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ERCOT Files Strawman PCM Design Decisions
ERCOT and E3 have filed with the Texas PUC a PCM Strawman Design White Paper, which reflects ERCOT/E3’s recommendations on various design elements.
As previously reported, PUC Staff recently filed Staff’s recommendation on PCM design, but Staff noted that Staff’s recommendation may be updated based on review of the ERCOT/E3 whitepaper.
A major difference between the Staff recommendation and the ERCOT/E3 whitepaper is that Staff would implement the PCM net $1 billion cost cap without applying any alleged reduced energy and A/S prices because of PCM as an offset to the cost cap. In contrast, the ERCOT/E3 whitepaper would use a counterfactual of energy and A/S prices without PCM to determine the net costs of PCM implementation, and compare such resulting net cost to the cost cap.
With regards to other key parameters, the ERCOT/E3 whitepaper uses an Ex-Ante approach for determination of the ERCOT-wide PC (performance credit) requirement.
Allocation of the System PC Requirement across LSEs would be based on Load Ratio Share during PC Hours.
Forward PCM market participation would not be required for LSEs.
An LSE’s collateral requirement for PCM would be based on expected PC potential exposure, defined as: (Expected LSE PC demand – PCs procured in forward market) * dynamic expected PC price.
LSEs would be required to post collateral “several business days” prior to the start of each PC season.
Project 55000 (11/03/2023)
Performance Credit Mechanism ( PCM )
