Discussion: Developing a consistent approach to activating and deactivating constraints

within CRR Auctions, SCED and DAM

Kris Dixit

Goals• To provide more consistency and transparency in how ERCOT Operations

manages transmission congestion within SCED• Make sure that these rules make it easy for the DAM group and the CRR

group to account for constraints that are deactivated in SCED

Issues to be discussed• Validity of 69kV Lines in SCED, CRR and DAM• Clarification of the ERCOT 2% rule in deactivating constraints• Activation of constraints during system wide scarcity

Issue 1 – Validity of 69 kV lines in SCED, CRR and DAM

• Purpose of Analysis– This analysis specifically focuses on 69kV constraints that were deactivated in SCED but

were activated in the CRR auctions– These are some examples as a premise for discussion and do not provide an exhaustive

list of all constraints that were deactivated within SCED but were activated in the CRR auctions

– We also present some 69kV lines as examples of constraints (from CRR Auctions) that do not meet the 2% criteria that ERCOT uses to deactivate constraints

– Only two auctions were considered for this analysis. Y1 2012 Annual and Jan 2012 Monthly Auction

Example 1Constraint: Fort Mason to Gillespie 69kV lineContingency: SFORGIL8:Fort Mason to Gillespie 138kV lineLast time this constraint was activated in SCED: April 12, 2011ERCOT has a MP for this area… Corrective action is to place the Yellow Jacket PST in Manual Mode.This contingency/constraint showed up in the Y1 2012 Auction and the Jan 2012 Auctions.Total Shadow price in Y1 2012 Auction: $229,771 x 16.5MW = $3,758,222Total Shadow price in Jan 2012 Auction: $60,416 x 27MW = $1,631,252

Example 2Constraint: Balinger to Humble 69kV line Contingency: SCOLBAL8, Coleman Lake - Ivey Tap to Balinger 138kV lineLast time this constraint was activated in SCED: 1/21/2011After Jan 2011, the flow on this constraint also exceeded capacity in April 2011 and Feb 2012 Reason for Deactivation: The contingency was resolved by adjusting the Firerock phase shifter transformer (PST).This contingency/constraint showed up in the Jan 2012 Auctions.Total Shadow price in Jan 2012 Auction: $73,837 x 24.3MW= $1,794,237

Issue 1 -Other lines that need to be analyzedThe following are lines that had shadow prices in the two CRR auctions analyzed but may not get activated in SCED due to the 2% rule.

3580 EDDY1_9 3581 TROY1_9 16513 SONR2A 8239 FRIR2A 1910 HICKORY69 914 LOCUST69 1110735 BTE_1_8 138 110737 BTE_2_5 345 A239750 TNOLDOCEAN0 39870 TNPHILLPS50 1

Examples of 69kV lines deactivated due to the 2% rule (not an exhaustive list)

Contingency Element Eq From To From KV To KV Violation DSTFlagWickett Tnp to Permian Basin M_69_E5 @PECOS LN PECOS LNSTRTAP 69 69 166.919617NWickett Tnp to Permian Basin M_69_E1 @WINK LN WINK AAPIPELN 69 69 120.241669NWickett Tnp to Permian Basin M_69_E3 @LNSTRTAP LN LNSTRTAP AAPIPELN 69 69 117.369682NWink Tnp to Wink Sub 138 KV M_69_H1 @WICKETT LN WICKETT PYOTE 69 69 104.290611NWink Tnp Winkat1 138/69 KV M_69_H1 @WICKETT LN WICKETT PYOTE 69 69 104.28714NWickett Tnp to Permian Basin 69_COLT_IH20 @TNCOLIET LN TNCOLIET IH20 69 69 103.898262NOldocean to Sclpcogn 69 G69_R @SWEENY LN SWEENY OLDOCEAN 69 69 117.582298NOldocean to Sclpcogn 69 G69_P2 @CLMNSTAP LN CLMNSTAP SWEENY 69 69 138.773087NOldocean to Sclpcogn 69 G69_P1 @BRAZORIA LN BRAZORIA CLMNSTAP 69 69 139.121536NApache to Caddotn 138 HEIGHTTN TRANSF HEIGHAT2 XF HEIGHTTN HEIGHTTN 69 138 117.955467NApache to Caddotn 138 G69_J @INTRCITY LN INTRCITY LAMARQUE 69 69 117.824669NApache to Caddotn 138 HEIGHTTN TRANSF HEIGHAT1 XF HEIGHTTN HEIGHTTN 69 138 99.628922NApache to Amocotn 138 G69_J @INTRCITY LN INTRCITY LAMARQUE 69 69 112.270386NApache to Amocotn 138 HEIGHTTN TRANSF HEIGHAT2 XF HEIGHTTN HEIGHTTN 69 138 104.250679NTejas To Coman_Tn 138 KV / G HEIGHTTN TRANSF HEIGHAT2 XF HEIGHTTN HEIGHTTN 69 138 128.405396 Tejas To Coman_Tn 138 KV / G G69_F2 @CHOCTAP LN CHOCTAP CHOCTAW 69 69 121.094742 Tejas To Coman_Tn 138 KV / G G69_E1A @HEIGHTTN LN HEIGHTTN NTHSDTAP 69 69 121.016785 Tejas To Coman_Tn 138 KV / G G69_F1 @HEIGHTTN LN HEIGHTTN CHOCTAP 69 69 115.06675 Tejas To Coman_Tn 138 KV / G HEIGHTTN TRANSF HEIGHAT1 XF HEIGHTTN HEIGHTTN 69 138 114.243271 Tejas To Coman_Tn 138 KV / G G69_E1B @TXCITYMN LN TXCITYMN NTHSDTAP 69 69 112.962669 Navy Kickapoo to Navy Kickap 6856 @BMRTN LN BMRTN SMOUR 69 69 109.9012N

Navy Kickapoo to Navy Kickap MUND_SEYM_1B @BAYLOR_T LN BAYLOR_T BMRTN 69 69 105.9874N

Caddotn To Apache 138 KV / G HEIGHTTN TRANSF HEIGHAT2 XF HEIGHTTN HEIGHTTN 69 138 135.572632 Airline TransformerWinding 1 AIRLINE TRANSF 138_69A2 XF AIRLINE AIRLINE 69 138 112.469193 Caddotn To Apache 138 KV / G G69_F2 @CHOCTAP LN CHOCTAP CHOCTAW 69 69 121.688423 Apache To Amocotn 138 KV / G G69_F2 @CHOCTAP LN CHOCTAP CHOCTAW 69 69 114.290504

Apache To Amocotn 138 KV / G HEIGHTTN TRANSF HEIGHAT2 XF HEIGHTTN HEIGHTTN 69 138 128.594254

Caddotn To Apache 138 KV / G HEIGHTTN TRANSF HEIGHAT1 XF HEIGHTTN HEIGHTTN 69 138 123.576469 Caddotn To Apache 138 KV / G G69_E1A @HEIGHTTN LN HEIGHTTN NTHSDTAP 69 69 121.476585

Apache To Amocotn 138 KV / G HEIGHTTN TRANSF HEIGHAT1 XF HEIGHTTN HEIGHTTN 69 138 118.834656 Caddotn To Apache 138 KV / G G69_F1 @HEIGHTTN LN HEIGHTTN CHOCTAP 69 69 115.548386 Apache To Amocotn 138 KV / G G69_E1A @HEIGHTTN LN HEIGHTTN NTHSDTAP 69 69 115.115501 Apache To Amocotn 138 KV / G G69_F1 @HEIGHTTN LN HEIGHTTN CHOCTAP 69 69 109.282425 Caddotn To Apache 138 KV / G G69_E1B @TXCITYMN LN TXCITYMN NTHSDTAP 69 69 113.258202 Magruder To Victoria 69 KV / N_VICT_VICTOR1@N_VICT LN N_VICT VICTORIA 69 69 109.260178 Apache To Amocotn 138 KV / G G69_E1B @TXCITYMN LN TXCITYMN NTHSDTAP 69 69 107.825638

Issue 2 –Clarification of the 2% rule• Should ERCOT operations activate constraints that have multiple

generators with greater than 2% shift factor on that constraint but cannot move those generators because

1. Generator is a wind generator and cannot be dispatched up from its current level2. Generator has a high negative shift factor on the constraint but is offline3. Generator has a high negative shift factor on the constraint but is currently operating at

its HSL

• How does the ERCOT DAM group account for these constraints within the DAM Engine?

• How does the ERCOT CRR group account for these constraints within the CRR Auction Engine?

– Is it possible for ERCOT operations to give the CRR auction group a list of lines that they will not activate because of the issues specified above?

Issue 3 – ERCOT deactivating constraints during system wide scarcity

• Should ERCOT deactivate constraints in times of system wide scarcity?• With the Texas Two Step, during system wide scarcity the first step should

create a reference price of system wide offer cap• Under such circumstances the only way a generator will get a base point

to reduce generation would be if it has *– 56% positive shift factor on an Interface constraint– 62% positive shift factor on a 345kV line constraint– 80% positive shift factor on a 138kV line constraint– 100% positive shift factor on a 69kV line constraint

• If a generator is found to have any of the above shift factors, ERCOT should identify such generators and contingency/constraint pairs prior to the CRR auction and let MPs know that they do not intend to activate those constraints

• Accordingly the CRR auction must deactivate those constraints within its model as well to maintain consistency

* Assumes a max marginal cost of $200 for all generators

August 2011 high and low SPPs when congestion was allowed to occur (8/1/2011 HE 14:05)

Top 10 Prices Bottom 10 Prices

SPNC_SPNCE_4 $3,409 STEA_STEAM_1 $2,935

SPNC_SPNCE_5 $3,409 STEAM_ENG123 $2,935

WHTTAIL_WR1 $3,307 STEA_STEAM_2 $2,935

JACKCNTY_CC1 $3,204 STEA_STEAM_3 $2,935

JACKCNTY_CT1 $3,204 LHSES_UNIT1 $2,932

JACKCNTY_CT2 $3,204 LHSES_UNIT2 $2,932

JACKCNTY_STG $3,204 OLIN_OLING_1 $2,931

NTX_NTX_123 $3,123 OLIN_OLING_2 $2,931

BRTSW_BCW1 $3,091 OLIN_OLING_3 $2,931

WFCOGEN_13 $3,084 OLIN_OLING_4 $2,931

WFCOGEN_24 $3,084 NEWM_NEWMA_5 $2,931

Questions for CMWG• Issue 1

– Should we question the validity of 69kV lines within SCED given that• There are many lines that need only a few outages to cross the 2% threshold, thus making it difficult to remove

them from the CRR models• They are generally a very small upgrade away from not congesting any more

– Or should we consider leaving all 69kV lines in SCED and revisit 69kV shadow price caps?

• Issue 3– What are the benefits of deactivating all constraints during system wide scarcity given

that locational price signals are high across the board?• What are the impacts to the CRR Markets when there is uncertainty in real time constraint management by

ERCOT operations?

Appendix

Did uncertainty in constraint management impact CRR auction results?

• MPs spent approximately $385MM in the 2011 CRR auctions (including BOY 11 auction). They valued the entire ERCOT congestion market for 2011 at a little over $400MM

• In the Cal 12 year auction, MPs spent approximately $158MM. Since 55% of capacity was sold, they valued the ERCOT congestion market for 2012 at a little over $280MM*

• What portion of this $120 MM difference was because of credit issues?• What portion of this was because of uncertainty in constraint

management?• What portion of this $120 MM difference was because of resale of CRRs

acquired in BOY 2011?

* Price was adjusted for gas forwards on Oct 15, based on gas forwards for each previous monthly auction. In this particular case, the gas forwards for Cal 12 averaged higher than the gas forwards for each of the previous 2011 months. Hence the CRR auction revenue was used as is.

CRR Auction Revenues

Auction CRR Auction Revenue % of Capacity Total Market Value

Jan-11 $15,843,028    

Feb-11 $14,726,765    

Mar-11 $19,870,198    

Apr-11 $19,837,830    

May-11 $21,924,935    

Jun-11 $31,392,092    

Jul-11 $23,545,860    

Aug-11 $24,480,429    

Sep-11 $14,518,171    

Oct-11 $13,369,077    

Nov-11 $8,168,286    

Dec-11 $12,781,620    

BOY 11 $141,724,188    

Total $362,182,479 90% $402,424,976

Cal 2012 $155,977,439 55% $283,595,343