Current through Reg. 50, No. 13; March 28, 2025
(a) Purpose. The
purpose of this section is to protect the public from harm when wholesale
electricity prices in markets operated by the Electric Reliability Council of
Texas (ERCOT) in the ERCOT power region are not determined by the normal forces
of competition.
(b) Applicability.
This section applies to any entity, either acting alone or in cooperation with
others, that buys or sells at wholesale energy, capacity, or any other
wholesale electric service in a market operated by ERCOT in the ERCOT power
region; any agent that represents such an entity in such activities; and ERCOT.
This section does not limit the commission's authority to ensure reasonable
ancillary energy and capacity service prices and to address market power
abuse.
(c) Definitions. The
following terms, when used in this section, have the following meanings, unless
the context indicates otherwise.
(1)
Competitive constraint--A transmission element on which prices to relieve
congestion are moderated by the normal forces of competition between multiple,
unaffiliated resources.
(2)
Generation entity--An entity that owns or controls a generation
resource.
(3) Market location--The
location for purposes of financial settlement of a service
(
e.g., congestion management zone in a zonal market design or
a node in a nodal market design).
(4) Must-run alternative (MRA) service--A
service that ERCOT may procure as an alternative to reliability must-run
service.
(5) Noncompetitive
constraint--A transmission element on which prices to relieve congestion are
not moderated by the normal forces of competition between multiple,
unaffiliated resources.
(6)
Reliability must-run (RMR) service--A service provided by a generation resource
to meet a reliability need resulting from the planned suspension of operation
of that generation resource for a period of greater than 180 calendar
days.
(7) Resource--A generation
resource, or a load capable of complying with ERCOT instructions to reduce or
increase the need for electrical energy or to provide an ancillary service
(
i.e., a "load acting as a resource").
(8) Resource entity--An entity that owns or
controls a resource.
(9) Suspension
date--The date specified by a generation entity in a notice to ERCOT as the
date on which it intends to suspend operation of a generation resource for a
period of greater than 180 calendar days.
(d) Control of resources. Each resource
entity must inform ERCOT as to each resource that it controls, and provide
proof that is sufficient for ERCOT to verify control. In addition, the resource
entity must notify ERCOT of any change in control of a resource that it
controls no later than 14 calendar days prior to the date that the change in
control takes effect, or as soon as possible in a situation where the resource
entity cannot meet the 14 calendar day notice requirement. For purposes of this
section, "control" means ultimate decision-making authority over how a resource
is dispatched and priced, either by virtue of ownership or agreement, and a
substantial financial stake in the resource's profitable operation. If a
resource is jointly controlled, the resource entities must inform ERCOT of any
right to use an identified portion of the capacity of the resource. Resources
under common control will be considered affiliated.
(e) RMR resources. Except for the occurrence
of a forced outage, a generation entity must submit to ERCOT in writing a
notice of suspension of operation no later than 150 calendar days prior to the
suspension date. If a generation resource is to be mothballed on a seasonal
basis in accordance with ERCOT protocols, the generation entity must submit in
writing a notice of suspension of operation no later than 90 calendar days
prior to the suspension date. ERCOT must issue a final determination of the
need for RMR service within 60 calendar days of ERCOT's receipt of the notice.
If ERCOT determines that the generation resource is not needed for RMR service,
the generation entity may suspend operation of the generation resource before
the suspension date, subject to ERCOT approval. Unless ERCOT has determined
that a generation entity's generation resource is not required for ERCOT
reliability, determined that the resource is needed for reliability but is not
a cost-effective solution to the reliability concern, or entered into an MRA
service agreement as an alternative to an RMR service agreement, the generation
entity must not terminate its registration of the generation resource with
ERCOT unless it has transferred the generation resource to a generation entity
that has a current resource-entity agreement with ERCOT and the transferee
registers that generation resource with ERCOT at the time of the transfer.
(1) Complaint with the commission. If, by the
suspension date, ERCOT has not notified the generation entity that the
continued operation of the generation resource is not required for reliability
or is not a cost-effective solution to the reliability need, and has not
entered into an RMR service agreement with the generation entity for the
generation resource or an MRA service agreement as an alternative to an RMR
service agreement, then the generation entity may file a complaint with the
commission against ERCOT, under §
22.251 of this title (relating to
Review of Electric Reliability Council of Texas (ERCOT) conduct).
(A) The generation entity will have the
burden of proof.
(B) As required by
§
22.251(d) of
this title, absent a showing of good cause to the commission to justify a later
deadline, the generation entity's deadline to file the complaint is 35 calendar
days after the suspension date.
(C)
The dispute underlying the complaint is not subject to ERCOT's alternative
dispute resolution procedures.
(D)
In its complaint, the generation entity may request interim relief under §
22.125 of this title (relating to
Interim Relief), an expedited procedural schedule, and identify any special
circumstances pertaining to the generation resource at issue.
(E) As required by §
22.251(f) of
this title, ERCOT must file a response to the generation entity's complaint and
must include as part of the response all existing, non-privileged documents
that support ERCOT's position on the issues identified by the generation entity
as required by §
22.251(d)(1)(C)
of this title.
(F) The scope of the
complaint may include the need for the RMR service; the reasonable compensation
and other terms for the RMR service; the length of the RMR service, including
any appropriate RMR exit options; and any other issue pertaining to the RMR
service.
(G) Any compensation
ordered by the commission will be effective the first calendar day after the
suspension date. If there is a pre-existing RMR service agreement concerning
the generation resource, the compensation ordered by the commission will not
become effective until the termination of the pre-existing agreement, unless
the commission finds that the pre-existing RMR service agreement is not in the
public interest.
(H) If the
generation entity does not file a complaint with the commission, the generation
entity will be deemed to have accepted ERCOT's most-recent offer as of the
suspension date.
(2)
Out-of-merit-order dispatch. The generation entity must maintain the generation
resource so that it is available for out-of-merit-order dispatch instruction by
ERCOT until:
(A) ERCOT determines that the
generation resource is not required for ERCOT reliability;
(B) any RMR service agreement takes
effect;
(C) the commission
determines that the generation resource is not required for ERCOT reliability;
or
(D) a commission order requiring
the generation entity to provide RMR service takes effect.
(3) RMR exit strategy. Unless otherwise
ordered by the commission, the implementation of an RMR exit strategy in
conformance with the ERCOT Protocols is not affected by the filing of a
complaint under this subsection.
(4) Evaluation of RMR and MRA service. ERCOT
may decline to enter into an RMR or MRA service agreement based on an
evaluation that considers the costs and benefits of the RMR or MRA service,
subject to the requirements of paragraph (5) of this subsection. ERCOT may
enter into an MRA service agreement if it identifies a resource or group of
resources that will address a reliability need resulting from a planned
suspension of operation of a generation resource in a more cost-effective
manner than entering into an RMR service agreement, subject to the requirements
of paragraph (5) of this subsection. ERCOT may incorporate the economic value
of lost load into its evaluation.
(5) Approval of RMR and MRA service
agreements. All recommendations by ERCOT staff to enter into an RMR or MRA
service agreement will be subject to approval by the ERCOT governing board. If
ERCOT identifies a reliability need for RMR or MRA service but recommends
against entering into an RMR or MRA service agreement, ERCOT staff's
recommendation will be subject to approval by the ERCOT governing board. In its
request for governing board approval, ERCOT staff must present information that
justifies its recommendation.
(6)
Refund of payments for capital expenditures. A resource entity that owns or
controls a resource providing RMR or MRA service must refund payments for
capital expenditures made by ERCOT in connection with the RMR or MRA service
agreement if the resource participates in the energy or ancillary service
markets at any time following the termination of the agreement. ERCOT may
require less than the entire original amount of capital expenditures to be
refunded to reflect the depreciation of capital over time.
(7) Implementation. ERCOT, through its
stakeholder process, must establish protocols and procedures to implement this
subsection.
(f)
Noncompetitive constraints. ERCOT, through its stakeholder process, must
develop protocols to mitigate the price effects of congestion on noncompetitive
constraints.
(1) The protocols must specify a
method by which noncompetitive constraints may be distinguished from
competitive constraints.
(2)
Competitive constraints and noncompetitive constraints must be designated
annually prior to the corresponding auction of annual congestion revenue
rights. A constraint may be redesignated on an interim basis.
(3) The protocols must be designed to ensure
that a noncompetitive constraint will not be treated as a competitive
constraint.
