History of ORDC

History of the Development of Operating Reserve Demand Curve (ORDC)

• In June 2012, the Brattle Group filed its report (6/19/12) on the options to resolve resource adequacy concerns in ERCOT.  This brought into the open discussions on whether to improve the Energy-only Market (EOM) or move toward a capacity market;
• In the summer and early fall of 2012, the PUCT held several workshops, with parties filing comments in July (7/24/12),[1] August (8/30/12), September, and October (10//23/12);
• GDF Suez filed supplemental comments on 11/14/12, which included a paper by Prof. Hogan on “Electricity Scarcity Pricing through Operating Reserves: An ERCOT Window of Opportunity” (355).  It proposed to implement an Operating Reserve Demand Curve (ORDC) as one response to the resource adequacy concerns;[2]
• The PUCT directed ERCOT to evaluate implementation options for an ORDC, but the staff found that to accomplish the task, as offered in the paper, would be too expensive and lengthy;[3]
• Subsequently, the staff worked with Prof. Hogan on a modified proposal, which was filed on 1/22/13, as the “Interim Solutions to Improve Scarcity Pricing by Utilizing Reserve Demand Curves” (369).  This paper contained Options A (focusing on generator energy offer floors) and B (focusing on an ORDC);
• On the same day, GDF Suez filed supplemental comments (370), with Prof. Hogan’s paper “Improved Electricity Scarcity Pricing and Operating Reserves;”
• At the 1/24/13 workshop,[4] the Commission expressed preference for Option B, which, after additional modifications, came to be known as B+;[5]
• At the request of the Commission, ERCOT staff have filed back-casts/analyses of Option B+, including the latest ones, on 3/22/13 – 392 and on 5/3/13 – 402;[6]
• On 5/17/13, ERCOT filed an impact analysis of cost and timeline estimates for the B+ implementation (406), noting that it would take six-to-eight months and cost $100K-$200K;
• As another workshop was announced (for 6/27/13), stakeholders filed comments on 5/31/13;
• On 6/18/13, ERCOT filed Estimating the Value of Lost Load (VOLL), as prepared by London Economics Inc. (LEI).  A third part of the study has yet to be done; [7] and
• On 6/25/13, ERCOT filed the Brattle Group’s estimates for the economic equilibrium planning reserve margin, using an ORDC (429).