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PRESS RELEASE
September 27, 2001
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 Print Version
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Launching a New Era in Texas January 2002
- History in the Making...
- We Are Ready for January 1, 2002
- Resources
- ERCOT Coverage Area
- News Release
- Video Selections
History in the Making...
January 1, 2002 marks the launch of a new era in the Texas electricity industry. At the center of this effort is the Electric Reliability Council of Texas, Inc. (ERCOT), the corporation that administers the power grid and serves approximately 85 percent of the state's electric load. The opening of the retail electric market is the culmination of years of hard work and planning, and will result in a competitive market unlike any in the United States.
| 1970 | ERCOT formed by consortium of Texas utilities to meet federal requirements. |
| 1995 | Texas wholesale electricity market deregulated. |
| 1999 | Texas Legislature passes SB-7 to deregulate the retail electricity market. ERCOT begins initial planning and design of an Energy Management System (EMS) necessary for a competitive retail market. |
| 2000 | ERCOT board hires executive staff. Construction begins on ERCOT Austin facility. Planning begins for construction of ERCOT Taylor. |
| 2001 | April. ERCOT conducts a mock market to begin testing the Energy Management System. June. ERCOT opens its Austin facility and switches the first electricity customer under the Pilot Program. September. ERCOT systems are successfully handling up to 15,000 customer switches a day in order to test processes for customers in the ERCOT service area. |
| 2002 | Start of the restructured electricity market in Texas. |
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We Are Ready for January 1, 2002
Reliable Electricity Supply and System Operation
We are ready for the full retail market because:- ERCOT has successfully completed four months of continuous Single Control Area operations-the largest in North America with over 57,000 MW of peak demand and 70,000 MW of generating capacity
- ERCOT has maintained frequency control and electric system reliability since July 31
- Dispatched generation to meet changes in load from forecast demand
- Maintained proper voltages throughout the region
- Prevented line over-loadings on both inter and intra-zonal paths
- Directed immediate deployment of generation during unscheduled plant outages
- ERCOT continues to attract new generating plants that add to market supply
- ERCOT has two control centers with identical functionality and redundant systems at each site. These computer systems have become very stable and transferring operations between systems and sites has been done successfully
- There has been a high degree of cooperation between ERCOT and Market Participants in working through problems and developing revised procedures based on Pilot Program operating experience
Competitive Wholesale Markets and Functioning Commercial Operations
We are ready for the full retail market because:- ERCOT has successfully implemented the new wholesale market scheduling, bidding, metering, profiling and settlement functions
- ERCOT has facilitated and settled more than 20,000 Ancillary Service and Balancing Energy market auctions necessary to maintain reliable energy services and manage transmission congestion
- ERCOT has established a liquid wholesale market that has resulted in an adequate supply of available energy and ancillary services at reasonable prices
- ERCOT has reconciled the energy produced and consumed throughout its region for over 5 million customers (more than 100 Million MWh) to within +/- 1% accuracy
- ERCOT has executed approximately 400 market participant agreements with REPs, QSEs, TDSPs, and LSEs in preparation for the full market
- ERCOT has conducted training for 1,500 market participant employees in addition to eight market readiness seminars averaging 300 participants per session
- ERCOT has successfully implemented a Pilot Program for the Renewable Energy Credit trading program in Texas
Fully Tested Retail Systems and Processes Under an End-to-end "Live" Pilot
We are ready for the full retail market because:- More than 67,000 customers participating in the Pilot Program are currently receiving power from new Retail Electric Providers (REPs)
- ERCOT has demonstrated its ability to manage 15,000 switches per day and has completed system performance enhancements for full market volumes. All switch request backlog has been eliminated and switches are processed as received
- ERCOT and the Market Participants successfully completed the final flight of readiness testing using Texas SET software specifications version 1.4 (Flight 1001) on November 30. A total of 124 trading partner relations were successfully tested with thousands of sample transactions
- ERCOT implemented Version 1.4 (as scheduled) on December 17
- ERCOT has received and processed over 20 Million end-use-customer meter reads for wholesale energy accounting purposes and is now forwarding these reads to Retailers per Protocol. ERCOT is currently reviewing performance with the REPs to verify this
- ERCOT and TDSPs are preparing to transfer customers from their incumbent utility to the utility's affiliated REP in January when utility affiliate REPs assume responsibility for all customers of the utility that have not chosen a new retail provider
- ERCOT has completed the testing and Pilot exercise of the first multi-supplier centralized retail customer registration system and process in the world !!!
Resources
Useful links:
Skipping Stone, Inc.
Texas Deregulation Report, December 2001
"ERCOT did one really good thing to drop the whole idea of pride of authorship. It went out to find the things that do work, pursue them in earnest, try to improve upon them and make them work. What ERCOT is attempting to do is very, very difficult, and it's doing it quite well."
Video of a recent interview with Dr. John O'Brien, principal, Skipping Stone Inc., is available here. Skipping Stone is an independent energy consulting firm based in Pennsylvania.
Energy Competition Strategy Report
September 2001
"…the Texas retail program is not only the one to watch, but also the one most likely to succeed. Will it wash away some of the bad taste from California? Perhaps it's too early to tell that. However, most experts believe the way Texas restructured its electric markets is the best yet."
The full text of the Energy Competition Strategy Report is available on the ERCOT web site. The report is published by National Health Information, www.nhionline.net.
Center for the Advancement of Energy Markets (CAEM)
RED Index, July 2001
"Our index, that my organization puts out to rank states for their deregulation efforts, already had Texas among the leaders and they haven't even opened their market yet. Clearly Texas will go up in the next issue of the RED Index and there is a really good chance Texas will be the best state in the nation."Video of a recent interview with Ken Malloy is available here. CAEM is an independent, nonprofit think tank based in Washington DC. The CAEM RED Index is available at www.caem.org.
Reason Public Policy Institute
"Getting Deregulation Right", April 2001
"Texas' electricity deregulation legislation, and its process to date, suggest that deregulation can and will generate benefits for both customers and suppliers. For those repelled by the politicized restructuring in California, Texas' plan provides an antidote."The full text of "Getting Deregulation Right: How Other States and Nations Have Avoided California's Mistakes" can be found at www.powertochoose.org, or at the Reason Public Policy Institute website at www.rppi.org.
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News Release
Texas Set to Open Fully Restructured Electric Market on January 1, 2002
The Electric Reliability Council of Texas, Inc. (ERCOT), the corporation that manages the state's power grid and is home to the largest control area in the United States, is set to launch the start of full retail competition on January 1, 2002.
Touted as "a model for the rest of the country" and the market "most likely to succeed" by experts across the U.S., Texas is now ready to implement its unprecedented plans to deregulate its electric utility market.
"Ours is the most complex system anyone has tried to build at the retail level," said Tom Noel, ERCOT Chief Executive Officer. "Texas has the only centralized retail market in the country. This day has been years in the making, but we are now ready to forge ahead on January 1 and smoothly transition into full retail competition as planned."
John O'Brien, Ph.D., an analyst with Skipping Stone, Inc. a Pennsylvania-based energy consulting firm says, "The goal of deregulation when it was introduced in any marketplace, but specifically in the energy marketplace, was to allow for a higher level of service at lower costs. I believe if the Texas model is implemented and executed with caution and time, those benefits will be very apparent."
Unlike other states, Texas first engaged in a seven month Pilot Program (prior to the start of full competition) in which up to five percent of customers were allowed to switch to a new provider. Over 100,000 customers elected to switch power providers in order to sample the merits of deregulation in Texas. The Pilot Program also gave ERCOT the opportunity to test the new systems necessary to make deregulation a reality.
"The Pilot Program has been everything a reasonable observer of deregulation would expect," said Noel. "Everyone involved in this process has needed to meet many challenges, but all systems are now working exceptionally well."
Texas has indeed become the state to watch as the country tries to put distance between itself and California, which has experienced ongoing problems with electric deregulation. Several other states have also delayed deregulation, opting instead to wait and see how successful Texas is in its endeavors.
The Lone Star state has also recently received high praise from both the Center for the Advancement of Energy Markets (CAEM) as well as from consultants and economic professors from around the nation. CAEM president Ken Malloy says "Our index, that my organization uses to rank states on deregulation efforts, puts Texas among the leaders and they haven't even opened the market yet. So when that happens on January first, there is a really good chance Texas will become the best state in the nation."
According to the Energy Competition Strategy Report, " . . . the Texas retail program is not only the one to watch, but also the one likely to succeed." The publication also indicated that " . . . most experts believe the way Texas restructured its electric markets is the best yet." The Energy Competition Strategy Report, as well as interviews with John O'Brien and Ken Malloy are available on the ERCOT Web site.
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ERCOT keeps the lights on in Texas so you won't be in the dark, and is one of ten regional reliability councils in North America. The organization oversees the operation of nearly 70,000 megawatts of generation and 37,000 miles of transmission lines in the State of Texas. The primary regulatory authority for ERCOT is the Public Utility Commission of Texas. ERCOT's members include retail consumers, investor and municipally owned electric utilities, rural electric co-ops, river authorities, independent generators, power marketers, and retail electric providers.
TopVideo Selections
Analysts Watch Texas Electric Deregulation
Austin, Texas (Dec. 20, 2001) - The Center for Advancement of Energy Markets predicts Texas should leap to the top of its rankings when it issues the next Red Index. CAEM's index is used to measure state's efforts to deregulate and promote energy markets.
To see video of a recent interview with CAEM's Ken Malloy, click here.
Analysts Release Texas Deregulation Report
Austin, Texas (Dec. 20, 2001) - In a new report by the Pennsylvania-based consulting firm, Skipping Stone, analysts predict deregulation of the electric industry in Texas will serve as a model for what should be going on in other states in the country.
To see video of a recent interview with Skipping Stone principal Dr. John O'Brien, click here.
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| Dottie Roark | 512-225-7024 |