ERCOT rejects opening electrical can of worms

A map of Texas showing the state s transmission lines is a focal point in the control room of the Electric Reliability Council of Texas, which operates most of the state's power grid. (Ryan Holeywell/Houston Chronicle) less A map of Texas showing the state s transmission lines is a focal point in the control room of the Electric Reliability Council of Texas, which operates most of the state's power grid. (Ryan Holeywell/Houston ... more Photo: Ryan Holeywell / Houston Chronicle Photo: Ryan Holeywell / Houston Chronicle Image 1 of / 1 Caption Close ERCOT rejects opening electrical can of worms 1 / 1 Back to Gallery

The manager of the Texas electric grid said Wednesday that it should not be forced to fix a data error that increased electricity costs by millions of dollars and reprice a block of wholesale power sales because generators submit erroneous data so frequently it would have to adjust prices as often as once a day.

The Electric Reliability Council of Texas made its comments in response to a complaint filed with the Public Utility Commission by the electricity trader Aspire Commodities in Houston. Aspire asked regulators to require generators to repay a windfall of an estimated $18 million, the result of inaccurate production data sent to ERCOT by the Houston merchant power company Calpine. On May 30, electricity prices soared from $41 per megawatt hour to $9,000 after Calpine mistakenly signaled to ERCOT that it had taken some 4,000 megawatts of generating capacity — enough to power 800,000 Texas homes — offline.

Aspire, lost an undisclosed amount of money on electricity trading as a result of the spike. Aspire estimated that the price spike increased the costs of summer futures contracts by $245 million. Wholesale power prices and the cost of futures contracts are built into retail electric rates.

On HoustonChronicle.com: Calpine admits error that sent power prices soaring

In its filing with the Public Utility Commission, ERCOT said it would be “imprudent” if it was forced to correct prices because on any given day the grid manager receives wrong information or data sent in error on power availability that affects wholesale prices. ERCOT said that it would cause increased price uncertainty and market instability if ERCOT were forced to reprice trades that move through the system.

Ed Hirs, an energy economist at the University of Houston, said ERCOT’s argument was astonishing for a regulator that has spent millions of dollars to build a computerized market model that prices power and measures capacity in 5 to 15 second intervals. ERCOT’s job is to create an orderly and reliable market, Hirs said, but the filing essentially described a built-in flaw that encourages any trickster to take advantage of it.

“This is a multi-billion enterprise that is unable and unwilling to repair mistakes,” he said. “How does it do its job?”

ERCOT declined to comment.

Calpine has asked ERCOT to reprice the 15-minute interval in which the price spike occurred, a move that would essentially lead to refunds from generators, which are paid based on the average price during each 15-minute interval. The wholesale price averaged $1,400 a megawatt hour during that interval in which the price spike occurred; it averaged $41 in the 15 minutes before and $29 in the 15 minutes after.

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Within an hour of discovering Calpine’s error, ERCOT rejected repricing the 15-minute interval. ERCOT does not make price corrections when it receives incorrect information from generators, Kenan Ogelman, vice president of commercial operations, said during a meeting of the ERCOT's board of directors in June.

Calpine would not comment for this story.

ERCOT also said in its filing that Aspire Commodities must use ERCOT’s alternative dispute resolution process before bringing a complaint to the Public Utility Commission and asked the commission to dismiss the complaint on that grounds.

Aspire president Adam Sinn said ERCOT wants to force people into arbitration so that it can bury the proceedings and delay making decisions.

The longer the delay, the more difficult it is for ERCOT to reprice, he said. And Aspire Commodities isn’t required to go through an arbitration process, he said, because the commission has already established jurisdiction over the issue.

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