ERCOT Files Letter Discussing Real-Time Co-optimization Next Steps
February 01,2019
ERCOT filed a letter with the Texas PUC to acknowledge recent discussion from the PUC regarding real-time co-optimization (RTC) and to help guide next steps.
As previously reported, the PUC directed that ERCOT should begin the process to implement RTC in the ERCOT market and that ERCOT shall report back to the Commission with, "a high level implementation plan and timeline." The PUC also directed that ERCOT shall set aside "any favorable variance in revenues" for fiscal years 2018 and 2019, and await further Commission discussion on whether such favorable financial variance shall be used to fund the project to implement RTC.
ERCOT stated in the letter that, "As previously indicated, the implementation of RTC is a large-scale project that impacts multiple core
systems. ERCOT provided a high-level cost estimate of a minimum of $40 million and a time estimate of
4 to 5 years to implement RTC after Commission policy decisions have been made and applicable Protocol
changes have been approved by the ERCOT Board of Directors (Board). Thus, there are policy decisions
that need to be made by the Commission before ERCOT can adequately put together a set of Protocol
changes for stakeholder and Board consideration. ERCOT has been working with Commission Staff and
the Independent Market Monitor (IMM) to identify key policy issues — such as changes to the System-Wide
Offer Cap (SWOC) and the Value of Lost Load (VOLL) — the Commission should consider in the near
future. Commission Staff has submitted a memo highlighting some of the initial policy issues that can be
published by the Commission for stakeholder comment. ERCOT is still evaluating what additional policy
issues should be considered by the Commission versus the ERCOT stakeholder process and plans to file
another letter in time for the February 28, 2019 Open Meeting detailing any other policy issues. ERCOT
believes that some ERCOT stakeholder policy issues cannot be decided without a Commission decision on
SWOC and VOLL — and therefore a final set of policy principles to draft Protocol changes may not be
complete until some period after Commission action. These outcomes will help provide more context to a
future implementation plan and timeline."
ERCOT stated, "With respect to the favorable financial variance, ERCOT currently forecasts a total favorable financial
variance of approximately $40 million for years 2018 and 2019. However, the final amount of any
favorable financial variance will be based on the audited financial statements — which for year ended 2018
will be completed and presented to the Board in April 2019, and for year ending 2019 will be completed
and presented to the Board in April 2020. ERCOT will provide more details around the projected favorable
financial variances at the Board's February 12, 2019 meeting. This information will include more details
on the components (such as project spend and timing differences) of the favorable financial variance for
2018 and 2019."
ERCOT stated, "Over the next month, ERCOT will update its Board on the Commission's decisions. ERCOT will further
work with the Technical Advisory Committee (TAC) to work on a process that will allow vetting of ERCOT
stakeholder policy issues. In fact, at its January 30, 2019 meeting, TAC discussed ERCOT hosting a
workshop on RTC to reengage stakeholders on the policy issues and a path forward. ERCOT will work to
put together a constructive workshop in February and report back to the Commission. This process can go
in parallel with any Commission process for considering policy issues."