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Verifiable Cost Task Force Update

Verifiable Cost Task Force Update. Presentation to the ERCOT Wholesale Market Subcommittee June 18, 2008. Identified a process for pricing Discrete Emission Reduction Credits (DERC). Developed additional rules for Exceptional Events.

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Verifiable Cost Task Force Update

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  1. Verifiable Cost Task Force Update Presentation to the ERCOT Wholesale Market Subcommittee June 18, 2008

  2. Identified a process for pricing Discrete Emission Reduction Credits (DERC). Developed additional rules for Exceptional Events. Provided feedback to ERCOT on the Whitepaper for including PPAs into the VC process. Made additional changes to the NPRR for including PPA in the Nodal Protocols. VCTF Summary

  3. VCTF recommends the following: Use Argus or Platts or other Index to determine monthly price for DERCs. Each QSE that requests reimbursement for DERCs will submit unit specific Continuous Emission Monitoring System (CEMS) data for the actual emission output at a specific MW level. On a monthly basis ERCOT will calculate the cost of emissions (including DERCs ) utilizing Index prices and provide this cost information to the QSE. If Argus or Platts or other Index stops publishing a monthly price for DERCs, the QSE may submit emission allowance to ERCOT (the VCTF is currently reviwing procedure). ERCOT has revised the VC Manual to include DERC and the VCTF will review the changes at the next meeting. Process for Including DERCs in the Verifiable Cost Process

  4. Final List: Recovery of costs due to “extremely” high fuel prices Emissions fines from the Texas Commission on Environmental Quality (TCEQ) for exceeding DERC allowances. Costs incurred due to delaying maintenance. Exceptional Events

  5. Progress to Date: QSEs must submit a settlement dispute to recover these costs. Extremely high fuel prices - If the FIP or FOP for the Operating Day is X % higher than the Day-Ahead fuel price, Resources can request for cost recovery as an exceptional event. ERCOT will utilize the Fuel Price of the next day after the Operating Day for calculating the RUC Make-Whole Payment in the final settlement statement. The VCTF is still working on the details and a final proposal will be submitted at the July WMS meeting.  Emission fines from TCEQ for exceeding DERC allowances should not be an issue since QSEs recover costs through DERC.  Costs incurred due to delaying maintenance. When a resource has an ERCOT approved outage scheduled to perform maintenance and ERCOT requests the resource remain in service. Agreed that this is needed but is outside the scope of VCTF An NPRR needs to be prepared by someone Exceptional Events

  6.   VCTF asked ERCOT to revise the Whitepaper to establish 3 different types of PPAs. 1. A PPA has a separate rate for fuel and O&M ERCOT will use the reference unit to cap the O&M costs Fuel costs will be treated just like all other units 2. IF the PPA only has O&M The fuel will be based on the heat rate supplied by the Resource and submitted by the QSE 3. The PPA includes fuel and O&M in one price PPA will be capped based on a reference Resources’ fuel and O&M VCTF will finalize the Whitepaper and the NPRR by the July WMS meeting. Purchase Power Agreements and Tolling Agreements

  7. If a Resource switches QSEs do the previously approved VC apply to the new QSE? Combined-cycle resources may register an ‘alternate’ unit which may be used in a specific Resource configuration. How should VC apply to the CCP logical Resource when the “normal” and “alternate” Resources do not have identical costs or fuel efficiencies? Additional Work Needed

  8. The Verifiable Cost Working Group (VCWG) is charged through the Wholesale Market Subcommittee (WMS) with reviewing and analyzing issues related to Resource costs that may be submitted as Verifiable Costs, and developing draft protocol language and procedures to guide the processing and use of the data contained in those submittals. VCTF Goals and Objectives

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