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Alignment of CSC Shadow Price Caps with New System-wide Offer Caps

This document discusses the alignment of CSC shadow price caps with the new system-wide offer caps in the ERCOT WMS meeting on January 16, 2008. It includes background information and proposed changes to the shadow price and offer caps, as well as the implementation of price administration to limit negative zonal prices. The text language is English.

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Alignment of CSC Shadow Price Caps with New System-wide Offer Caps

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  1. Alignment of CSC Shadow Price Caps with New System-wide Offer Caps ERCOT WMS Meeting January 16, 2008

  2. Background • CSC shadow price cap of $2,500/MW implemented via SCR 747 on 12/07/2006 • The $2,500/MW shadow price cap was developed based on an offer cap of $1,000/MWh and an offer floor of ($1,000)/MWh • Typical shift factor difference between most effective zones approximately 0.40 • $2,500 x 0.40 = $1,000

  3. Background • System-wide offer cap changed to $1,500/MWh on March 1, 2007 • System-wide offer cap will change to $2,250/MWh on March 1, 2008 • Offer floor remains at ($1,000)/MWh (Protocols Section 6.11.1) • When there is zonal congestion, with the current CSC Shadow Price cap of $2,500: • Offers > ~$1,000/MWh will be ignored • Zonal prices will be limited to approximately $1,000/MWh, even if all available energy is exhausted in the most effective zones

  4. Changes • Increase the CSC Shadow Price cap to $5,600/MW • Offer cap increase from $1,000 to $2,250 (2.25x) • Shadow price cap increase from $2,500 to $5,600 (~2.25x) • Apply price administration to limit any negative zonal price to a minimum of ($1,000)/MWh • Automated and ex ante ultimately • May be manual and ex post initially • CSC shadow price will also be re-determined administratively and ex post if this price administration occurs

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