verifiable cost working group (vcwg) update

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Verifiable Cost Working Verifiable Cost Working Group (VCWG) Group (VCWG) Update Update Presentation to the ERCOT Wholesale Market Subcommittee January 20, 2010 1

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Verifiable Cost Working Group (VCWG) Update. Presentation to the ERCOT Wholesale Market Subcommittee January 20, 2010. VCWG – Chair Elections Chair – Heddie Lookadoo Vice Chair – Ian Davis Options for Filing Verifiable Costs File Verifiable Costs . - PowerPoint PPT Presentation

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Page 1: Verifiable Cost  Working Group (VCWG)  Update

Verifiable Cost Verifiable Cost Working Group (VCWG) Working Group (VCWG)

UpdateUpdate

Presentation to the ERCOT Wholesale Market Subcommittee

January 20, 2010

•1

Page 2: Verifiable Cost  Working Group (VCWG)  Update

VCWG SummaryVCWG Summary

•2

1. VCWG – Chair Elections a) Chair – Heddie Lookadoob) Vice Chair – Ian Davis

2. Options for Filing Verifiable Costsa) File Verifiable Costs .

1. Once VC are accepted they may not elect for Standard O & M Costs with the exception of those entities that have filed VC prior to implementation of this concept.

b) File with election of Standard O & M Costs by Technology.

1. Standard O & M per Startup by Technology - $ per Start

2. Standard O & M for Energy - $/MWH3. Will have to provide Actual fuel flows, Heat Rate

Curves , emissions rates, ect.c) VCWG is continuing to review data to come up with a

standard O & M in $/Start and $/MWH.

Page 3: Verifiable Cost  Working Group (VCWG)  Update

VCWG SummaryVCWG Summary

3. Proxy Heat Rate a) VCWG feels that the current use of daily average of

pricing to determine heat rate is sufficient till data can be collected on RUC instructions after Nodal Implementation.

b) Suggest that a review of commitments in DRUC and HRUC after the first 3 months of Nodal to determine if the Proxy heat rate should be changed from daily average.

4. NPRR Language for allowing disputes for FOP (Vote)a) NPRR language allows for recovery between FOP and

Actual cost.b) Documentation must reflect purchase of replacement

fuel oil with in 7 business days of fuel burn.

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Page 4: Verifiable Cost  Working Group (VCWG)  Update

VCWG SummaryVCWG Summary

5. Proxy Offer Curvea) The proxy Energy Offer Curve used to calculate the

RTAIEC (Real Time Average Incremental Energy Cost) will result in a negative average cost for energy.

b) AIEC in the RUC formula is designed to allow the Resource to retain the cost incurred to generate above LSL.

c) A negative cost will increase the Revenue deducted from the RUC Guarantee.

d) Increasing the Revenue would result in lowering the Make Whole payment and possibly subjecting the QSE to a Clawback Charge

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Page 5: Verifiable Cost  Working Group (VCWG)  Update

TWOS Proxy Offer Curve ExampleTWOS Proxy Offer Curve Example

MW Price (per MWh)

160 2250

81 2249.99

80 -$249.99

15 -$250.00

•Inputs

•Outcome

•For Interval 14•TWOS=80 MWs •HSL= 160 MW•LSL=15 MW

•For that Operation day•SWCAP=2250

•RTMG for that interval•RTMG=24•RTMG*4=96MW Price (per MWh)

HSL SWCAP

Output Schedule MW plus 1 MW

SWCAP minus $0.01

Output Schedule MW -$249.99

LSL -$250.00

Page 6: Verifiable Cost  Working Group (VCWG)  Update

Proxy Offer Curve and Negative AIECAREA - Proxy Offer Curve and Negative AIECAREA - REVISEDREVISED

$ 2249.99$ 2250

-$ 249.99

RTAIECAREA_<Q>_<R>_<SP> part3

15mw 80mw 81mw 160mw

EOCPRCAP_<Q>_<R>_<SP>

RTMG

EOCQTYCAP_<Q>_<R>_<SP>

LSLHSL

TWOSTWOS+

1mw

Price

QTY

-$ 250

Proxy Offer Curve

RTAIECAREA_<Q>_<R>_<SP> part1

RTAIECAREA_<Q>_<R>_<SP> part2

•Results•RTAIEC = -$183

Page 7: Verifiable Cost  Working Group (VCWG)  Update

VCWG SummaryVCWG Summary

6. RMR – Startup Offers in DAMa) Startup offers only have a Fuel Adjustment with no O &

M.b) Could result in lower costs than similar units.c) LMPS would not reflect the true cost of RMR units

struck in the DAM.d) Contract price not represented in offer.e) ERCOT will be taking to NATF.

7. Next meeting will be Wednesday February 10, 2010.

?’s

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