The ERCOT ORDC Under-Estimates the LOLP Because of a Misapplication of Normal Distribution Probability Theory

Abstract

ERCOT’s LOLP is underestimated because it ignores the path reserve level might take over the course of an hour. Some paths reach a reserve level of zero but end up greater than zero. These paths are not included in the LOLP determination even though they would result in a loss of load event during the hour, resulting in an underestimation of LOLP by the methodology.