Operating Reserve Demand Curve (ORDC):
On November 19, 2013, the board of directors for the Electric Reliability Council of Texas (ERCOT) took action to improve market signals when operating reserves are in short supply by approving Nodal Protocol Revision Request 568 (NPRR 568) which provided for the implementation of an Operating Reserve Demand Curve (ORDC) on June 1, 2014.
Within ERCOT, energy and reserves are currently priced separately. (Energy is the total amount of Real-Time load in the market and reserves are the “cushion” of available power in case of system issues.) Because of this separation of prices, ERCOT may show low energy prices, while also experiencing a reserve shortage, which could potentially result in a reliability issue. The PUCT ordered ERCOT to better reflect that the two products are inter-related by creating a methodology to combine the two prices into one. The ORDC sets a value on reserves and adds it to the energy price. Therefore, when ERCOT experiences times of reserve shortages going forward, the energy price will be higher which should incentivize resources to produce more energy and reserves. This incentive is a charge that can be referred to as the Real-Time Price Adder which ERCOT includes in its published Real-Time Settlement Point Prices.
Due to the creation of this new ORDC Real-Time Price Adder, there are new ancillary service imbalance charges and/or credits. These charges/credits are essentially the under/over-collection of dollars associated with the ORDC Real-Time Price Adder by ERCOT and act as a balancing mechanism.
ERCOT – The Electric Reliability Council Of Texas is an independent, not-for-profit organization responsible for overseeing the reliable and safe transmission of electricity over Texas' main electricity power grid. ERCOT is governed by a board of directors and subject to oversight by the Public Utility Commission of Texas (PUCT) and the Texas Legislature.
PUCT – The Public Utility Commission of Texas is an organization that regulates the state’s electric and telecommunication utilities by providing oversight of competitive markets and compliance enforcement of statutes and rules.
Please don’t hesitate to contact your CNE Representative for more information. You may also contact Customer Care by phone at 888-635-0827 or email us at CustomerCare@Constellation.com.