Audit Finds That Power Grid Is Being Operated Safely and Reliably

Austin – At its monthly meeting today, the ERCOT Board of Directors charged ERCOT staff with the task of accelerating the implementation of several upgrades to ERCOT systems in order to improve wholesale and retail market performance in the newly restructured electric industry in Texas. The twenty-five member Board, voted unanimously to approve the upgrades through financing (debt) rather than through recommending an increase to the current 22 cents administrative fee.

"The Board has spoken," said ERCOT Chief Executive Officer, Tom Noel. "We are comfortable with their recommendations, and now that we have their blessing, we will move forward to implement the points of discussion from today's meeting."

Responding to the urging of electric industry market participants and the Public Utility Commission of Texas (PUCT), ERCOT's Board approved a number of projects that will improve the performance of the wholesale and retail electric market systems. The wholesale market enhancements, some of which have been ordered by the Commission, are intended to improve efficiency in the energy market, minimize energy market anomalies, and minimize the potential for market power abuses. On the retail side, the enhancements are intended to provide more efficiency and predictability in the retail customer switching process.

Also today, PricewaterhouseCoopers presented to the Board the findings of an operational audit conducted on ERCOT's Control Systems. Since the summer of 2001, ERCOT has made a major transition in operations to support the restructured electric industry (including support of retail deregulation) and has been in the process of implementing complex market and operational systems, in a virtual "start up" mode of operations. Full market operations began on January 1, 2002.

Although the operations audit discovered 28 instances where ERCOT was not following its written procedures in its control operations, the findings did not raise significant concerns about ERCOT's ability to operate the grid reliably and safely.

"We believe that of the activities that were found out of compliance, none of them have posed a critical threat to system reliability or proper market operations," said Noel. "In my experience, it is not uncommon to find variances from operating procedures during start-up operations to new control systems. We reported to the Board today that we have developed an action plan to begin addressing the audit findings, and they have confidence that we will make the corrections needed to be in compliance."

ERCOT committed to providing the Board with a progress report at each monthly meeting until all of the issues mentioned in the audit are resolved.