ERCOT CEO Looks to Future, Discusses Next Steps in Retail Market

Austin - Nearly one year after customer switching of the retail electric market in Texas began en masse, the Chief Executive Officer for the Electric Reliability Council of Texas, Inc. (ERCOT), said that strides are being made daily to correct deficiencies in the newly deregulated market.

"While only a small percentage (about one percent) of the market is now experiencing billing errors and delays as a result of restructuring, that is too many," said Tom Noel, referring to the approximately 50,000 customers who have been impacted by issues related to Texas' deregulated electricity market. "It is true that the rest of the country regards our market as a significant success and a model to be emulated," he continued. "In fact, by and large we have done it right in Texas, and Senate Bill 7 has accomplished what it set out to do. However, until every customer's issues have been resolved satisfactorily and until we can say that every time a customer decides to switch, the process is done quickly, efficiently and smoothly, then we won't be satisfied."

Noel discussed ERCOT's role in the evolution of the retail market since July 31, 2001 when customer switching began in earnest. During his report to the ERCOT Board of Directors at its July meeting, Noel said that ERCOT and the market participants did not fully appreciate the complexity of the system requirements needed to meet customers' high expectations. He added that move-ins/move-outs and meter data issues have predominantly affected the timely and accurate billing of customers.

"Based on reports given to the Public Utility Commission of Texas (PUCT), our billing error rate is comparable to historic levels, but we can't tell that to the customer who hasn't received his or her electricity bill for three months! They don't care about statistics! The bottom line is, system performance needs to continue to improve so that this doesn't happen at all," Noel said.

Noel also discussed the ongoing role of the Feld Group, a Dallas-based integrated technology management firm that was recently hired by ERCOT to develop and implement a plan tightly focused on improving the transactional systems needed for retail processes to operate as intended. "Implementation of their recommendations will require the commitment of all market participants working in conjunction with ERCOT, its Board of Directors, the PUCT, and the Electric Utility Restructuring Legislative Oversight Committee (co-chaired by Representative Steven Wolens and Senator Troy Fraser)," said Noel.

Noel concluded his presentation to the Board by addressing the issue regarding ERCOT's role going forward. "Some, such as State Representative Steve Wolens, have suggested that ERCOT should be order-givers, not order-takers, while others argue that the role of ERCOT staff should be limited to implementing stakeholder wishes." Noel commented further that, "I agree with Chairmen Wolens and Fraser that ERCOT needs to assume more responsibility and accountability for desired outcomes, and that we need to have the authority to do what needs to be done. In some cases where a consensus between stakeholder committees and ERCOT cannot be reached, I believe that ERCOT should take its arguments directly to the Board for approval."

ERCOT Board Chairman, Mike Greene concurred with Noel's remarks: "I'm in agreement that ERCOT will not be able to reach the milestones that have been set if it does not have the ability to ensure that each objective is met along the way. We have not yet achieved the results that were anticipated by the public, by market participants, or by the Legislature. It's time to do some fine-tuning so we can achieve the successes that everyone has been hoping for since electric deregulation became a reality seven months ago."

Tom Noel's complete Board presentation can be found on the ERCOT Web site.