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Fuel Cost Components in the Fuel Adder

Learn about the detailed guidelines and documentation requirements for submitting actual fuel adders, including historical costs, transportation fees, and verifiable cost components. Understand the considerations for including fixed and variable costs, recovering fuel supply expenses, and visibility into approved fuel adders. Explore unit-specific verifiable costs and limitations for fuel components.

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Fuel Cost Components in the Fuel Adder

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  1. Fuel Cost Components in the Fuel Adder RCWG Meeting July 26, 2016

  2. Fuel Cost Components in the Fuel Adder Section 3 of the VCM under Additional Rules for Submitting Fuel Costs 2. Any Filing Entity that submits an actual fuel adder must provide documentation that establishes the historical costs for fuel, including transportation, spot fuel, and any additional verifiable cost associated with fuel contracts that can be easily differentiated from the standard commodity cost of fuel and clearly attributable to the Resource for the period. The fuel adder for a rolling 12-month period is the difference between the Filing Entity’s average fuel price paid (including all fees) during the period and the fuel price utilized by ERCOT for the corresponding Resource. The Filing Entity shall provide rolling 12-month supporting data to verify total fuel price for all purchased volumes to support the actual Resource fuel consumption. Data to support these costs should include, but are not limited to, accounting ledger entries, invoices, and copies of fuel contracts. In addition, the actual costs used to calculate the fuel adder may include, but are not limited to, the following categories: transportation, deliveries, storage, injection, withdrawal, imbalance, and minimum requirements fees. Other costs not described herein may be included and approved by ERCOT.

  3. Fuel Cost Components in the Fuel AdderNatural Gas Cost Components

  4. Natural Gas Cost Components in the Fuel AdderDefinitions - Page 1 of 4

  5. Natural Gas Cost Components in the Fuel AdderDefinitions – Page 2 of 4

  6. Fuel Cost Components in the Fuel AdderDefinitions – Page 3 of 4

  7. Fuel Cost Components in the Fuel AdderRelated Definitions – Page 4 of 4

  8. Fuel Cost Components in the Fuel Adder Prior RCWG discussion points: • Should the fuel adder include only “incremental” and “variable” costs, to be consistent with the other components of verifiable cost and market power mitigation? • Does the existing VCM language allow inclusion of fixed cost components? • Should Resources be able to recover their costs for providing the fuel supply, transportation and related services required to make the Resource available to the market? • Does including fixed-cost components result in the market bearing the risk and/or cost for Resource fuel contracts? • Should margins from any 3rd party volumes be included in the fuel adder? • Should market participants have visibility to the range of approved actual fuel adders?

  9. Fuel Cost Components in the Fuel Adder Guidance from Nodal Protocols 5.6.1 (3) These unit-specific verifiable costs may include and are limited to the following average incremental costs:… 5.6.1 (5) These unit-specific verifiable costs may not include: (a) Fixed costs, which are any cost that is incurred regardless of whether the unit is deployed or not; and (b) Costs for which the QSE or Resource Entity cannot provide sufficient documentation for ERCOT to verify the costs.

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