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TPUC Staff Seek Comment On REP Collateral Required Under PCM Market
Staff of the Texas PUC have issued a series of questions for stakeholder comment concerning the Performance Credit Mechanism (PCM), including questions concerning the collateral requirements that will be imposed on Load Serving Entities (LSEs) such as retail electric providers. Comments are due by June 20,2024.
Staff issued a series of questions concerning design parameters that the Commission still needs to resolve, as Staff noted that other parameters have been dictated by statute or prior Commission direction.
Staff seeks comments in response to the following questions:
(1) Answer the following questions on PCM Design Parameters #1-2, which are related to the PCM Seasons.
a. What should the value be for the number of seasons?
b. Which months should be included in each of those seasons?
c. What specific sensitivities around the PCM seasons should be included in the analysis?
(2) Answer the following questions on PCM Design Parameters #3-4, which are related to the Performance Credit (PC) hours.
a. What should the number of PC hours per season be?
b. How wide of a range on the number of PC hours should be considered for the sensitivity analysis (i.e., the minimum/maximum number of hours per season)?
c. Should all EEA hours automatically be included as PC hours, even if the number of EEA hours exceeds the chosen number of PC hours in each season?
(3) The base case for PCM Design Parameter #5, which relates to the metric used to determine PC generation by resource, is set to ‘ Sum of available generating capacity by resource.’ How should ‘availability’ be defined for the purpose of this design parameter?
(4) Under the base case for PCM Design Parameter #6, the PCs that duration-limited generators could earn would be capped during consecutive PC hours by the duration of the generation facility (e.g., a four-hour energy storage resource would only be able to receive PCs for up to four consecutive hours).
- Should the number of PCs these resources can receive during consecutive PC hours be capped by the duration of the facility? Why or why not?
(5) PCM Design Parameters #11 (ERCOT-wide PC Requirement Determination Framework), #12 (Net-CONE determination), and #14 (Demand Curve – Seasonal Value Allocation) all currently have optionality where these parameters can be determined on an ex-ante or ex-post basis.
a. For each of these design parameters, should the base case be set to ex-ante or ex-post? Why?
b. If an ex-ante determination is preferred for any of these parameters, are there alternatives that do not require forward-looking load forecasts made by ERCOT?
(6) Other than PCM Design Parameters #19-21, which are directly tied to the Annual Net Cost Cap Compliance, identify any other PCM design parameters that are impacted by the statutory cost cap.
(7) PCM Design Parameter #20 relates to the framework utilized to comply with the net cost cap. The current base would compare PCM to a modeled energy-only system that is at the Market Equilibrium Reserve Margin (MERM) without PCM.
- Is this the appropriate counterfactual to compare the PCM against to calculate the net cost of the PCM? If not, provide a recommendation on the best system comparison to calculate the net cost of the PCM each year to ensure compliance with the net cost cap of $1B.
(8) PCM Design Parameter #31 relates to the timing of the seasonal PC market settlement. The current base case settles the PC market for all seasons simultaneously at the end of the year. Is the current base case appropriate, or should the PC market be settled at the end of the season for each season? Why?
(9) Regarding the collateral requirements and timelines (PCM Design Parameters #32-36), what modifications can be made to the other design parameters to effectively reduce the collateral requirement on the Load Serving Entities (LSE)?
(10) Provide any additional feedback on the PCM design parameters that the Commission needs to consider.
Staff also provided its current opinions on selected unresolved matters:
LSE PC Market Collateral Requirement design parameter (#32) – “The base option of ‘collateral based on potential PC procurement shortfall’ is reasonable.” “Staff recommends removing the optionality from this parameter [#32] as the ‘No collateral requirements’ option should not be considered.”
Concerning the LSE PC Market Collateral Timeline – “The base option of ‘several business days prior to the start of the season/year’ is reasonable since it aligns with collateral timelines for existing products,” with Staff recommended removing “No collateral requirements” as an option.
Whether LSEs would be required to participate in the forward PC market – “The base option of ‘No LSE participation requirements’ is sufficient; no optionality is necessary.”
Staff’s Questions for Comment and Summary of PCM Design Parameters (05/16/2024)
Project 55000 (Opened11/03/2023)
Performance Credit Mechanism ( PCM )
