|(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
(c) Definitions. The following terms, when used in
this section, have the following meanings, unless the context indicates
(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
(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
(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
(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
(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.
|Source Note: The provisions of this §25.502 adopted to be effective January 9, 2005, 29 TexReg 12166; amended to be effective September 13, 2006, 31 TexReg 7317; amended to be effective August 12, 2010, 35 TexReg 6823; amended to be effective January 1, 2018, 42 TexReg 5671; amended to be effective December 5, 2019, 44 TexReg 7376