***** EXTERNAL email. Please be cautious and evaluate before you click on links, open attachments, or provide credentials. ***** NOTICE DATE: March 16, 2018 NOTICE TYPE: M-A031618-01 Legal SHORT DESCRIPTION: Resolution of ADR Proceedings between ERCOT and Luminant Energy Company, LLC (ADR No. 2017-LEC-01) INTENDED AUDIENCE: Market Participants DAYS AFFECTED: June 9 - 10, 2017 LONG DESCRIPTION: Upon ERCOT's determination of the disposition of an Alternative Dispute Resolution (ADR) proceeding, ERCOT Protocol Section 20.9 requires that ERCOT issue a Market Notice providing a brief description of the relevant facts, a list of the parties involved in the dispute, and ERCOT's disposition of the proceeding and reasoning in support thereof. Parties: ERCOT and Luminant Energy Company, LLC (Luminant) Relevant Facts: On June 9, 2017, at 23:35 Central Prevailing Time (CPT), ERCOT issued a Verbal Dispatch Instruction (VDI) for three combustion turbines owned by Luminant to come On-Line to resolve a voltage support issue that arose due to an approved transmission outage. At the time of the VDI, Luminant's turbines were in quick-start mode and had a status of "OFFQS" in Security-Constrained Economic Dispatch (SCED). Luminant responded to the VDI and synchronized to the ERCOT Transmission Grid, but one of the turbines tripped shortly after startup and was unable to restart; ERCOT confirmed that this turbine was not needed to resolve the voltage issue. Luminant filed Settlement disputes relating to its Settlement under the VDI for the period beginning 23:35 on June 9, 2017 through 02:00 June 10, 2017. Luminant claims it is owed $17,990.90 in additional payments for Operating Days June 9-10, 2017. ERCOT's Disposition/Reasoning: ERCOT denies this ADR for the following reasons. Generation Resources that receive a VDI for voltage support are settled as if they were committed through the Reliability Unit Commitment (RUC) process. In particular, ERCOT Protocol Section 5.1(12) states: After the use of market processes to the fullest extent practicable without jeopardizing the reliability of the ERCOT System, any ERCOT Dispatch Instructions for additional capacity that orders a QSE to commit a specific Generation Resource to be On-Line shall be considered a RUC Dispatch for the purpose of the Settlement of payments and charges related to the committed Generation Resource. Generation Resources committed through the RUC process are eligible to be settled at least at a Guaranteed Amount (GA). The GA consists of two parts: 1) Startup Costs (cost to start the Generation Resource); and 2) Minimum Energy (guaranteed minimum revenue for the time a Generation Resource is on-line due to RUC). In this case, Luminant's turbines were settled as Generation Resources that were committed through the RUC process. However, Luminant claims it was wrongly denied both parts of the GA. In order to receive the Startup Cost portion of the GA, the Generation Resource must not be QSE-committed. See ERCOT Protocol Section 5.6.2(2)(a). The ERCOT Protocols further state that any hour in which a quick start Generation Resource is available for SCED dispatch (as it is in OFFQS), the Generation Resource is considered QSE-committed. See ERCOT Protocol Sections 3.8.3(6) and 3.9.1(5)(b)(i)(o) (defining OFFQS as Off-Line but eligible for SCED deployment). As a result, when a Quick Start Generation Resource (QSGR) shows a status of OFFQS, it is treated as being QSE-committed and thus not eligible for the Startup Cost portion of the GA (technically, the Startup Cost for a QSE-committed Generation Resource is $0). Based on the foregoing, ERCOT determined that Luminant was not eligible for Startup Costs. Luminant claims that it should have received compensation for the minimum energy portion of the GA as well. Minimum energy is calculated as the minimum of the Low Sustained Limit (LSL) in the Current Operating Plan (COP) or the Generation Resource's Real-Time metered generation, whichever is lower. See ERCOT Protocol Section 5.7.1.2(1). The ERCOT Protocols require a QSGR to set the LSL in its COP "to the expected sustainable LSL and HSL for the QSGR for the hour." See ERCOT Protocol Section 3.8.3(1). In this case, Luminant was in OFFQS and therefore, its COP should have listed a LSL of the lowest amount of energy it could generate if deployed. Instead, Luminant set the LSL in its COP for the turbines to zero. The ERCOT Protocols required ERCOT to settle Luminant's minimum energy costs at the lower of its LSL or Real-Time generation. Because Luminant's COP reflected the LSL for the turbines as zero, this (zero) amount was used for the minimum energy portion of GA. Luminant's Settlement treatment was performed in accordance with the express language of applicable ERCOT Protocols and was not caused by a failure of SCED or any other ERCOT tool. As a result, this ADR was denied. This Market Notice serves to conclude the ADR proceedings between ERCOT and Luminant. FURTHER INFORMATION: ERCOT has filed Nodal Protocol Revision Request (NPRR) 856, Treatment of OFFQS Status in Day-Ahead Make Whole and RUC Settlements, to revise current Protocol language relating to Startup Cost eligibility for QSGRs. If approved, NPRR 856 will allow a QSGR with a COP and telemetered Resource Status of OFFQS to be considered for Startup Cost eligibility in the RUC Make-Whole Payment. NPRR 856 is currently tabled at PRS. CONTACT: If you have any questions, please contact your ERCOT Account Manager. 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