ERCOT inadvertently violated its own technical rules over the course of several years — including violations that potentially could have impacted power prices, according to new regulatory filings from the organization.

Included in a Dec. 18 filing at the Texas Public Utility Commission, the revelations include an acknowledgement by ERCOT of apparently serious violations that began as early as 2010 and that were only detected this month.

The organization acknowledged that some of the violations could have impacted power plant activity and market prices — although to what extent remains unclear. “ERCOT is unable to determine with sufficient accuracy how prices may have been impacted,” the organization stated in its filing.

ERCOT, also known as the Electric Reliability Council of Texas, is the organization that coordinates the flow of electricity over the state’s primary power grid. It also helps coordinate some transactions in the state’s wholesale power market.

PROXY CURVE VIOLATIONS

The violations reported by ERCOT fell in to several broad categories, with some representing infringements of the organization’s own technical rules for managing market operations, and others representing infringements of rules set forth by the PUC.

The most significant relate to a complex computer system at ERCOT known as the Security Constrained Economic Dispatch program, or SCED. These inadvertent violations began as early as Dec. 1, 2010, during a major overhaul of the ERCOT system, and were detected on Dec. 7 of this year, according to the organization.

Functioning like a big electronic brain, SCED takes into account market conditions, price offerings and other factors, and then transmits electronic signals to generating units in order to dispatch them in what is deemed the most economical fashion possible.

As part of this complex system, generators submit “offer curve” schedules to ERCOT in which they outline prices under which they will ramp up their operations and deliver power.  ERCOT also occasionally will submit “proxy offer curves” on behalf of certain renewable generators and other generating units that don’t submit their own offer curves. And it’s here where the problem arose, according to the filing.

ERCOT apparently got these proxies wrong — perhaps substantially so. Instead of adding or subtracting 1 megawatt to certain values to create proxy offer curves, ERCOT added or subtracted .01 MW, according to the filing.

 IMPACT UNCLEAR

But what this means to prices is anybody’s guess. “Any effort to recalculate new prices for operating days from Dec. 1, 2010 to Dec. 10, 2017 …  would require significant assumptions about the operating condition of ERCOT system resources — (and) this would necessarily call into question the accuracy of any recalculated prices,” ERCOT wrote in its filing.

Adam Sinn, a trader at Aspire Commodities, said ERCOT’s admission was troubling. “ERCOT’s filing demonstrates that ERCOT for many years and currently is not optimally dispatching — the resulting market prices for Texas energy consumers are both inefficient and incorrect,” he told the Platts news service.

Other violations acknowledged by ERCOT related to disclosure rules. In some cases, ERCOT failed to post certain market-related information on its website as required when certain criteria were met.  That triggering criteria occurred on more than 100 days since 2010, according to the filing.

In other violations, ERCOT failed to post certain market data on a monthly basis and certain other data for seven consecutive days — also as required by protocols. ERCOT this year also inappropriately disclosed information to one generator that was specific to another.

PUC spokesman Terry Hadley said agency staff would review the ERCOT filing and determine next steps. It was unclear whether the commission would take up the issue during its next meeting, in January, he said.

“But potential interested parties could comment, if some entity feels that they have been (financially) shorted or didn’t get the revenue they thought they should get,” said Hadley.  “The market knows about this and usually they’re not shy about telling us.”

 

 

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