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LRIS Settlement Example

LRIS Settlement Example. April 20 th , 2011. Current Proposed Settlement. Normal electricity structure REP has locked in profit of Retail Price – Wholesale Price. 4 MWs. Customer. REP. Retail $. Wholesale $. 4 MWs. Wholesale Counterparty. Current Proposed Settlement (continued).

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LRIS Settlement Example

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  1. LRIS Settlement Example April 20th, 2011

  2. Current Proposed Settlement • Normal electricity structure • REP has locked in profit of Retail Price – Wholesale Price 4 MWs Customer REP Retail $ Wholesale $ 4 MWs Wholesale Counterparty

  3. Current Proposed Settlement (continued) ERCOT • Customer signs with DR Provider for 4 MWs 4 MWs 4 MWs @ LMP – LMPz 4 MWs DR Provider Customer DR $

  4. Current Proposed Settlement (continued) All REPs’ Settlement 4 MWs @ LMPz 4 MWs ERCOT 4 MWs @ LMP – LMPz 4 MWs 4 MWs @ LMPz 4 MWs @ LMP – LMPz 4 MWs 4 MWs REP DR Provider Customer Retail $ DR $ Wholesale $ 4 MWs Wholesale Counterparty

  5. Current Proposed Settlement Issues • Focus has been what to pay the DR Provider • Will the risk of LMPz being higher than LMP suppress DR? • What should ERCOT pay original REP to keep ERCOT indifferent? • REP now has price risk = 8 MWs LMPz – 4 MWs LMP – 4 MWs Wholesale $

  6. Remedy All REPs’ Settlement 4 MWs @ LMPz 4 MWs ERCOT 4 MWs @ Retail $ 4 MWs 4 MWs @ LMPz – Retail $ 4 MWs 4 MWs REP DR Provider Customer Retail $ DR $ Wholesale $ 4 MWs Wholesale Counterparty

  7. Remedy Issues • Keeps REP and ERCOT indifferent • In line with other ISOs (pre-FERC Order re: Net Benefits) • Requires ERCOT to collect Retail Rate • Part of registration process with DR Provider • Does not further incent loads @ high priced LMP

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