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RMR vs NON-RMR Supply Offers: Verifiable Costs and Methodology

This article discusses the differences between RMR and NON-RMR Three-Part Supply Offers in terms of verifiable costs and methodology. It explores the factors considered by ERCOT in making RMR Units available for commitment and proposes ways to mitigate cost concerns.

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RMR vs NON-RMR Supply Offers: Verifiable Costs and Methodology

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  1. Nodal Verifiable Costs for RMR Resources Ino Gonzalez NATF February 2, 2010 1

  2. RMR vs NON-RMR Three Part Supply Offers Issue RMR Offers based on RMR contract O&M costs not included in RMR contract and therefore are not part of Three-Part Supply offers RMR Three–Part Supply Offers do not reflect true cost of Resource 2

  3. RMR vs NON-RMR Three Part Supply Offers Protocol Language 4.4.8 RMR Offers ERCOT shall decide, in its sole discretion, when to make a Reliability Must-Run (RMR) Unit available for commitment in DRUC, HRUC, or DAM, considering relevant factors such as whether it is likely to be needed in Real-Time for reliability reasons, whether Security-Constrained Economic Dispatch (SCED) will solve operating constraints, contractual constraints on the Resource, and any other adverse effects on the RMR Unit that may occur as the result of the dispatch of the RMR Resource. (a) By 1000 in the Day-Ahead, ERCOT shall submit, in ERCOT’s sole discretion, Three-Part Supply Offers based on RMR Agreement rates and any other relevant information as provided under contract on behalf of RMR Units for any RMR Units to be consideredin the DAM, DRUC, or HRUC. (b) ERCOT may submit Energy Offer Curves based on RMR Agreement rates and any other relevant information as provided under contract on behalf of RMR Units committed in the DAM, DRUC, or HRUC. 3

  4. RMR vs NON-RMR Cost Methodology Verifiable Costs Caps: Non-RMR Units a. Startup Cap = Fuel Rate x Fuel Price + O&M(1) b. Min Energy Cap = Fuel Rate x Fuel Price + O&M(1) c. Mitigated Cap = IHR x Fuel Price + O&M(1) (1) Includes emissions; IHR = Incremental Heat Rate 4

  5. RMR vs NON-RMR Cost Methodology Verifiable Costs Caps (Offer): RMR Units a. Startup Offer = Fuel Rate x [Fuel Price + FA(1)] b. Min Energy Offer = Fuel Rate x [Fuel Price + FA(1)] c. Energy Offer Curve = IHR x [Fuel Price + FA(1)] (1) FA = Fuel Adder; IHR = Incremental Heat Rate

  6. RMR vs NON-RMR Cost Methodology Startup Cost Example 6

  7. RMR vs NON-RMR Cost Methodology Concerns a. RMR units 3PO understated by actual O&M values paid in settlement b. RMR units compete in DAM based on cost and energy price c. Is this acceptable? 7

  8. RMR vs NON-RMR Cost Methodology Possible ways to mitigate issue a. Don’t Offer RMR units into the DAM b. Might be able to modify Fuel Adder to increase overall cost to more reasonable level c. Suggestions? 8

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