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The Public Utility Commission of Texas on April 7 initiated a revision to the Electric Reliability Council Of Texas Inc.'s scarcity pricing rule to ensure that a "circuit breaker" change in the systemwide offer cap, designed to avoid harming consumers, does not create what the chairman called "absurd results."
At issue is the switch from ERCOT's $9,000/MWh "High Systemwide Offer Cap," or HCAP, to the "Low Systemwide Offer Cap," known as LCAP, which is the higher of either $2,000/MWh or 50 times a fuel index price, or FIP, chosen by the grid operator. ERCOT has set that FIP as the spot natural gas price at the Katy Hub, as determined by Argus.
Under ERCOT and PUC rules, ERCOT is to maintain the HCAP until the "Peaker Net Margin," or PNM, crosses a threshold of $315,000, when the LCAP is to be used. The PNM represents a calculation...