ERCOT RMR Basics

Ino GonzálezSupervisor, S&B Market Analysis

Topic Outline

I. Why ERCOT deploys RMR units

II. How ERCOT Contracts RMR Units

III. Eligible RMR Costs

IV. Non-Eligible RMR Costs

V. Settlement of RMR Units

VI. Deployment of RMR Units in the Adjustment Period

VII. Next steps

Slide 2

Need for RMR Units

I. Why ERCOT deploys RMR units• To solve local reliability constraints• To provide voltage support• To acquire additional system capacity under special

conditions (possibly using a currently undefined type of Load Resource- LR)

Slide 3

RMR Contract Basis

II. How ERCOT Contracts RMR Units• ERCOT performs analysis of needs for system

capacity, or • Resource submits Notice of Suspension Form• ERCOT request RMR owner to submit estimated costs

to run the units• ERCOT evaluates costs and reliability needs and

makes final procurement assessment

Slide 4

RMR Contract Basis

III. Eligible RMR Costs (Per protocol 3.14.1.10 Eligible Cost)

Labor and services Materials and supplies Maintenance Fuel Property Taxes All variable costs

Slide 5

RMR Contract Basis (con.)

IV. Non-Eligible RMR Costs (Per protocol 3.14.1.10 Eligible Cost)

Depreciation expenses Return on Equity Fixed property taxes Income taxes of property owner Labor costs not associated with RMR operation Any costs the RMR owner would have incurred even

if the unit had been mothballed or shutdown

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RMR settlement Basis

V. Settlement of RMR Units • Initial Settlement

Capacity payment ($/h) based on eligible costs plus 10%

Energy Payment (based on estimated fuel)

• True-up Settlement Capacity payment ($/h) based on actual costs plus

10% Energy Payment (based on actual fuel)

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Deployment of RMR Units in the Adjustment Period

VI. Deployment of RMR units in the Adjustment Period ERCOT discovers need for RMR units in the Adjustment period

If RMR unit needed for capacity service, submit an OS SCED deploys RMR based on EOC and system need at SWC

Slide 8

Loads Providing RMR-Like Services

VII. Next StepsNeed to:

Define the type of capacity (RMR-Like) service an LR

o types of loads

o allow aggregation or not

o minimum MW levels Develop RMR-Like contracting procedures Establish deployment guidelines Specific payment and settlement rules and M&V

Slide 9