CA Reports

The 2012 State of the Market Report Finds Prices Too Low In ERCOT
June 20, 2013, Reporting by Margarita Fournier


Potomac Economics, which serves as the Independent Market Monitor in ERCOT, just posted the 2012 State of the Market Report for the ERCOT region, dated June 2013.  Its key findings include the following:

  • –  The ERCOT wholesale market performed competitively in 2012;
  • –  The ERCOT-wide, load-weighted average, real-time energy price was $28.33/MWh in 2012 – a 47% decrease from the 2011 price of $53.23/MWh. 
  • –  The decrease was primarily driven by more moderate weather and much lower natural gas prices (the average price for natural gas was 31% lower in 2012 than in 2011, decreasing from $3.94/MMBtu in 2011, to $2.71/MMBtu in 2012);
  • –  After the extremes of 2011, loads in 2012 were more moderate, with reduced occurrences of shortage conditions (total ERCOT load in 2012 was 2.7% lower than 2011);
  • –  Peak load decreased by 2.6%, and prices at the system-wide offer cap occurred in the dispatch intervals, totaling 1.5 hours in 2012;
  •  –  The total congestion revenue generated by the ERCOT real-time market in 2012 was $480 million, a decrease of 9% from 2011 (which is not as large as might be expected, given the much larger decreases in average natural gas prices and real-time energy prices);
  • –  The Odessa-North transformer constraint was the most frequently occurring transmission constraint in 2012.  This, and other related localized constraints in West Texas, had significant financial impacts, causing the West Zone average price to be higher than the ERCOT average for the first time;
  • –  Even with the increased system-wide offer cap implemented in 2012, net revenues provided by the market were at historic lows as energy prices fell substantially;
  • –  The net revenues were insufficient to support investment in new generation, even though planning reserve margins have fallen to levels that are close to the minimum planning reserve targets; and
  • –  These results underscore the importance of the resource adequacy issues currently under consideration by the Commission, which are discussed in this report.




Oncor Asks to Interpret Definition of Wholesale Storage Load


                On 5/28/13, Oncor Electric Delivery filed a Protocol Interpretation Request (PIR) with ERCOT to clarify the definition of Wholesale Storage Load (WSL).  The request was spurred by a resource interconnected with Oncor that is requesting WSL treatment under the ERCOT Protocols for several different types of facilities, including batteries, inverters, two different cooling systems, and lighting and security.  Oncor is asking which of these facilities must be separately metered as WSL, and which is ineligible for treatment as WSL (the resource is currently operating pursuant to an ERCOT-approved Temporary Metering Exemption). 

                On 6/11/13, ERCOT issued Market Notice M-A061113-01, which includes this guidance:  “The definition of WSL in Sec. 2 of the ERCOT Protocols carries with it a fundamental principle from P.U.C. Subst. R. 25.501(m)(2) – namely, “energy that is separately metered from all other Facilities to charge a technology that is capable of storing energy and releasing that energy at a later time to generate electric energy.”  The Protocol definition further adds that “WSL includes losses for the energy conversion process that are captured by the WSL EPS Meter.”  The Commission gave no indication in Project No. 39917 that certain auxiliary facilities which support the operation of the storage facility should be included in the wholesale storage treatment – whether part of the energy conversion process or not.  As such, ERCOT must assume that all auxiliary facilities are excluded from the definition of WSL and treated as regular Load under the ERCOT Protocols, until the Commission directs otherwise.”  (At the same time, the Emerging Technologies Working Group is developing potential revisions to the definition of WSL.)




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