From S&P Global:

Beth Garza, a senior fellow at the R Street Institute, a nonpartisan public policy research organization, who until recently headed Potomac Economics’ independent market monitor office for ERCOT, said the emergency pricing program, in effect, has the state Legislature set the public’s value of lost load, which she said is “helpful.”

“But without careful and thoughtful implementation, the proposed mechanism may result in an unsustainable wholesale market because enough revenue would not be generated to support the addition of needed generation capacity,” Garza said in a March 30 email. “The tricky part will be determining the conditions under which HCAP should be reinstated. … This question has appropriately been left for PUCT deliberations.”

Garza said assigning ancillary service cost to intermittent resources is “a bad idea,” as ERCOT’s ancillary service costs have decreased “even with the large influx of intermittent generation.”

“ERCOT should determine the quantity of [ancillary services] required to ensure reliable operation for all loads, given all generation,” Garza said. “Those costs are best borne directly by loads. By keeping the allocation simple and direct, loads will pay the lowest cost for those services rather than a generator’s risk adjusted approximation of those costs.”