Meeting Summary - 12/02/2024 - Reliability and Markets Committee

1 - Call General Session to Order - Julie England

2 - Notice of Public Comment, if Any - Julie England

3 - October 9, 2024 General Session Meeting Minutes - Julie England

3 October 9, 2024 RM General Session Meeting Minutes

• Motion to approve the minutes from October 9, 2024 was approved with all members voting in favor with no opposition or abstentions.

4 - Annual Committee Self-Evaluation Survey Results - Julie England

4 Annual Committee Self-Evaluation Survey Results

• Board members who served on the R&M committee during 2024 were asked to complete a self-evaluation survey after the October meeting.
• Survey results were compiled and included in the meeting materials for discussion.
• The lowest score on the survey was related to the 'appropriate number of members' for the committee.
• The current committee is down to two members, indicating a need to rebuild membership.
• There is an emphasis on the committee's importance in overseeing grid operations, stressing the urgency to fill vacancies.

5 - TAC Report regarding R&M Committee Charter Revision Requests Recommended for Board Approval - Caitlyn Smith

5 TAC Report regarding R&M Committee Charter Revision Requests Recommended for Board Approval

5.1 - NPRR1247, Incorporation of Congestion Cost Savings Test in Economic Evaluation of Transmission Projects – URGENT - Caitlyn Smith

1247NPRR-02 Impact Analysis 080924.docx

5.1.1 ERCOT Comments on NPRR1247.pdf

1247NPRR-24 TAC Report 112024.docx

• NPRR1247 was recommended by TAC for board approval with three opposing votes and one abstention.
• Incorporates the Consumer Energy Cost Reduction Test as the Congestion Cost Savings test in economic project evaluation.
• Addressing amendments by the PUC in Texas Administrative Code § 25.101 and aligned with 87R-SB1281.
• ERCOT worked with E3 to develop a suitable congestion cost savings test based on stakeholder feedback.
• The NPRR proposes a System Wide Gross Load Cost Test, recommended by E3.
• Maintains the Production Cost savings test as a standalone evaluation method.
• Faced procedural and substantive challenges during the proposal process, receiving diverse feedback from stakeholders.
• Opposition due to concerns over urgency, incompleteness, and lack of stakeholder review for supporting white papers.
• ERCOT engaged with stakeholders throughout the process and made necessary revisions based on feedback.
• Debate about the appropriateness of some variables in the economic criteria formula and possibility of future updates.
• NPRR1247 aims to evaluate projects based on both production and congestion cost savings for recommending approval.
• Motion to reccomend that the board approve NPRR1247 approval passed unamiously.
  
• Commitment to review project revenue requirements at least annually and ensure efficient application of the criteria.

6 - Recommendations regarding Regional Planning Group (RPG) Tier 1 Transmission Projects - Julie England

• Discussion of two regional planning group projects.
• Projects: American Electric Power Service Corporation, Brownsville Area Improvements Transmission Project, and Oncor Delaware Basin Stages 3 and 4 project.
• Christy Hobbs to present recommendations for these projects.
• Projects have met criteria for board consideration.
• Recommendations scheduled for a vote as noted in the agenda.

6.1 - AEPSC Brownsville Area Improvements Transmission Project - Kristi Hobbs

6.1 AEPSC Brownsville Area Improvements Transmission Project

• The AEPSC Brownsville Area Improvements Project is valued at $423 million and requires Tier 1 approval.
• The project was first reviewed by ERCOT in March of this year due to specific needs in the Brownsville area.

• Analysis aimed at addressing thermal overloads and voltage violations according to NERC and ERCOT planning criteria.
• A stakeholder review process was conducted, culminating in unanimous endorsement by the technical advisory committee in October.
• Ten different options were evaluated, with the chosen recommendation being the least cost option while offering additional operational flexibility and improved long-term load serving capability.
• Recommendation 2A is to be moved forward to the board for endorsement.
• No questions or comments were raised by committee members, and a motion was made and seconded to recommend board endorsement of Option 2A.

6.2 - Oncor Delaware Basin Stages 3 and 4 Project - Kristi Hobbs

6.2 Oncor Delaware Basin Stages 3 and 4 Project

• The Oncor Delaware Basin Stages 3 and 4 project was submitted, with a project cost of $202 million.
• The project stems from a 2019 study focusing on future oil and gas load growth and long-term planning in the Delaware Basin area.
• The recommendation resolves 20 voltage violations and four unsolved power flows in the region.
• The project was included as part of the base case assumptions in the Permian Basin Reliability Plan, which the Commission approved.
• There was a concern about using five-year-old data, but additional analysis confirmed the project’s continued relevance.
• There are ongoing efforts to track the progress of Tier 1 projects, including updates on project status when they seek CCN status.
• The Delaware Basin project is critical as a foundational part of the Permian Basin reliability plan.
• The project remains on schedule and is included in reliability studies as being already in place.
• There was a suggestion to track the project with a Permian Basin Monitor to ensure timely completion.
• The board was recommended to endorse the need for this project based on ERCOT reliability planning criteria.
• The motion to recommend the board endorsement was seconded and carried unanimously.

7 - Recommendation regarding Real-Time Market Price Correction – Incomplete Weekly Database Load - Gordon Drake

7 Recommendation regarding Real-Time Market Price Correction - Incomplete Weekly Database Load

• Gordon Drake presented ERCOT staff's recommendation regarding price corrections due to an incident on November 1st.
• Data transfer process failed during a weekly database load, affecting real-time settlement intervals between midnight and 12:30 PM.
• A market notice was issued on November 8th about the discovery of the issue.
• Internal analysis showed the criteria for price correction were met.
• Criteria for correction include a 20% impact and more than $2,000 impact to a single counterparty; two counterparties were affected.
• The maximum impact was nearly $3,000 with a percentage impact up to 45%.
• Overall impact to ERCOT's settlement was just short of $2,000, about 0.01% of the day's total settlement.
• There is a forthcoming price correction noted in the appendix, related to issues from November 2023.
• ERCOT has modified processes to log errors immediately during model loads to prevent recurrence.
• Discussion included comparisons to other regions' thresholds and the importance of addressing root causes and corrective actions.
• Motion passed to recommend board actions regarding affected prices and implementation of corrections.

8 - Independent Market Monitor (IMM) Report - Jeff McDonald

8 Independent Market Monitor (IMM) Report

• Jeff McDonald presented the IMM report, reviewing market performance and concerns about ASDC curves.
• Energy prices from August to October were lower than a year ago, due to milder summer weather and lower natural gas prices.
• Notable was a warmer October, which increased prices and loads that month.
• There was a low occurrence of shortage pricing, contributing to lower overall prices.
• Ancillary service costs and congestion costs were generally uneventful.
• There was an increase in wind and solar energy production in October, attributed to greater installations.
• Battery storage was discussed, noting it doesn't appear as supply due to it being a net load.
• An analysis of battery storage showed a large capacity offered at varied price ranges, with interests on the optimized charging and discharging strategies.
• The report emphasized the challenges for battery storage operators in real-time markets and the use of rule-of-thumb strategies over dynamic price bids.
• McDonald acknowledged battery storage as a key future element and promised more detailed future reports.
• The IMM worked on developing ASDC curves to address specific concerns while ensuring compatibility with the RTC software and existing ORDC curves.
• Recommendations were made for ERCOT to evaluate and potentially refine the proposed ASDC curves.

9 - Committee Briefs - Kristi Hobbs

9.1 - System Planning and Weatherization Update - Kristi Hobbs

9.1 System Planning and Weatherization Update

• Start of winter season and ERCOT's preparations involving a risk-based approach for inspections.
• Weatherization inspection workshops held with generators and transmission service providers.
• Participation in NERC cold weather project technical conference with over 300 attendees.
• Visit to facilities selected for the firm fuel supply service to confirm on-site fuel capability.
• Approximately 90% of expected winter declarations received from market participants as of the night before.
• Improved performance in thermal generation fleet observed in response to recent storms.
• Monthly Outlook on Resource Adequacy (MORA) indicates higher risk of emergency alerts during certain hours in December and January.
• Two regional transmission plans to be posted before year-end, focusing on 2030 load forecasts.
• Generation interconnection requests tracked, with over 1900 active requests and total gigawatts increased.
• Large load interconnection process has approved planning studies for over 17,000 MW of new large loads.
• Ongoing efforts to define reliability standards with a new deadline extended to February.
• Preparation for next three-year reliability assessment starting in January 2026.
• Continued updates on transmission planning summary and overall endorsed projects.

9.2 - System Operations Update - Dan Woodfin

9.2 System Operations Update

• Upcoming revision requests are being processed; initial discussions held to avoid starting from scratch when finalized.
• Growth of large loads, such as data centers and crypto miners, raises concerns: these loads often fail to ride through voltage events, impacting system voltage and causing temporary power consumption dropouts.
• ERCOT proposed PGRR122 to limit the loss of load to 1,000 megawatts for any single fault to manage frequency stability.
• Timeline and process for getting necessary studies for 8,800 megawatts yet to be completed, dependent on input from transmission service providers.
• Second major issue discussed: series capacitors added to some lines to increase power transfer capability. Risk of subsynchronous resonance when generators connect directly, leading to proposal of a new planning guide revision to prevent direct connections.
• End of fall outage season; beginning of winter inspections. Outage levels are decreasing compared to mid-November.
• Electric vehicle sales growth has slowed. Updated long-term forecasts reflect this trend.
• Inertia of the system has overall increased slightly on average, while minimum inertia times are recovering due to increased nighttime loads from data centers.
• Winter weather outlook predicts warmer and drier conditions on average, but potential for significant cold outbreaks due to increased variability in temperature.

9.3 - Commercial Markets Update - Keith Collins

9.3 Commercial Markets Update

• Discussed reliability unit commitment (RUC) and noted an uptick due to net load changes during solar resource ramp down and congestion in South Texas.
• Comparatively, the RUC uptick in October was lower than October 2022 but indicated a change in trend continuing into November.
• Published the 2024 Operating Reserve Demand Curve Biennial Report in November, examining design changes and efficacy.
• Key changes to the ORDC include the introduction of the ECRS product in June 2023 and a multi-step price adder floor in November 2023.
• Found ORDC performing in line with expectations, despite higher ancillary service requirements and lower natural gas prices.
• An 85% generation rate during price floor periods was recorded, with the ORDC intended to incent dispatchable resources.
• ORDC will be retired with the integration of Ancillary Service Demand Curves via the RTC project in December 2025.
• Discussed ongoing work on NPRR1255 regarding a mitigation framework for energy storage resources (ESRs) addressing market power.
• Evaluation for ESRs mitigation is underway, with a focus on shadow price, shift factor, and system price.
• Stakeholder process underway to address concerns and considerations surrounding proposed changes in NPRR1255.
• No expected significant changes in natural gas prices for 2025.

9.3.1 - Real-Time Co-optimization Update - Matt Mereness

9.3.1 Real-Time Co-optimization Update

• ERCOT has achieved a budget savings of approximately $15 million by advancing its real-time co-optimization project timeline by seven months, reducing the budget to $35 million.
• A beta version of the SCED software, critical for the real-time co-optimization, has been delivered and is undergoing development and testing.
• The market trials plan has been approved by TAC, and initial training readiness materials are available online.
• Five historical operating days were simulated to show hypothetical market prices if RTC had been in place, and results have been published.
• The IMM proposed new ancillary services (AS) demand curves, with discussions planned to evaluate and possibly implement them.
• Two NPRRs concerning policy issues will be drafted—an omnibus for market trial parameters and one for AS demand curves.
• Significant progress has been made in market readiness training materials and defining market trials activities and criteria.
• The implementation of the NPRRs needs board approval by April to proceed with May market trials; this timeline is crucial.
• Feedback from the Public Utility Commission emphasizes keeping the implementation deadline on schedule for real-time co-optimization.
• Stakeholders support the current implementation plans, with an adherence to the established timeline to prevent delays.

9.4 - Market Credit Update - Austin Rosel

9.4 Market Credit Update

• The report indicates stability with no changes in total potential exposure for the last two months.
• A minor default occurred with a small trader in late November, but the system managed it without issues due to sufficient collateral.
• There will be no uplifts to the market due to the default.
• Two NPRRs were discussed:
• NPRR1205 was implemented smoothly on November 1, without any issues reported.
• NPRR1215, which required no implementation, was approved by the PUC.
• Future work on credit-related NPRRs is planned for next year.

9.5 - Revision Request Status Update - Rebecca Zerwas / Ann Boren

9.5 Revision Request Status Update

• Presented by Rebecca Zerwas and Ann Boren on revision request status.
• 17 revision requests for December Board consideration; one opposed, others on consent agenda.
• 57 revision requests currently in progress; 14 new since last board meeting.
• No change in the aging revision request list since October; additional comments filed for some.
• 70 revision requests approved through the stakeholder process in 2024.
• New section introduced to address key policy issues not in front of the board.
• Discussion of RTC+B with two potential revision requests by December 2025.
• Consideration of policy parameters and PUC approval before market trials in May.
• Stakeholder consensus sought on ASDCs; proposals requested by December.
• DRRS phase two discussed with NPRR1235 live in stakeholder process.
• Evaluation of standalone DRRS product, robust discussion ongoing.
• Large load issues addressed with ERCOT sponsored package NPRR1234 and PGRR115.
• ERCOT filed comments on 1 GW maximum single contingency to address stability risk.

10 - Future Agenda Items - Woody Rickerson

10 Future Agenda Items

• Transmission projects and other known needs were included in the agenda.
• Discussion on anticipating additional future needs not currently foreseen.
• Specific mentions of upcoming discussions on '765' and 'RTC'.

11 - Other Business - Julie England

• Julie England thanked Commissioner Lori Cobos for her service and contributions to the committee.
• Lori Cobos acknowledged the complex and challenging issues ERCOT is facing and appreciated the committee's robust discussions on important topics.
• No further business or executive session was expected for the day.

11.2-12 - Not Discussed

13 - Adjournment - Julie England