Transcript Priority Power Management, LLC Proposed Changes to Holistic Solution WMS January 9, 2013 James Z.

Priority Power Management, LLC
Proposed Changes to Holistic
Solution
WMS January 9, 2013
James Z. Brazell
Law Office of James Z. Brazell
100 Congress Avenue, Suite 2000
Austin, Texas 78701
512-370-5222
[email protected]
WMS 1/9/2013
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Priority’s Initial Proposal to WMS
November 7, 2012
1.
Change Shadow Price Caps to $1,000;
2.
Change $95,000 net margin threshold:
a. once margin passes $65,000, if constraint will continue and
reach $95,000 margin, apply the Caps;
b. once margin applied and Shadow Price Caps in effect, leave
Caps in place until constraint is fixed—do not restart calculating
margin at the beginning of the next year.
3. Apply Shadow Price Caps to closely related nodes after system
changes applied that move constraint from its initial locus.
WMS 1/9/2013
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Priority’s Revised Proposal to WMS
December 7, 2012
1.
2.
3.
4.
Change Shadow Price Caps back to $2,000;
Change $95,000 net margin threshold to $80,000/MW/year;
Trigger for applying and terminating Shadow Price Caps is
changed from calendar year calculation (currently used) to
rolling 12-month calculation, recalculated daily. Price caps
remain in place for next six calendar months. Price caps
terminate on the last day of the fifth calendar month after the
rolling 12-month net margin from rents falls below the
$80,000/MW/year trigger;
maintain the November 7th proposal that Shadow Price Caps
that originate with a constraint shall follow and be applied to
closely-related nodes to which the constraint moves when
ERCOT implements solutions, such as system changes, to
address the constraint. However, drop the requirement that the
constraint at the closely-related node must be non-competitive
and irresolvable.
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Discussion at CMWG
December 14, 2012
1.
2.
3.
4.
Shadow Price Caps not constrained by $2,000 LCAP
(could be $1,000, $500);
Rolling 12-month calculation of net margin threshold
has merit;
Rolling 12-month calculation may coordinate with
revised CRR Auction schedule;
$80,000 threshold reflects cost of 390 MW CT from
IMM Report and that separate 390 MW turbines not
needed for each constraint.
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Conclusion
 West Zone needs Interim Relief until transmission is adequate;
 West Zone congestion results from unique West Zone
conditions/Limitations (limited generation, small total load, limited
transmission, more wind that other zones, large oil and gas load, less
weather sensitive, different heat rate);
 When Holistic Solution adopted, April to October 2012 West Zone
Congestion Crisis had not occurred;
 Holistic Solution changes will help provide Interim Relief;
 Holistic Solution changes are reasonable, appropriate, and timely.
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Questions/Comments?
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