(a) Definitions. The following terms, when used in this section, have the following meanings, unless the context indicates otherwise:
(1) Emergency operations--ERCOT entering into any level of Energy Emergency Alert.
(2) Generation entity--an entity that owns or controls a generation resource.
(3) Generation resource--a generator capable of providing energy or ancillary services to the ERCOT grid and that is registered with ERCOT as a generation resource.
(4) Load entity--an entity that owns or controls a load resource.
(5) Load resource--a load capable of providing ancillary service to the ERCOT system or energy in the form of demand response and is registered with ERCOT as a load resource.
(6) Resource entity--an entity that is a generation entity or a load entity.
(b) Scarcity Pricing Mechanism (SPM). ERCOT will administer the SPM. The SPM will operate as follows:
(1) The SPM will operate on a calendar year basis.
(2) For each day, the peaking operating cost (POC) will be 10 times the natural gas price index value determined by ERCOT. The POC is calculated in dollars per megawatt-hour (MWh).
(3) For the purpose of this section, the real-time energy price (RTEP) will be measured as an average system-wide price as determined by ERCOT.
(4) Beginning January 1 of each calendar year, the peaker net margin will be calculated as: ∑((RTEP - POC) * (number of minutes in a settlement interval / 60 minutes per hour)) for each settlement interval when RTEP - POC >0.
(5) Each day, ERCOT will post at a publicly accessible location on its website the updated value of the peaker net margin, in dollars per megawatt (MW).
(6) System-Wide Offer Caps.
(7) Reimbursement for Operating Losses when the LCAP is in Effect. When the system-wide offer cap is set to the LCAP, ERCOT must reimburse resource entities for any actual marginal costs in excess of the larger of the LCAP or the real-time energy price for the resource. ERCOT must utilize existing settlement processes to the extent possible to verify the resource entity's costs for reimbursement.
(c) Emergency Pricing Program (EPP). ERCOT will administer the EPP. The EPP will operate as follows.
(1) Activation of the EPP. The EPP must be activated if the system-wide energy price, as determined by ERCOT, has been at the HCAP for 12 hours within a rolling 24-hour period.
(2) Emergency Offer Cap (ECAP). While the EPP is active, the system-wide offer cap will be set to the ECAP for both energy and ancillary service offers. The ECAP will be set equal to the value of the LCAP.
(3) Duration of the EPP. The EPP will remain in effect until the later of:
(4) Market Notice. ERCOT will issue a notice both when the EPP is activated and when the EPP is terminated. The notice must include the date and time of the activation or termination of the EPP.
(5) Reimbursement for Costs That Exceed the ECAP.
(6) Report.
(7) Immediate Implementation. ERCOT must implement the EPP immediately. Notwithstanding any conflicting language in this subsection, ERCOT may utilize a manual process to activate the EPP and may consider the real-time energy price, exclusive of any congestion, to determine the system-wide energy price, until any system and protocol changes are complete. ERCOT must issue a market notice when it transitions from a manual to an automated EPP activation process.
(d) Review of System-Wide Offer Cap Programs. Beginning January 1, 2026, and every five years thereafter, the commission will review each of the system-wide offer cap programs to determine whether to update aspects of each program.
(e) Development and Implementation. ERCOT must use a stakeholder process, in consultation with commission staff, to develop and implement rules that comply with this section. Nothing in this section prevents the commission from taking actions necessary to protect the public interest, including actions that are otherwise inconsistent with the other provisions in this section.
Source Note: The provisions of this §25.509 adopted to be effective May 11, 2022, 47 TexReg 2742; amended to be effective December 20, 2023, 48 TexReg 7518