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Texas Generators Say Real-Time Co-optimization Would Harm ERCOT Reliability

October 09,2018



Several generators told the Texas PUC in comments on an evaluation of real-time co-optimization (RTC) in the ERCOT market that adoption of RTC would harm reliability and resource adequacy

Vistra Energy Corp. said in comments that, "What is known, importantly, about the RTC model results provided by the IMM is that its simulated 'benefits' are derived almost entirely from reduced wholesale power prices for energy and ancillary services—prices lower than the already low power prices experienced in 2017 that appropriately helped drive significant generation resource retirements, new build delays or cancellations, and a material drop in ERCOT planning reserve margins."

"The only seemingly rational conclusion is that a reduction of energy prices that are already too low to support new entry will have a detrimental impact on resource adequacy in an energy-only market," Vistra said

"Implementation of RTC would be detrimental to the reliability of the ERCOT grid," Vistra said

The benefits from RTC, "are simply a wealth transfer from resources to loads," Vistra said

Exelon Corporation similarly said in separate comments that, "RTC could potentially have a negative effect on resource adequacy, based on its effects on generator revenues."

Exelon said that, "Considering the insufficient revenues in the market due to historically low prices over the last several years, it would be prudent to not rush into implementation until the PUCT is confident in ERCOT's resource adequacy."

In jointly filed comments, various subsidiaries of NRG Energy and Calpine said that, due to lower generator revenues, "the potential impact of RTC on resource adequacy cannot be ignored,"

NRG and Calpine urged the PUC to introduce a local reserve requirement through the real-time co-optimization of energy and reserves, "as this will provide a market solution that properly sets prices when there are inadequate reserves in a constrained sub-region."

South Texas Electric Cooperative, Inc. said in its comments that, "STEC does not believe that inefficiencies that exist in the market should remain in perpetuity because they increase prices at a time when prices are artificially low. In other words, if the implementation of RTC results in a decrease to generators at a time when reserve margins are low and therefore results in further dampening of the price signals necessary to incent generation to be in the market, then the Commission should act swiftly and couple scarcity pricing reforms with the implementation of RTC so that ERCOT load customers can continue to enjoy the continuity of service that they have historically enjoyed."

However, the ERCOT Steel Mills said that, "Regarding collateral impacts and unintended consequences that could affect the desirability of implementing RTC, we would be remiss if we did not observe that some of the gains in efficiency resulting from RTC have the potential to reduce the revenues earned by some generation resources. In our view, it should be made clear before embarking on RTC that the effects of RTC will not be used as a justification to funnel additional revenue to generators through compensating market design changes or through new out of market regulatory mechanisms or actions. If the benefits to consumers from the implementation of RTC were to be taken away and transferred to the generators, then the value of RTC would be greatly diminished and our preference would in that event be to not start down the RTC path at all."

Tags:
ERCOT   Texas   Energy-only  

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