Load Participation in Real-Time
Market: LMP Minus G
Efforts to Allow More Load
Participation in Energy Market
• State law calls for ERCOT to permit demand
response to participate in markets
• Significant potential resource in residential
and commercial air conditioning load
• REP and third-party demand response
providers have sought broader opportunities
– Third-party DR providers could bring focus and
expertise, could invest in DR equipment at
customers’ premises
TAC Deliberations
• TAC in 2011 voted to endorse “LMP-G” rather
than “Full LMP” as settlement mechanism
– TAC decision based on a conceptual discussion, rather
than detailed examination of LMP-G
• Presentation to TAC emphasized avoiding double
payment: LMP to DR provider plus customer’s
avoided cost of energy
• TAC endorsed “volumetric” LMP-VG, in which
energy curtailed would be added back to the
LSE’s settlement at the individual customer (ESI
ID) level
Recent Stakeholder Efforts
• DSWG’s Loads in SCED subgroup has worked on details
of how LMP-G could be implemented
• Volumetric LMP-G is not workable for residential and
small commercial, because ERCOT believes it cannot
estimate load reductions for individual residential and
small commercial sites with sufficient accuracy
• New approach, LMP-Proxy $G, can work for customers
or aggregations of customers in all classes if capable of
being accurately baselined by ERCOT
• This approach has broad support in DSWG
LMP-Proxy $G Settlement
• LMP-G would be implemented at the wholesale
market (QSE settlement) level
– ERCOT would pay DR QSEs for load reduction at LMPProxy $G
– ERCOT would add each LSE’s portfolio-level load
reduction to the LSE’s settlement
– ERCOT would credit LSE at Proxy $G for the load
reduction
– Proxy $G would be based on POLR rates
• No new market uplifts under this approach
LiSCED Consensus Principles
• Loads should be permitted to actively participate
in Real Time Market
• Loads participating in Real Time Market would
contribute to wholesale price formation
• Loads should not receive financial benefit more
than once for providing demand response
• The existing ORDC and Loads in SCED “bid to buy”
market structures should be preserved
• There are other issues that will need to be
resolved in stakeholder process
LiSCED Consensus Customer Policies
• Customer has the right to select or change a DR QSE
• REP would be notified if customer agrees to have his
load response managed by a DR QSE
• Rules should preclude DR-blocker strategies by REPs
• Rules should ensure an adequate transition period for
REPs to manage existing customer relationships
– For the transition period, rules should define a REP’s rights
with respect to a customer’s legacy rate plan when
customer joins a DR QSE, if the current rate plan includes
an incentive tied to DR capability
• Customer engagement rules will be needed, so that
REPs and DR QSEs compete on equitable term
LiSCED Consensus Implementation
Mechanisms
• New concept of demand response provider of
record (DR-POR)
• System to notify ERCOT and current REP or DR
provider of customer enrollment in DR
program and other key events
• System needed to resolve competing claims to
be customer’s DR-POR
Areas of Particular PUC Interest
• Can REP charge customer for energy not consumed or
for risks related to customer’s participation in 3d party
DR?
• What are REP’s options when customer joins a DR QSE,
if the current rate plan includes an incentive tied to DR
capability
• Transition period for REPs to manage existing customer
relationships
• Prohibition of DR-blocker strategies by REPs
• Customer engagement rules: REPs and DR QSEs to
compete on equitable term
• System to resolve competing claims to be customer’s
DR-POR
Questions for TAC
• Should the PUC be brought into the
deliberations on Loads in SCED? If so,
when and how?
• DSWG recommendation is consistent
with the LMP-G concept discussed at
2011 TAC meeting, but different in
implementation approach. Is TAC OK
with the approach outlined in this
presentation?