ERCOT has issued its RFP for the Must Run Alternative

Posted: July 19, 2016 - 10:49 / FOA-RFI-RFP

NOTICE DATE:  July 13, 2016
NOTICE TYPE:  M-C071316-01 Contracts/RFP 
SHORT DESCRIPTION:  Issuance of Request for Proposals for Must-Run Alternatives to Replace June 2, 2016 Reliability Must-Run Agreement
INTENDED AUDIENCE:  ERCOT Market Participants
DAY AFFECTED:  July 13, 2016
LONG DESCRIPTION:  On July 13, 2016, ERCOT issued a request for proposals (RFP) to procure one or more resources as a Must-Run Alternative (MRA) to the existing Reliability-Must Run (RMR) Agreement with NRG Texas Power LLC.  The June 2, 2016 RMR Agreement requires NRG to make its Greens Bayou Unit 5 available to ERCOT during the months of July through September 2016, June through September 2017, and June 2018 in exchange for a standby payment of $3,185 per hour during the term of the agreement plus an incentive factor of as much as 10%.  ERCOT identified a need for the RMR Agreement based on a study showing that the Greens Bayou Unit 5 would reduce overloads on the Singleton-Zenith 345 kV import path into the Houston area under certain G-1 + N-1 conditions.  

Protocols Section 3.14.1.4, Exit Strategy from an RMR Agreement, requires ERCOT to evaluate the availability of cost-effective alternatives to this RMR Agreement.  Protocols Section 3.14.1.5, Potential Alternatives to RMR Agreements, authorizes ERCOT to replace the RMR Agreement with an MRA Agreement if the MRA Resource would:

  • provide an acceptable solution to the reliability concern currently addressed by the RMR Unit
  • provide at least $1 million in annual savings over the projected net annualized costs for the RMR Unit, and 
  • satisfy objective financial criteria demonstrating that the provider of the MRA Resource is reasonably able to fulfill its performance obligations.  

Pursuant to these provisions, ERCOT’s RFP seeks MRA proposals that meet the reliability objectives of the existing RMR Agreement and satisfy the other MRA criteria in Section 3.14.1.5.  The RFP is conducted subject to the program terms described in the MRA Governing Document, which has been posted along with the RFP.  
As explained in the RFP and the MRA Governing Document, ERCOT seeks proposals to provide either new generation—including new standalone units or augmentation or additions to existing units—or demand response—including new DR capacity or currently registered Load Resources or ERS Resources.  The service may be provided by resources located at either transmission or distribution voltage, provided that the resource must have a negative Shift Factor of at least 3% with respect to the Singleton-to-Zenith constraint. The MRA Resource must be available for one or more months in the five-month period that includes June to September 2017 and June 2018.  For any MRA Resource committed for June 2018, ERCOT may extend the MRA Resource’s obligation up to an additional 90 days.

Under the terms of the RFP, only Qualified Scheduling Entities (QSEs) may submit MRA proposals.  Proposals will be awarded on an as-bid basis.  ERCOT will provide hourly standby payments to awarded QSEs and will provide startup and energy costs, as described in the RFP and the MRA Governing Document.  Awarded QSEs will be required to execute a “Must-Run Alternative Supplement to Market Participant Agreement,” which is embedded in Section 5 of the RFP document.  Awarded QSEs will also be required to establish a separate sub-QSE for purposes of Settlement.  QSEs must submit proposals to ERCOT no later than 3:00 p.m. Central Prevailing Time (CPT) on August 24, 2016.  The RFP, MRA Governing Document and appendices of the RFP may be accessed on ERCOT’s website at the following link: http://www.ercot.com/about/procurement/rfp/index.  

Market Participants or other potential submitters of proposals may not communicate with any ERCOT employee other than the person designated as the “ERCOT Point of Contact” in the RFP (see “Contact” section, below) about any matter concerning the substance of the RFP.  

CONTACT:  Inquiries concerning this RFP must be directed in writing to Jimmy Ramirez, Senior Manager, Supply Chain Management, at jramirez@ercot.com.  Media inquiries concerning the RFP may be directed to Robbie Searcy, Communications Manager, at (512) 225-7213 or robbie.searcy@ercot.com.

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