Only once before in grid history has the price hit the $9,000 mark.
ERCOT recently recorded a dramatic $9,000-per-megawatt hour price in a segment of the wholesale power market — the very highest allowed — and the spike prompted a complaint to Texas regulators.
The result of an apparent error, the spike occurred at 2:50 p.m. on May 30 and may have cost the market more than $18 million. On only one other occasion during the entire history of the state’s main power grid have wholesale prices reached the $9,000 mark, according to ERCOT.
In a complaint filed with the Texas Public Utility Commission, Aspire Commodities said it suffered harm from the “mistake” because it cost it money on the energy futures market. It said ERCOT understood that the price was struck in error, and that the organization should have retroactively ordered a correction.
“At no time before or during the interval in question did actual frequency drop to the level of an alert,” wrote Aspire Commodities in its PUC complaint. “Thus the ERCOT operators instantaneously knew full well that there had been no sudden loss of generation. They knew immediately with 100% certainty that there was no physical condition on the grid that warranted $9,000 prices.”
ERCOT, also known as the Electric Reliability Council of Texas, oversees the state’s main power grid and its stakeholder board sets rules for the wholesale power market. Aspire Commodities — citing a report to ERCOT’s Wholesale Market Subcommittee — blamed the costly spike on incorrect information from by an entity that schedules power generation onto the grid.
The $9,000 price cap — also known as the “system-wide offer cap” — limits the price that generators can seek when selling into the real-time power market. But such spikes are exceedingly rare. According to ERCOT’s Independent Market Monitor, real-time prices exceeded $3,000 only for about 45 minutes during the entirety of 2018, and the only other $9,000 price spike occurred on Jan. 23 of that year. By way of comparison, wholesale power during non-peak hours typically sells for less than $50 per MWh.
Aspire calculated the cost to the market “of the artificial and fictitious price spike” on May 30 at $18,374,229. If ERCOT had allowed the spike to continue, it would have bankrupted several retail electric providers, according to Aspire.
“Aspire lost money not because its research was wrong, quite the opposite — in fact, the company’s financial position was correct given the actual market fundamentals that existed,” the company wrote. “Our forecast of load was correct. Our forecast of available generation was correct, as was our expectations about the state of the transmission grid. There was no sudden unforeseen reliability event. We had the correct position yet we lost money because ERCOT at approximately 2:50 p.m. allowed an undisputed mistake to create an invalid market solution.”
The company noted that the retail electric provider Griddy, which passes-through wholesale costs to customers under a membership program, did not charge its customers for the $9,000 spike. Instead, it credited back to customers an amount based upon the company’s own calculations of what should have been the correct price.
“These were real prices and real expenditures and represent a very significant unjustifiable transfer of wealth from load to the generators — we simply cannot understand how anybody associated with the market cannot argue that repricing is absolutely required for this interval,” Aspire wrote in its complaint.
The PUC staff will review the complaint and will respond by early next month. The commissioners could then take up the matter in an upcoming open meeting. Other than acknowledging the complaint, ERCOT so far has not filed its formal response at the PUC.
You can read the full Aspire Commodities complaint here.