1. Resource Cost Working Group
August 2, 2017
WMS Update

2. Long-Term Solution to Coal Index Price

3. Long-Term Solution to Coal Index Price
VCMRR014 provided an interim solution
$1.10 fuel adder for coal and lignite resources that is added to the $1.50 Solid Fuel Price
Sunsets 6/1/18
RCWG reviewed revised draft NPRR for Coal Fuel Index Price
“CFIP” Coal Fuel Index Price: “Delivered to ERCOT” index price based on PRB 8400 coal plus rail transportation
Considering using 8800 Btu/lb coal index instead of 8400
$0/MMBtu fuel adder for coal and lignite
Min Energy and Make-Whole caps from $18/MWh to 10.5*CFIP

4. Long-Term Solution to Coal Index Price - continued
Preliminary Cost Impact of $275k to $375k, but simplifications may reduce impact
Retain existing Coal and Lignite generic price formats for Minimum Energy and Make-Whole caps but possibly update values monthly or quarterly instead of utilizing a daily CFIP
RCWG to review additional information and continue discussion at next meeting
Variability of coal index prices over monthly and quarterly periods
ERCOT to provide historical changes to CFIP

5. Exceptional Fuel Costs Included in the Mitigated Offer Cap (MOC)

6. Exceptional Fuel Cost Included in the Mitigated Offer Cap
Background:
On certain days in February and March 2014 (Polar Vortex), some Resources were mitigated in real-time to below their actual cost due to large differences between FIP and their actual gas price (i.e. Waha)
NPRR664 implemented a manual Real-Time Make-Whole Payment process for exceptional fuel events that expired May 1, 2015
Also provided for a resource-specific Fuel Index Price (FIPR) of Houston Ship Channel, Waha or weighted-average price
NPRR714 extended the manual process for Make-Whole with a sunset date of 6/1/17

7. Exceptional Fuel Cost Included in the Mitigated Offer Cap
Background (continued):
TAC assignment to investigate alternatives to NPRR664
Prefer exceptional fuel costs in LMPs to avoid make-whole and uplift, but also concerned with incorrect LMPs
RCWG/WMS have discussed several options without reaching consensus
Option 1: Continue with existing Real-Time Make-Whole Payment
Option 2: Pursue “Exceptional Fuel Cost flag” concept
Option 3: Increase MOC Capacity Factor Multipliers during Cold Weather Events
ERCOT has proposed a new revised option

8. Exceptional Fuel Cost Included in the Mitigated Offer Cap
Overview of draft NPRR
During an exceptional fuel event, a QSE can submit a weighted average fuel price (WAFP)1 to ERCOT.
WAFP must exceed FIP + Fuel Adder + $2, and applicable to at least 10% of the total fuel burned in the applicable Operating Hour
WAFP can only be submitted during the adjustment period for each Operating Hour (i.e. 1 hour at a time)
ERCOT would use the WAFP in the MOC calculation in place of FIP & FA
After the event, QSE must provide documentation of the WAFP to ERCOT for validation, including attestation by an officer
Failure to provide sufficient, timely and supportable documentation may result in limiting ability to submit exceptional fuel cost for up to 12 months
RCWG to continue discussion at the next meeting
1 Applicable only to intraday or same-day gas purchases

9. WMS Open Action Items for RCWG
Status
Comments
Review removal of PPA applied in Verifiable Cost from Protocol
Pending
Keep existing PPA language until NPRR664 is finalized
TAC Assignment: Alternative to NPRR664 Fuel Index Price for Resource Definition…
Aging Projects-NPRR664, Index Fuel Price
On-going
Reviewing draft NPRR
Coal Index – Long Term Solution
RMR Issue: Contract length – “significant investment” language
On-hold
Developed draft NPRR based on WMS guidance. On-hold pending PUCT RMR rulemaking
Re-assigned to QMWG?
Switchable Generation Resource DSWG Whitepaper
Joint DSWG/RCWG assignment
Next RCWG Meeting – Wednesday August 23, 2017