Discuss infrastructure to support
bilateral contracting between CSPs
and REPs in the Retail Market
Loads in SCED Sub-group
May 22, 2014
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Key Terms
• CSP = Curtailment Service Provider (i.e. 3rd
Party DR Provider)
• For simplicity, ‘REP’ is used in these slides as
entity involved in transaction flow
– REP settlement remains thru REP’s QSE, a
separate entity
2
Objectives
• Design a transaction-based infrastructure to facilitate
bilateral contracts between CSPs providers and REPs.
• Promote more robust competition in the DR space.
• Address the impact of customer switching on CSPs.
• Eliminate LMP-volumetric G issues.
• Provide notification and transparency for all parties
involved and impacted by a DR transaction.
• Utilize retail electric service customer protection rules
well-established by the PUCT for the solicitation of DR
products and services.
• Eliminate complex changes to MMS/EMS for LRISv2.
3
Features of Bilateral Approach
• ALRs represented by REPs continue to participate in
SCED on a ‘bid to buy’ basis
– REP’s QSE is the only entity involved in ERCOT settlement
• Allows CSP to solicit customers directly
• CSPs gain ability to maintain DR relationships when
customers switch REPs
• Creates incentive for CSPs and DR-friendly REPs to
contract bilaterally to promote DR products and
services
• CSP new role in market: Qualification to submit and
receive ERCOT transactions
• Maximum flexibility for DR market
4
Status Quo: REP initiates DR product/service
Customer
Benefits:
-Simplifies implementation and
operations by ERCOT (no change)
-Easiest to understand for
customers?
CSP
2) REP markets bundled
DR products/services with
electric service
REP
1) CSP and REP negotiate
contract terms for DR
products and services,
settlement
3) Interaction as
currently designed
ERCOT
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Transaction-Based Bilateral
Approach
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Service initiation by CSP
Requires bilateral contract between CSP & REP
Customer
1) CSP initiates DR
service w/customer
CSP
2) CSP notifies ERCOT
of DR relationship
w/customer; identifies and
provides ERCOT information
about customer type,
aggregation, response type,
etc. Return transaction
reveals REP of record to CSP.
Existing relationship
w/customer for electric
service
Benefits:
-Provides CSP and REP with
customer level DR information to
facilitate bilateral contracts and
partnerships
Existing Contract
or Negotiate New
REP
-Improves ERCOT’s ability to
centrally track and manage ALRs
3) ERCOT notifies REP of
DR relationship between
CSP and customer
ERCOT
Manage CSP/ALR-REP relationships
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DR customer deployment
Customer
Customer deployment flexibility,
contractual terms dictate
CSP
REP
2) SCED dispatches
ALR when LZ SPP is
>= bid price
ERCOT
3) M&V, ALR telemetry
validation
1) REP submits bids to
ERCOT for ALRs
(negotiated in bilateral
contracts with CSP)
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Settlement of DR customer deployment
3) REP charges customer for
actual metered consumption
and may provide additional
incentives for load reduction
(DR service terms)
Customer
2) REP pays CSP for curtailment (G)
based on bilateral contract terms
including performance true ups
CSP
Benefits:
-No double payment by ISO
-Eliminates the volumetric G
problem
-REP acts as single billing agent for
customer
REP
ERCOT
1) ERCOT settles REP for load
curtailment as reduced
adjusted metered load
(Base Point Deviations and
CLREDP scores apply)
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Customer switches REPs
3) CSP has option to
continue serving customer;
informs customer of service
continuity or change
Customer
1) Customer with CSP relationship switches
REPs via normal switching process (TDSP
interaction not shown for simplicity)
CSP
New REP
Old REP
New
transactions 4) ERCOT
2) Switch transaction
at ERCOT triggers 2nd
transaction notifying
CSP of new REP
notifies new
REP of DR
relationship
Normal switching process (TDSP
interaction not shown for simplicity)
ERCOT
Manage ALR-REP relationships
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Issues/concerns with this approach
• Forces CSPs to contract with REPs to deliver products
and services to customers (is this a bad thing?)
• CSP incurs REP risk as well as customer risk (is this a
bad thing?)
– Operational
– Credit
• REP may incur commercial risk as a result of CSP
deployment
• REP incurs deployment compliance risk for the CSP
(same as today)
• REP acts as settlement agent for CSP (same as today)
• Implement via TX SET/NAESB additions?
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Is there another way? LMP- Proxy $G?
Customer
5) REP charges customer for
actual metered consumption
6) CSP passes on DR payment
at contract terms
1) CSP notifies REP of DR
relationship with customer
CSP
2) SCED Base Points sent
to CSP
Issues:
3) ERCOT pays CSP
-Complex implementation
for load curtailment
-Must implement Loads in SCED
(X) at LMP-Proxy $G
as a resource for this
-Disruptive to REPs
-Is critical mass realistic?
-Define acceptable Proxy $G
ERCOT
(target for litigation/dispute?)
REP
4) ERCOT charges REP
for adjusted metered
load
Drawback: Customers on
indexed price are ‘double-paid’?
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3 Ways to Implement LMP - G
1) Avoid it! (Status quo or bilateral approach)
or
• L = Actual Load (MWh)
• C = Curtailment (MWh)
• G = Retail Rate
2) Volumetric LMP-G (Proving unworkable)
Customer settlement = -(L+C)*G + LMP*C
= -L*G + (LMP-G)*C
3) LMP – Proxy $G (Complex and disruptive to retail)
Customer settlement = -L*G + (LMP-G)*C
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