Addressing Challenges in ERCOT Generator Compensation
Discover the pressing need for a catch-all mechanism to prevent generators from losing money on ERCOT reliability requests. Explore issues like bid restrictions, cost recovery triggers, index reliance, and the call for process automation and review.
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Presentation Transcript
RUC Compensation Issues Aug 2022 WMWG
We need a catch all for make whole No Generator should be forced to lose money for an ERCOT reliability request We ve discovered that there are issues that are causing Generators losing money A catch all with proper checks is needed
All units need to be able to bid into the DAM The 2x FIP ceiling discriminates against units that are not able to procure gas at those prices The players in this market are sophisticated enough to not have arbitrary training wheels Rules already in place to ensure correct information is given to ERCOT RUC claw back calculations are based on DAM offers yet some units are unable to bid into the DAM at prices reflective of costs Additionally, the current level of RUCs warrants a review of RUC claw back percentages
There needs to be a trigger for additional cost recovery and margin The new use of RUCs is more similar to an RMR then the RUCs of 2020 and before RUC make whole process can take 6 months and that cost of capital is not allowed to be recovered These 6 months of make whole take considerable corporate time This continued RUCing of Units that are not allowed to bid into the DAM could be considered an illegal taking The continued RUCing of historically extremely low-capacity factor units is a major shift in the economics of these facilities
We need to move away from indexes Indexes can be an inaccurate proxy for fuel costs We have seen over the last 2 years that there are extreme price differences for fuels across the state Even if we retain the use of an index, we should have options for generators to use alternatives when appropriate We need to ensure Generators are not forced to lose money due to the use of an index
We need automation of the process The daily occurrence of withholding payments for 6 months is becoming an issue Generators are required to pay for their fuel in a timely fashion and they should not be asked to incur cost of capital for a year
