BLOG: PUC Rejects Regulatory Complaint Against ERCOT

 

A company error led to a massive wholesale power price spike.

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A multi-million-dollar regulatory complaint against ERCOT and relating to a massive wholesale power price spike has been dismissed by Texas regulators.

But during deliberations Sept. 11,  the Texas Public Utility Commission also agreed that the state’s power grid operator should establish clear guidelines to address similar circumstances in the future.

The price surge occurred after Houston-based Calpine last year submitted erroneous information to the Electric Reliability Council of Texas, the grid operator.  As part of its day-to-day responsibilities, ERCOT manages a computerized energy trading system that processes data from power generators and others.

Prices surged as a result of the generation company error — from $37 per megawatt hour to the regulatory cap of $9,000 per mWh. On only one occasion previous to the that spike last year had prices reached such an elevated level.

The market quickly settled after the mistake was discovered, but not before $18 million in reported losses.

COMPANY ACKNOWLEDGES MISTAKE

Calpine has acknowledged the mistake. According to reports, the company on May 30, 2019 erroneously reported to ERCOT that it had taken 4,000 megawatts of generation offline, or approximately enough power for 800,000 homes during a hot day. The resulting price surge lasted 15 minutes.

Aspire Commodities, the energy trading company that filed the PUC complaint, said ERCOT should have retroactively ordered a correction.

“Aspire lost money not because its research was wrong, quite the opposite,” 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.”

ERCOT, as a matter of policy, does not retroactively adjust prices in response to bad data it receives from market participants. The grid operator argues that it frequently receives incorrect data, and that making adjustments in each instance would require daily changes.

NO WIGGLE ROOM

But speaking to the Houston Chronicle, Aspire President Adam Sinn said no “wiggle room” existed in the relevant PUC rules on pricing. He expressed disappointment with the Commission’s decision.

PUC Chairman DeAnn Walker said ERCOT should open a process to address how it handles future pricing errors from generators. The other two commissioners agreed.

“We shouldn’t wait for there to be a really huge event to be having this discussion and this fight,” said Commissioner Arthur D’Andrea. “This is the kind of thing that should be clear.”

Calpine and ERCOT declined to comment to the newspaper.

— R.A. Dyer