The issue of subsynchronous oscillation (SSO) in the ERCOT market, "should not be used as a vehicle to shift operational risks properly borne by competitive generators to loads," Texas Industrial Energy Consumers said in reply comments at the Public Utility Commission of Texas, responding to proposals from Luminant Energy Company, LLC (Luminant) and the Texas Competitive Power Advocates (TCPA).

TIEC opposes, in particular, proposals that load pay generators for energy they did not produce due to SSO in the form of so-called "lost opportunity" payments.

"TCPA suggests that generators should not only be compensated for protective equipment for their facilities, they should also be reimbursed for any market revenues they did not receive when their generation trips," TIEC noted.

"In other words, generators would be paid for energy they did not actually provide, with the costs of these so-called 'make whole payments' uplifted to consumers. This proposal goes far beyond ensuring the reliability of the grid and reducing SSO risks, and instead would shift all of the financial risk associated with SSO to customers, who have no way to protect themselves from this risk," TIEC said.

"The approach suggested by TCPA is wholly inappropriate because, among other things, generators are in the best position to plan for, properly price, and hedge against any potential risk that they will not be able to perform in the market for any reason -- including in the rare circumstance when their unit trips in response to a SSO event. They are also compensated for the operational risks associated with an SSO event, just like any other operational risks that could result in a unit trip, through market prices. Consumers do not have this same ability to hedge operational risks or uplifts, and would be left under TCPA's proposal to compensate generators not only for the protective equipment generators installed, but also for power that the generators never produced and that consumers purchased from other generators instead. TCPA's proposal runs counter to the ERCOT market design in which customers pay for energy that is actually produced and generators are rewarded for their actual performance. There is nothing about SSO risks that justifies altering this fundamental and successful tenet of the competitive wholesale market," TIEC said.

"TCPA and Luminant again presuppose that all generators have a right to a particular grid configuration and should be compensated by loads for any system changes that may create new operational risks after a generator is up and running," TIEC said.

"[O]perational risks and opportunities continuously appear and disappear as the grid evolves. With each change to the grid's topology, different sets competitive generators (and customers) will be affected differently, and this will create competitive advantages and disadvantages. For example, generators may reap financial benefits from transmission congestion at certain points in time, but no party would seriously argue that as the grid evolves and those benefits change, generators are entitled to be compensated as though the grid had remained static. The operational risks associated with SSO risk are no different, and certainly do not provide a justification for shifting the financial and operational risks associated with the evolution of the grid to electric customers," TIEC said.