Members Debate Southern Cross’ Bid to be Merchant DC Tie Operator
AUSTIN, Texas — ERCOT’s Technical Advisory Committee last week failed to reach agreement on how to classify Southern Cross Transmission (SCT) after debating the company’s bid to become the ISO’s first merchant DC tie operator.
TAC representatives and members will again take up the discussion during its March meeting, as part of an ERCOT legal staff effort to update the ISO’s bylaws and 18-year-old articles of incorporation. The proposed bylaw amendments include an attempt to place SCT in the appropriate membership segment.
The Public Utility Commission of Texas last year directed ERCOT to determine the best “market participation category” for SCT (Project No. 46304), which is behind an HVDC transmission project that would be capable of shipping more than 2 GW of electricity between the Texas grid and Southeastern markets.
During a September workshop, SCT proposed it be included within the Investor-Owned Utilities segment as an “independent DC tie operator.” It defined the classification as being appropriate for any entity that is not a transmission or distribution entity or an affiliate of a T&D entity, or for entities that own or are preparing to own or operate “a DC tie to be interconnected to the ERCOT transmission grid.” (See “Southern Cross Offers Suggestions for its Market Participation,” ERCOT Briefs.)
ERCOT’s legal staff pointed out that SCT does not fit within the “currently defined” segments and said one of the existing definitions within the bylaws would have to be amended to accommodate an entity “whose ERCOT-based activities are limited to owning or operating a [DC] tie” interconnected to the ERCOT grid.
In a 12-page memo, staff recommended that the TAC consider the IOU and Independent Power Marketers segments as appropriate for SCT. “The activities of typical members in these two segments more closely align with those of SCT than the activities of typical members” in other segments, they wrote.
ERCOT does not currently include DC tie operators as market participants. Three of its IOU members — American Electric Power, Oncor and Sharyland Utilities — operate ERCOT DC ties as “electric utilities” or “transmission service providers.”
Staff said they believe they have a directive to move the issue forward, and plan to bring a recommendation to the Board of Directors’ Human Resources and Governance Committee in April.
“At some level, the choice that gets made here is just a name,” said Cratylus Advisors’ Mark Bruce, who represents SCT. “What it boils down to is, are you a member? Do you have a role in corporate governance? Are you able to cast an individual vote as a member? Those are particular areas where having a corporate membership in the organization affords you a right — and it’s an important right.”
Like ERCOT staff, Oncor has suggested that a DC tie operator, “if such a member does not fit in any other classification,” should participate in the market as an IPM. That segment includes entities that are not transmission/distribution service providers (TDSPs) or affiliates of a TDSP, and are registered at the PUC as power marketers in ERCOT.
Liz Jones, legal counsel for Oncor, compared the discussion to a “big ol’ game of keep-away.”
“[One segment] says not us, other segments say not us,” she said. “ERCOT segments are founded on the notion [that] IOUs should not be running the market. The fact we own transmission, in and of itself, is not distinguishable, because the end-use transmission customers also own transmission elements.
“We, coupled with the NOIEs [non-opt-in entities], are the foundation of the open-access market,” Jones continued, referring to cooperatives and municipally owned utilities that offer customer choice in ERCOT. “I do not think it is consistent with the community interest to include Southern Cross in the IOU segment. We have previously found a home for misfit children. I’m sure neither Southern Cross and the power marketers will be particularly thrilled, but that’s not enough of a reason to throw them into the IOU segment.”
“Southern Cross does not really have religion,” Bruce reiterated. “It’s just a name and a way to get a vote. As long as we get a vote, it doesn’t matter. On the other hand, optics matter. Being called a power marketer when you don’t market power is awkward.”
SCT foresees qualified scheduling entities (QSEs) buying capacity from it just as they do from the ISO’s existing five DC ties. The company would not participate in the settlement process, but the QSEs would. SCT would not have a Texas tariff or collect transmission rates, leaving the QSEs responsible for paying transmission service charges for use of the ERCOT system.
“If the Southern Cross DC tie was located 1 inch further west than planned, it would be a Texas utility and a TSP [transmission service provider],” Bruce said.
He noted that because the tie is not in the state of Texas, SCT is an electric utility under federal law, with a FERC code of conduct and an open access tariff. Bruce said that the fundamental feature of power marketers is that “they take title to the electricity they buy and sell. Southern Cross will not buy or sell energy and will not take title to power.”
“Southern Cross will do the exact same thing at a DC tie that AEP does, that Sharyland does,” he said. “Southern Cross will follow ERCOT instructions to net out approved e-Tags and provide open access to the ERCOT system.”
SCT obtained FERC approval in 2014 for interconnection to and transmission service in ERCOT that maintains the ISO’s jurisdictional status quo.
The project would link ERCOT to the Eastern Interconnection through a 38-mile, 345-kV line owned by Garland Power & Light that connects with a converter station just across the Louisiana border. SCT would build a 400-mile, 500-kV DC line to connect with Southern Co.’s existing 500-kV system in Alabama.
The PUC last May approved Garland’s application for the 345-kV line, which has an established route (Docket No. 45624).
Members Reject Appeal from Small Municipalities
Members unanimously rebuffed an appeal of a rejected change to the ISO’s Nodal Operating Guide regarding the definition of transmission owners, with some saying the decision should be left to the PUC.
“I think we’re the wrong body to handle this,” said Citigroup’s Eric Goff. “I’d like it to go the commission as soon as possible.”
Tom Anson, legal counsel for the Small Public Power Group of Texas (SPPG), said the group has an agreement with the PUC’s enforcement staff to pursue the rule change, and would instead take its appeal to the ERCOT board, which next meets in April.
The revision request (NOGRR149) would exempt municipal distribution service providers without transmission or generation facilities from having to procure designated TO services from a third-party provider if their annual peak load is less than 25 MW. The proposal was developed in 2015 to settle the noncompliant status of six municipally owned utilities with loads of 9 to 21 MW.
The cities of Goldsmith and Bartlett, with a combined peak of less than 4 MW, have since joined the SPPG appeal.
The group has been filing regular monthly progress updates with the TAC. Anson refreshed the committee on the group’s most recent status report, which indicated none of the municipalities has been able to reach an agreement with its TSP.
“As a group, some of them have been able to make more progress than others … but none of them have a permanent [market] solution in place today,” Anson said, acknowledging the committee’s concerns over the lack of progress. “TAC asked us to look at potential market solutions, and we have done that. Whether it’s a potential market solution with third parties or some other solution, it can’t happen overnight. We’re dealing with other parties who sometimes are dealing with other parties.”
Anson proposed several alternatives to finding market solutions for the SPPG members, including a “TO light” category representing small systems that would get a partial exemption to a lower level of standing within ERCOT. However, none found favor with the TAC.
“You have asked SPPG members to pursue market solutions, and they have done so,” Anson said. “If you decide nevertheless to have a vote today, to me, that is essentially determining there are no sufficiently available market solutions.”
“It frustrates me that this revision request isn’t what we want, which is to exempt [municipalities] from load-shed obligations,” Goff said. “I understand why it’s complicated. Why would you want to pay for something that’s expensive for the size of the customer? Not that there aren’t any options, but it would be worth pursuing those in another venue.”
“We can’t be on the record for supporting an appeal that exempts someone from the market,” said Austin Energy’s Barksdale English. “We all have our obligations, and we have to meet them.”
The appeal was tabled for six months when brought to the TAC in March 2016, shortly after it failed to pass the Reliability and Operations Subcommittee. (See “Small Municipalities’ Appeal Tabled Again,” ERCOT Technical Advisory Committee Briefs: Aug. 24, 2017.)
Eight members, representing cooperatives, municipalities and independent generators, abstained from the vote, which led to a five-minute recess to review TAC’s bylaws. Eventually, ERCOT staff and TAC Chair Bob Helton determined there had been enough votes from the 22 remaining members to reject the appeal.
Committee Endorses Task Force Restructuring Recommendations
TAC members unanimously endorsed a task force’s recommendation to designate the Commercial Operations Subcommittee (COPS) and several of its working groups as inactive, and to move its remaining groups to other subcommittees.
The TAC Subcommittee Restructuring Task Force (TSRTF) noted that COPS was created to focus on “substantial and urgent” market communication and settlement issues, but it has now reached a “steady state concerning those issues.” Designating the subcommittee as inactive will protect access to historical information and allow for its reactivation, if necessary, the task force said.
The TSRTF and COPS agreed to also designate the Communications and Settlements and Market Data working groups as inactive, with some of their responsibilities inherited by other subcommittees. Settlement discussion items will move under the Wholesale Market Subcommittee.
As part of its work, the task force looked at the Retail Market Subcommittee (RMS), which, after meeting with the task force, agreed to move the Advanced Metering Working Group to inactive status and distribute several COPS duties to its other working groups. The RMS would also inherit and deactivate COPS’ Profiling Working Group.
The task force hopes to complete its work reviewing and modifying the TAC and its subcommittee procedures and voting structures, so it can make a formal recommendation to the board in April.
Although COPS may be living on borrowed time, the TAC confirmed its 2018 leadership and goals. Heddie Lookadoo (Reliant Energy Retail Services) and John Moschos (Tenaska) serve as its chair and vice chair, respectively.
TAC Unanimously Approves Slim Set of Revision Requests
The committee unanimously approved two NPRRs and two changes to the Resource Registration Glossary (RRGRRs):
- NPRR854: Allows NOIE TDSPs to submit meter data for NOIE points of delivery, rather than incurring the expense of installing, testing and maintaining an ERCOT-polled settlement meter, resulting in decreased expenses for both the NOIE and ERCOT.
- NPRR860: Clarifies certain day-ahead market practices and cleans up protocol language to better match the current implementation, including clarifying 1) the language for offering in three-part supply offers and ancillary service offers for offline non-spinning reserve in the same hour for day-ahead consideration; 2) the self-commitment treatment of resources with only an ancillary service offer submitted for the day-ahead; and 3) the ancillary service offer resubmission rules. Also removes the reference to congestion revenue rights being co-optimized in the day-ahead.
- RRGRR015: Clarifies glossary definitions and detailed descriptions of data fields to help market participants successfully submit their resource asset registration forms (RARFs). The change does not add or delete any data requirements, does not require a revision of the existing RARF form and does not require resubmission of previously submitted data already accepted by ERCOT.
- RRGRR016: Provides amplifying direction to RARF users for completion of certain solar data and narrows the data in order to provide solar forecasters with more precise data.
— Tom Kleckner