            0

                                 56           ERCOT Wholesale Market Basics
Load Imbalance
Settlement Calculations - Energy                             Module 3


                 Load Imbalance Example
   For a given interval and zone,

   LI = -1*(Scheduled Load – Actual Load) * MCPE


   Therefore, for interval 1630, AlphaQSE’s Load
   Imbalance in the South Zone is

   LI = -1*(35MWh - 40MWh) * $17.09/MWh = $85.45




                                57         ERCOT Wholesale Market Basics
Load Imbalance
Settlement Calculations - Energy                                          Module 3



                           Load Imbalance

           LIizq = -1 * (SLizq - AMLizq) * MCPEiz

         Terms                                       Subscripts
            LI : Load Imbalance Amount                 i: Interval
            SL: Scheduled Load                         z: Zone
            AML: Adjusted Metered Load                 q: QSE
            MCPE: Market Clearing Price for Energy



     Translation: Load Imbalance is the difference between the
     Scheduled and Actual Load times the Clearing Price for Energy.
                                                                  Protocol 6.9.5.2

                                          58            ERCOT Wholesale Market Basics
Settlement Calculations - Energy                       Module 3



   Learning Objectives:
          Balancing Energy
          Resource Imbalance
          Load Imbalance
          OOME/LBES
          Uninstructed Resource Charge
          Congestion
          Mismatched Schedules
          BENA


                               59    ERCOT Wholesale Market Basics
Out-of-Merit Energy / Local Balancing Energy Service
Settlement Calculations - Energy                                              Module 3


                                               OOME
     What is OOME?
             Out-of-merit order, unit-specific energy
             deployment to address intra-zonal congestion

             Procured by ERCOT when no market solution

             Paid according to a generic cost structure
             (Protocol Section 6.8.1.1)

             ERCOT-wide cost is uplifted to QSEs based
             on Load-Ratio-Share (LRS)

                                                       60   ERCOT Wholesale Market Basics
Out-of-Merit Energy / Local Balancing Energy Service
Settlement Calculations - Energy                                              Module 3



                                              OOME
       OOME Payment Methodology
               The OOME Up and OOME Down payments are
               intended to cover only the amount above the
               billable quantity times MCPE. MCPE times
               billable quantity is paid in Resource Imbalance.

               If the calculated OOM Up payment is insufficient -
               -- additional verifiable costs may be paid if
               submitted in a timely manner.



                                                       61   ERCOT Wholesale Market Basics
Out-of-Merit Energy / Local Balancing Energy Service
Settlement Calculations - Energy                                              Module 3



   What is LBES?
          Unit-specific energy deployment of balancing
          energy when intra-zonal congestion occurs

          Procured by ERCOT SPD to solve Local
          congestion

          Paid the incremental bid premium specified
          (Protocol Section 7.4.3.1)

          ERCOT-wide cost is uplifted to QSEs based
          on Load-Ratio-Share (LRS)

                                                       62   ERCOT Wholesale Market Basics
Out-of-Merit Energy / Local Balancing Energy Service
Settlement Calculations - Energy                                              Module 3



                                                LBES
       LBES Payment Methodology
                LBES Up and Down payments are the difference
                between the MCPE of the Congestion Zone in
                which the specific Resource is located and the
                incremental bid premium specified.

                MCPE times billable quantity is paid in Resource
                Imbalance.



                                                       63   ERCOT Wholesale Market Basics
Out-of-Merit Energy / Local Balancing Energy Service
Settlement Calculations - Energy                                               Module 3


                              OOME/LBES Example
   Situation: AlphaQSE receives a UNIT-SPECIFIC instruction
   for IE 1600 to move the output of Unit 1 to 150 MW
     Data for AQSE for IE 1600:

         RP_Unit1 = 100 MW (25 MWh per 15 minute interval)

         Metered Generation by Unit1 = 36 MWh

         Instructed Output Level= 150MW (37.5 MWh per interval)

         OOME price = Unit 1 is a Gas-Steam Reheat Boiler unit
         Generic Cost (Per Protocol 6.8.2.1) = $61.41 per MWh

         LBES price = Bid premium submitted = $75.80

         MCPE = $15.80 per MWh

                                                       64    ERCOT Wholesale Market Basics
Out-of-Merit Energy / Local Balancing Energy Service
Settlement Calculations - Energy                                              Module 3


                              OOME/LBES Example
   As with all settlement equations,

         OOME/LBES Payment = -1 * Quantity * Price

   Price is fairly easy:

      Price = (OOME/LBES Price – MCPE) or 0, whichever is
   greater.

   Example, OOME Price = $61.41- 15.80 = $45.61 per MWh
   Example, LBES Price = $75.80- 15.80 = $60.00 per MWh
 Why do we subtract the MCPE from the Generic Cost/Bid Premium?


                                                       65   ERCOT Wholesale Market Basics
Out-of-Merit Energy / Local Balancing Energy Service
Settlement Calculations - Energy                                              Module 3



                              OOME/LBES Example

   Quantity is a little more difficult:

         Quantity = The change in energy output in
                  response to the instruction with a
                  maximum of the instruction itself.




                                                       66   ERCOT Wholesale Market Basics
Out-of-Merit Energy / Local Balancing Energy Service
Settlement Calculations - Energy                                                     Module 3


                             OOME/LBES Example

     150                                               Instructed Output

     144                                                    Metered Output


                                                               Resource Plan and
      100                                                      Generation Schedule

                37.5MWh          36MWh          25MWh



       0
                                                       67          ERCOT Wholesale Market Basics
Out-of-Merit Energy / Local Balancing Energy Service
Settlement Calculations - Energy                                              Module 3



                              OOME/LBES Example

  The unit’s response = Metered Output – Resource Plan
                      = 36 MWh – 25 MWh
                      = 11 MWh

  The unit’s instruction = Instructed Output – Resource Plan
                         = 37.5 MWh – 25 MWh
                         = 12.5 MWh
   Since the response does not exceed the instruction, ERCOT
   will pay AlphaQSE for the unit’s response of 11 MWh.



                                                       68   ERCOT Wholesale Market Basics
Out-of-Merit Energy / Local Balancing Energy Service
Settlement Calculations - Energy                                               Module 3



                              OOME/LBES Example

   Putting it all together,

         OOME/LBES Payment = -1 * Quantity * Price
                      = -1 * 11 MWh * $45.61/MWh
         OOME Payment = -$501.71
                                            = -1 * 11 MWh * $60.00/MWh
        LBES Payment = -$660.00



                                                       69    ERCOT Wholesale Market Basics
Out-of-Merit Energy / Local Balancing Energy Service
Settlement Calculations - Energy                                                    Module 3


                                            OOME
   PEOOMUPiuq = -1 * EOOMUPiuq * [Max (RCGFCc – MCPEiz),0]

         where EOOMUPiuq = Max (0, Min ((MRiuq – OLiuq), IOOMUPiuq))

         Terms:                                             Subscripts
            MR = Metered Resource                             i: Interval
             OL = Resource Plan Output Level                  z: Zone
             I = OOME Instruction                             q: QSE
             RCGFC = Resource Category price                  c: resource category
                                                              u: generation unit
       Translation: The OOM Energy premium payment is equal to
       the Energy provided times the difference between MCPE and
       the Generic cost for the OOME service.
                                                                    Protocol 6.8.2.3

                                                       70         ERCOT Wholesale Market Basics
Out-of-Merit Energy / Local Balancing Energy Service
Settlement Calculations - Energy                                                  Module 3


                                             LBES
   LPCRSUiuq = -1 * ELBEiuq * [Max (PMc – MCPEiz),0]

     where ELBEiuq = Max (0, Min ((MRiuq – OLiuq), ILBEiuq))

         Terms:                                             Subscripts
            MR = Metered Resource                             i: Interval
             OL = Resource Plan Output Level                  z: Zone
             I = LBES Instruction                             q: QSE
             PM = Bid premium submitted                       c: bid premium
                                                              u: generation unit

     Translation: The LBES Energy premium payment is equal to the
     Energy provided times the difference between MCPE and the Bid
     Premium price submitted for the LBES service.
                                                                   Protocol 6.8.2.3

                                                       71       ERCOT Wholesale Market Basics
Settlement Calculations - Energy                       Module 3


   Learning Objectives:
          Balancing Energy
          Resource Imbalance
          Load Imbalance
          OOME/LBES
          Uninstructed Resource Charge
          Congestion
          Mismatched Schedules
          BENA


                               72    ERCOT Wholesale Market Basics
Uninstructed Resource Charge
Settlement Calculations - Energy                                 Module 3




     Uninstructed Resource Charge (URC)
             A QSE who schedules resources will be paid the full
             Market Clearing Price for Energy Up to the amount
             of instructed deviations
             An Uninstructed Deviation Charge Back will be
             calculated at a factor of the MCPE. The
             Uninstructed Deviation Charge Back will be applied
             to each Congestion Zone in which a QSE has a
             deviation from schedule plus instructions.

                                   73          ERCOT Wholesale Market Basics
Uninstructed Resource Charge
Settlement Calculations - Energy                                                     Module 3


                               Price Chasing
                               Metered Resource is greater                 Uncontrollable
                                                                        Renewable Resource is
                               than larger of 101.5% of (or              not subject to URC.
                                5MWh over) total schedule
                                     plus Instruction
          Integrated
          Amount of
                                                                 Over Generation
            ERCOT
                                                                 in a zone where
         Regulation is
                                                                 MCPE is positive
         less than -25
            MWhrs




                                                              Uninstructed
                                                               Resource
                                                                Charge


                                                 74              ERCOT Wholesale Market Basics
Uninstructed Resource Charge
Settlement Calculations - Energy                                                    Module 3


                               Cost Optimization
                                                                          Uncontrollable
                                   Metered Resource is less            Renewable Resource is
                                                                        not subject to URC.
                                  than lesser of 98.5% of (or
                                      5MWh under) total
           Integrated              schedule plus Instruction
           Amount of
                                                                Under Generation
             ERCOT
                                                                 in a zone where
          Regulation is
                                                                MCPE is negative
         greater than 25
             MWhrs




                                                                Uninstructed
                                                                 Resource
                                                                  Charge




                                                   75           ERCOT Wholesale Market Basics
Settlement Calculations - Energy                       Module 3



   Learning Objectives:
          Balancing Energy
          Resource Imbalance
          Load Imbalance
          OOME/LBES
          Uninstructed Resource Charge
          Congestion
          Mismatched Schedules
          BENA

                               76    ERCOT Wholesale Market Basics
Congestion
Settlement Calculations - Energy                                 Module 3


             Settlement of Zonal Congestion
         QSE impact is determined by the bilateral schedule
         The net Resource schedule (Resource –
         Obligation) for each zone is multiplied by the zonal
         shift factor for each Commercially Significant
         Constraint (CSC).
         The CSC impacts are added together
         The QSE is charged the Impact on the CSC
         multiplied by the Shadow Price on the CSC.



                                  77           ERCOT Wholesale Market Basics
Congestion
Settlement Calculations - Energy                                Module 3


                  Congestion Management - Example
                                        West to North CSC




                   West                     North
                   Zone                     Zone




                              South
                              Zone               South to North CSC

   South to West CSC



                                 78           ERCOT Wholesale Market Basics
Congestion
Settlement Calculations - Energy                                                      Module 3



                               Shift Factors
         CSC Zonal Average Weighted Shift Factors

                  Average Weighted Shift   Average Weighted Shift      Average Weighted Shift
        CM Zone
                         Factor                   Factor                      Factor
         names
                      West to North           South to North               South to West



       West2009       0.489911548             -0.004425342                 -0.016725781

      North2009      -0.008056712             -0.120276952                 -0.003225342

      South2009       0.002302236                0.503257831                0.104328870




                                            79                      ERCOT Wholesale Market Basics
Congestion
Settlement Calculations - Energy                                 Module 3

             Where do you find the real shift factors?



                                               https:tcr.ercot.com




                                  80           ERCOT Wholesale Market Basics
Congestion
Settlement Calculations - Energy                                            Module 3

                 Congestion Management - Example
     Situation: AlphaQSE schedules 548 MW of Resource from the
     South Zone and delivers 140 MW to the South Zone and 408
     MW to the North Zone.




     The South to North congestion Path is constrained.
     MCPE_North = $28.84
     MCPE_South = $17.09
     MCPESPC_SN = $32.91

                                       81                 ERCOT Wholesale Market Basics
Congestion
Settlement Calculations - Energy                             Module 3

              Congestion Management - Example
     West                                                   North

                                         Res = 0MW
                                        Load = 408MW




                         Res = 548MW
                         Load = 140MW

             South

                               82          ERCOT Wholesale Market Basics
Congestion
Settlement Calculations - Energy                                  Module 3


             Congestion Management - Example

   AlphaQSE’s South Zone Schedule impacts the South to North
   constraint as follows:
      Impact = (Resource – Obligation)(1/4 hr) * SFSN
               = (548 MW – 140MW)(1/4 hr) * 0.503257831
               = 51.33 MWh

   AlphaQSE’s North Zone Schedule impacts the South to North
   constraint as follows:
      Impact = (Resource – Obligation)(1/4 hr) * SFSN
               = (0 MW – 408MW)(1/4 hr) * -0.120276952
               = 12.27 MWh


                                  83            ERCOT Wholesale Market Basics
Congestion
Settlement Calculations - Energy                               Module 3


             Congestion Management - Example

 Now the Congestion Charge for a particular CSC is simply a
 quantity times a price:

 Congestion Charge = (Sum of Impacts) * Shadow Price
 = (51.33 MWh + 12.27 MWh)*($32.91/MWh)
                       = $2093.08




                                84           ERCOT Wholesale Market Basics
Congestion
Settlement Calculations - Energy                                      Module 3



                      CSC Schedule Impact

             ICSCiq = Σ((QSSiqz – SOiqz) * SFZCSC)z

     Terms                                       Subscripts
        I: Scheduled MW Impact per CSC             i: Interval
        QSS: QSE Supply Schedule                   q: QSE
        SO: Scheduled Obligation                   z: zone
        SF: Shift Factor                           CSC: Commercially
                                                   Significant Constraint

     Translation: Your Zonal Impact on each CSC is your net position
     in each zone multiplied by the zonal CSC shift factor.
                                                          Protocol 7.3.4.1


                                         85         ERCOT Wholesale Market Basics
Congestion
Settlement Calculations - Energy                                       Module 3



                 Congestion: CSCBE Charge

              CSCBECSCiq = SPCCSCi * MAX(0, ICSCiq)

     Terms                                        Subscripts
        I: Scheduled MW Impact per CSC              i: Interval
        CSCBE: Energy Related Congestion Charge     q: QSE
        SPC: Shadow Price                           CSC: Commercially
                                                    Significant Constraint

     Translation: Your Congestion Charge per CSC is your SCS
     Impact multiplied by the Shadow Price.

         What happens if my impact is negative?
                                                           Protocol 7.3.4.1


                                           86        ERCOT Wholesale Market Basics
Congestion
Settlement Calculations - Energy                                       Module 3



             Congestion: CSC Counterflow

                   CSCBECSCiq = SPCCSCi * ICSCiq

     Terms                                        Subscripts
        I: Scheduled MW Impact per CSC              i: Interval
        CSCBE: Energy Related Congestion Charge     q: QSE
        SPC: Shadow Price                           CSC: Commercially
                                                    Significant Constraint


     Translation: If your impact opposes the congestion, or helps
     relieve the CSC, there is a payment for Counterflow.
                                                           Protocol 7.3.4.1


                                        87           ERCOT Wholesale Market Basics
Congestion
Settlement Calculations - Energy                                         Module 3



               Congestion Management – TCR Example

     Situation: If AlphaQSE had bid for and purchased 100 TCRs
     for this month at $3 a piece, then the impact is as follows:

             Cost of TCRs = (100 MW * $4) / 4 = $100 for one interval

             Cost of congestion from IE 1630 = $2,093.08
         Payment from TCR = TCR/4 * MCPESPC_SN

                               = (100/4) * $32.91 = $822.75

  AlphaQSE cost for Congestion = $2,093.08 – $822.75 = $1270.33
  (minus the monthly amortized cost of the TCR of $100)


                                        88             ERCOT Wholesale Market Basics
Settlement Calculations - Energy                          Module 3


   Learning Objectives:
         Balancing Energy
         Resource Imbalance
         Load Imbalance
         OOME/LBES
         Uninstructed Resource Charge
         Congestion
         Mismatched Schedules
         BENA


                               89       ERCOT Wholesale Market Basics
Mismatched Schedules
Settlement Calculations - Energy                                       Module 3



                        Mismatched Schedules

What happens if the following schedule is not resolved?


                     QSE A                           QSE B

                 R           O                   R           O

  QSE A 100MW            100MW QSE B   QSE A 120MW         120MW QSE B
        (South)          (South)             (South)       (South)
                                 Mismatch




                                       90            ERCOT Wholesale Market Basics
Mismatched Schedules
Settlement Calculations - Energy                                            Module 3



                         Mismatched Schedules
                       QSE A                              QSE B

                  R            O                      R            O

   QSE A 100MW             100MW QSE B    QSE A 120MW             120MW QSE B
         (South)           (South)              (South)           (South)
                                   Mismatch


                                              QSE A 100MW
                                                    (South)
                                              ERCOT 20MW
   Resolved in Settlement                           (South)


                                         91               ERCOT Wholesale Market Basics
Mismatched Schedules
Settlement Calculations - Energy                                         Module 3



                       Mismatched Schedules
                 MISDiqz = -1 * MISAMTDiqz * MCPEiz

                 MISRiqz = MISAMTRiqz * MCPEiz
    Terms:                                                        Subscripts
       MISD: Payment for mismatched amount delivered to ERCOT       i: Interval
       MISR: Charge for mismatched amount received from ERCOT       z: Zone
       MISAMTD: Mismatched amount delivered to ERCOT                q: QSE
       MISAMTR: Mismatched amount received from ERCOT
       MCPE: Market Clearing Price for Energy

    Translation: The mismatch payment or charge is equal to the
    mismatch amount delivered to or received from ERCOT times
    the MCPE.

                                       92              ERCOT Wholesale Market Basics
Settlement Calculations - Energy                         Module 3



   Learning Objectives:
        Balancing Energy
        Resource Imbalance
        Load Imbalance
        OOME/LBES
        Uninstructed Resource Charge
        Congestion
        Mismatched Schedules
        BENA


                               93      ERCOT Wholesale Market Basics
Balancing Energy Neutrality Adjustment
Settlement Calculations - Energy                                                    Module 3

                   Balancing Energy Neutrality Adjustment
                  Resource
                                                                  Mismatch
                 Imbalance
                                                                   Energy
                                         $                $       Delivered

                                                  B
             Load               $                 E
                                                  N                          Mismatch
           Imbalance                                                          Energy
                                                  A
                                                              $              Received

                                 $
                                              $           $
                                                                       Uninstructe
                TCR
                                              Balancing                d Resource
              Payments
                                             Energy CSC                  Charge
                                               Charges


                                                  94              ERCOT Wholesale Market Basics
Balancing Energy Neutrality Adjustment
Settlement Calculations - Energy                                    Module 3



             Balancing Energy Neutrality Adjustment

  BENAiq= -1 * (Σ (RIiz + LIiz + URCiz+ MISDiz+ MISRiz)z +
                 TCRPAYBei + Σ CSCBei ) * LRSiq
   Terms
      BENA: Balancing Energy Neutrality Adjustment
      RI: Resource Imbalance
      LI: Load Imbalance
      URC: Uninstructed Resource Charge
      MISD: Mismatched Energy Delivered
      MISR: Mismatched Energy Received
      TCRPAY: Transmission Congestion Right Payments
      CSC: Direct Assigned Congestion Cost
      LRS: Load Ratio Share                             Protocol 9.6.1

                                         95       ERCOT Wholesale Market Basics
Balancing Energy Neutrality Adjustment
Settlement Calculations - Energy                                      Module 3



               Balancing Energy Neutrality Adjustment

      BENAiq= -1 * (Σ (RIiz + LIiz + URCiz+ MISDiz+ MISRiz)z +
                    TCRPAYBei + Σ CSCBei ) * LRSiq



     Translation: The Balancing Energy Neutrality Adjustment is equal
     to the Sum of the Load Imbalances, Resource Imbalances,
     Uninstructed Resource Charges, Mismatch Charges, TCR
     Payments and Direct Assigned Congestion costs allocated at
     Load Ratio Share.


                                                        Protocol 9.6.1

                                         96         ERCOT Wholesale Market Basics
General Fees                          Module 3




               97   ERCOT Wholesale Market Basics
General Fees                                          Module 3




  General Fees:
        ERCOT Admin Fee
        Registration Fee
        ERCOT Regional Entity Fee
        Nodal Surcharge




                           98       ERCOT Wholesale Market Basics
General Fees                                             Module 3


ERCOT System Administration Fee

    $0.4171 per MWh to fund ERCOT activities subject
    to Public Utility Commission of Texas (PUCT)
    oversight. This fee is charged to all Qualified
    Scheduling Entities (QSEs) based on Load
    represented. (Protocol Section 9.7.1)




                           99          ERCOT Wholesale Market Basics
General Fees                                                  Module 3



ERCOT Registration Fee
    The ERCOT Registration Fee for a QSE is $500 to be
    paid by check submitted with the Application for
    Registration form. (Protocol Section 9.7.4)
    The ERCOT Registration Fee for a Competitive
    Retailer is $500 to be paid by check submitted with the
    Application for Registration form. (Protocol Section 9.7.4)




                               100          ERCOT Wholesale Market Basics
General Fees                                                     Module 3



Electric Reliability Organization (ERO) Fee
    NERC Fee authorized by FERC.
    ERCOT collects the fee based on each LSEs Adjusted Metered
    Load (AML)
    AML is posted by August 1 for previous Calendar Year.
    LSEs must dispute AML by September 15.
    2009 Invoice based on 2007 load data.

                      2008 Calculated and   Quarterly Invoices
     2007 AML                                     2009
                         Posted AML




                                    101        ERCOT Wholesale Market Basics
General Fees                                                              Module 3


                                   ERO
 EROFq = (LOADq / LOADt) * (NERCC + NERCC ADJ)
   EROFq = The QSE’s quarterly share of the next fiscal year’s NERC
   charges.
   NERCC = The total NERC charges for the appropriate quarter of the next
   fiscal year.
   LOADq = The total Adjusted Metered Load (AML) of all LSEs represented
   by the QSE for the calendar year (or part thereof) prior to the year in which
   ERCOT performs the calculation.
   LOADt = The total Adjusted Metered Load (AML) in the ERCOT Region for
   the calendar year prior to the year in which ERCOT performs the
   calculation.
   q = A QSE representing an LSE in the year during which ERCOT assesses
   the EROFq.
   NERCCADJ = When necessary, unpaid EROF amounts from a previous
   period.

                                       102              ERCOT Wholesale Market Basics
General Fees                                        Module 3



                   ERO
    Invoice calculated for each QSE two
    months prior to start of quarter.
    AML will not change from original AML
    established in August, but LSE to QSE
    relationship might.
    Invoice based on relationship of QSE to
    LSE / Rep based on the time the invoice is
    calculated.


                         103      ERCOT Wholesale Market Basics
General Fees                                                         Module 3


ERCOT Nodal Implementation Surcharge
   ERCOT shall calculate the nodal
   implementation surcharge (“NIS”) by multiplying
   total net metered generation by a nodal
   surcharge factor. ( Protocol Section 9.7.6)
     QNSiq        =      NODSF * MRiq
     Where:
     QNSiq        QSE NIS per interval ($)
     MRiq         Real-Time net metered generation in MWh per interval
       for the given QSE
     NODSF        Nodal surcharge factor ($/MWh)
     i 15 minute Settlement Interval being calculated
     q QSE

                                   104             ERCOT Wholesale Market Basics
General Fees                                                  Module 3



ERCOT Registration Fee
    To see a complete list of ERCOT Fees, go to
    the Current PROTCOLS under the Market
    Rules of ercot.com.

    http://www.ercot.com/content/mktrules/protocols/current/
    53-ERCOT%20Fee%20Schedule%20-%20012009.doc




                               105          ERCOT Wholesale Market Basics
                              Module 3




Questions




    106     ERCOT Wholesale Market Basics

				
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