QMWG – Feb. 26, 2014 Discussion topic: NPRR585 Clarification of Administrative Pricing Requirements for Self-Committed Combined Cycle Combustion Turbines on a Resource Committed by RUC

Issue: At the February meeting, the QSE Manager’s Working Group (QMWG) requested that ERCOT clarify how the RUC Buy Back process works in relation to ERCOT operator awareness, Ancillary Services responsibility, and settlement outcomes. Buy Back Process: Beginning on January 7 th, 2014, ERCOT implemented NPRR416, Creation of the RUC Resource Buyback Provision, and NPRR575, Clarification of the RUC Resource Buy-Back Provision for Ancillary Services, which instigated a process whereby the QSE has the option to Buy Back a RUC commitment any time before the end of the Adjustment period for the first hour of the block of RUC hours by changing the COP status of the Resource from ONRUC to ONOPTOUT. This action (changing COP) will communicate to ERCOT Operator, and to ERCOT settlement, that the QSE has self- committed the Resource and agrees to stay online for the duration of the RUC commitment.

Buy Back Process cont.: ONOPTOUT status in the COP will signal ERCOT settlements to remove the Resource for consideration in both the RUC Make Whole payment and the RUC Clawback charge calculations. The Resource with an ONOPTOUT status may carry Regulation Service as well as Responsive and Non-Spinning Reserve Services. When the ONOPTOUT status is evoked the QSE will not be required to price the energy of the Resource from LSL to HSL at the System Wide Offer Cap (SWOC).

The market requested that ERCOT be clear how the combined cycle resource would be treated if the RUC Buy Back provision is not evoked. ERCOT responses are as follows: 1. Can the QSE run the combined cycle train in a 2x1 if RUC committed the 1x1? The ERCOT Operator must see the amount of capacity available from the Combined Cycle Train that was specified in the RUC instruction. In other words, operating out of a 2x1 configuration if the RUC commitment was to a 1x1 configuration would be acceptable; however, the reverse would not be allowed because the 1x1 would not have the full amount of capacity that was specified in the RUC instruction.

ERCOT responses cont.: 2. How will the settlement be handled if the QSE decides to run in the 2x1 configuration when the 1x1 received RUC instruction? ERCOT Settlements will apply all revenues received by the Combined Cycle Train to the Guarantee based on the Startup, Minimum energy, and Energy Offer Curve (EOC) of the Combined Cycle configuration that received the RUC instruction per 5.7 Settlement for RUC Process.

ERCOT responses cont.: 3. If the QSE decides to run in the 2x1 configuration when the 1x1 received the RUC instruction, can the QSE set the capacity between LSL and the MW point corresponding to the capacity difference between 2x1 and 1x1 at a price lower than the SWOC? NPRR 585 says that the QSE can do it. Issues are: Very high potential for Clawback. Could cause issue when ERCOT Compliance verifies the QSE complied with the RUC instruction. That functionality would need to be automated and would require a system change. Because the RUC committed units are eligible for a make whole, should their offer be something less than SWCAP? - Make Whole eligibility is based on train not configuration for CC units

ERCOT responses cont.: 4. If the QSE decides to run in the 2x1 configuration when the 1x1 received RUC instruction can the QSE also carry AS responsibility on the 2x1? ERCOT interprets the language in Protocol 3.9 Current Operating Plan (COP) paragraph (4) to stipulate that a combined cycle Resource may not carry AS on any configuration in the combined cycle train unless the reason for the RUC commitment was specifically to provide that service, as follows: (4) A QSE must notify ERCOT that it plans to have a Resource On-Line by means of the COP using the Resource Status codes listed in Section 3.9.1, Current Operating Plan (COP) Criteria, paragraph (5)(b)(i). The QSE must show the Resource as On-Line with a Status of “ONRUC,” indicating a RUC process committed the Resource for all RUC-Committed Intervals. A QSE may only use a RUC-committed Resource during that Resource’s RUC-Committed Interval to meet the QSE’s Ancillary Service Supply Responsibility if the Resource has been committed by the RUC process to provide Ancillary Service. (italics added)