Texas power market's multistep scarcity pricing floor delayed until Nov. 1

A revision of the Electric Reliability Council of Texas main scarcity pricing program that would set minimum price adders at levels well above emergency reserve levels will become effective no sooner than Nov. 1, stakeholders learned during an ERCOT Protocol Revision Subcommittee meeting on Sept. 13.

At issue is the Operating Reserve Demand Curve mechanism, by which a systemwide real-time price adder is calculated that increases as operating reserves approach scarcity levels, ultimately reaching the systemwide offer cap of $5,000/MWh.

A Sept. 8 filing of ERCOT rule changes proposed for Public Utility Commission of Texas approval included Other Binding Document Revision Request 048, ORDC Multi-Step Price Floor. This proposal would set a minimum price adder of $10/MWh when operating reserves fall between 6.5 GW and 7 GW and to $20/MWh when reserves fall below 6.5 GW.

Energy emergency levels

ERCOT enters Energy Emergency Alert Level 1, the lowest level of risk, when operating reserves drop below 2.3 GW and are not expected to recover within 30 minutes, and energy conservation is requested.

EEA 2, a higher level at which conservation is critical and certain additional energy resources become available, is entered when operating reserves fall below 1.75 GW. ERCOT declared an EEA 2 condition on Sept. 6, when excessive heat drove up demand and wind resources failed to ramp up sufficiently in the evening as ERCOT's growing solar resources' output began to diminish.

The highest risk is EEA 3, when operating reserves fall below 1,375 MW, and the grid operator requests transmission companies to implement rotating firm load reductions, such as occurred during the mid-February 2021 winter storm in which about 4 million ERCOT customers lost power, some for days.

Comment period

Under new PUC rules, interested parties have 30 days after the filing of the OBDRR 048 to object or offer comment, after which the PUC can vote in its Oct. 12 public meeting. Upon approval that day, the multi-step price adder would go into effect Nov. 1, a speaker who was not clearly identified for conference call listeners said Sept. 13.

ERCOT staff and stakeholders advocated the multistep ORDC change as an interim measure as a price signal in ERCOT's energy-only market to encourage investment in dispatchable generation either to delay retirement of existing resources or to develop new generation.