The 2004 ERCOT Summer Reliability Assessment (as it appears in the NERC 2004 Summer Reliability Assessment, released today) appears below.  If you wish to speak to a member of the ERCOT staff regarding this Assessment, please contact Heather Tindall, ERCOT Director of Communications, at 512-225-7023.

ERCOT

The Electric Reliability Council of Texas (ERCOT) is operated as a single control area electric interconnection that enables a competitive wholesale electricity market and the ability of retail customers to choose their electric supplier. Market mechanisms are used to the greatest extent possible to address reliability issues of generation adequacy, system operating reliability and transmission congestion. ERCOT has been successful in maintaining a reliable electric system utilizing these market mechanisms with occasional “command and control” tools when market mechanisms are not fully effective.

Due to competitive forces, merchant plant developers are less likely to share plans for generation additions exceeding a three-year horizon. Despite this, it is expected that capacity margins for the assessment period will be kept above the regional minimum requirement of 11% without any publicly announced generation additions after 2006. However, there is growing concern about the future availability of natural gas supply given recent operating experience and the large amount of new and existing generation capacity solely dependent on that fuel.

A number of major transmission projects will be completed during the assessment period. These projects will help relieve problems that constrain operation of generation in ERCOT. These constraints limit imports into the Dallas-Fort Worth and Houston load centers and have required ERCOT to contract with Reliability Must Run (RMR) generation that would otherwise not be operated in other parts of the region to maintain area operating reliability. The long lead times and difficulty in building new transmission facilities will likely require implementation of ERCOT Congestion Management Procedures on an ongoing basis during the period.

Demand

In 2002, ERCOT had a peak demand of 56,233 MW, a 1.9% increase from 2001. The 55,201 MW peak in 2001 was a 4.2% decrease from the summer peak demand of 57,606 MW in 2000 due to cooler weather and a slowing economy. The projected peak for 2003 was 57,639 MW, a 2.5% increase from 2002 and equivalent to the 2000 peak. The actual summer peak occurring on August 7, 2003 was 59,992 MW, on a day with record high temperatures throughout the region. For the period 1991 to 2000, demand had been increasing an average of 4.3% per year.

Between 2001 and 2002, the actual ERCOT energy consumption increased slightly from 278,226 to 280,269 GWh, a 0.7% increase. The 2002 energy consumption was still less than the record of 288,713 GWh in 2000.  Energy consumption in 2003 is expected to increase to 287,333 GWh, a 2.5% increase from 2002. For the period 1991 to 2000, the compound annual growth rate in energy consumption had been 3.5%.

The average annual growth rate in ERCOT’s summer peak demand is projected to be 2.5% for the 2003 through 2012 period. The projected annual growth for energy is 2.7%. These growth rates are based on long-term historical trends and thus assume a continued recovery from the recent economic downturn to average growth and historical average weather.

ERCOT has two DC ties to the Southwest Power Pool (SPP) and one to Mexico with a total capacity of approximately 856 MW. About 190 MW may be used to transfer output of a power plant in ERCOT partially owned by utilities in the SPP to those utilities. Two entities in ERCOT are forecasting purchasing approximately 115 MW over the ties to the SPP for the assessment period. The use of the ties has generally been for purchases from outside ERCOT for economy energy reasons.

Resources

In 2002, ERCOT established a minimum planning reserve margin requirement of 12.5%, which equates to a capacity margin of 11%. This requirement was based on a reliability study that indicates with reasonable assumptions that level of margin should provide about a one-day-in-ten-year loss-of-load expectation (LOLE), which is a commonly used industry standard. ERCOT, in conjunction with the Public Utility Commission of Texas, is determining what mechanisms may be needed to maintain adequate margins going forward whenever projected margins fall to the minimum level.

Due to the short time required to construct new generating plants, ERCOT does not maintain a new generation forecast beyond 2008. Counting only new generation capacity that has actually executed an interconnection agreement with a transmission provider and including DC tie imports and capacity that can be switched between ERCOT and SPP and SERC, capacity margins in ERCOT are expected to be no lower than 25% through 2008. Based on this assessment, ERCOT expects to have adequate resources through 2008 with ample opportunity for the market to do what is necessary to maintain that adequacy through 2012.

In addition, ERCOT has put structures and systems in place that will allow load to act as a resource (by voluntary interruption) and participate in the market. The current amount of load acting as a resource is 1,150 MW and it is expected to grow in the coming years as this market develops. Between 2003 and 2006, over 9,200 MW of new generating capacity has been announced in ERCOT. Wind turbines will account for 375 MW of this capability with the balance being natural gas-fueled generation.  A concern is growing about the availability of natural gas during the winter peak given the fact that over 60% of existing and projected total generating capacity in ERCOT is fueled solely by natural gas. In late February 2003, widespread gas curtailments to electric generators throughout the region during several days of cold weather affected available capacity. On February 25, 2003, ERCOT implemented the first step of the Emergency Electric Curtailment Plan (EECP) to address a shortage of electricity due to the natural gas curtailments. Fortunately, the market was able to increase generation to avoid further steps of the EECP and no interruptible or firm load shedding was necessary. Concern about this reoccurring in the future has led ERCOT to raise the issue of creating economic incentives for dual fuel (gas/oil) capability and the need for reconsidering the order of electric generation in gas supplier curtailment priorities.

Transmission

The major transmission constraints in ERCOT continue to be related to the transfer of energy into the Dallas-Fort Worth and Houston load centers. Almost all of the 16,000 MW of new generation coming on line in the past three years has been located outside these areas due to environmental and economic considerations. The much longer lead time in building transmission compared to building new generation or shutting down old generation is the root cause of these constraints. ERCOT manages these constraints operationally by a market-based generation redispatch when possible and direct redispatch instructions or RMR contracts when necessary.

Local constraints in smaller load centers in west and south Texas are also dependent on local generation for both voltage support and keeping within transmission loading limits. Some of this local generation consists of older plants that are not economical to run in a competitive market. To keep this generation available to maintain system operating reliability, ERCOT has executed RMR contracts with generation owners. In addition, more than 1,000 nameplate MW of wind generation has been built in west Texas in the last three years and the relatively weak existing transmission system in the area has required almost daily limitation of the output of this renewable generation resource.

ERCOT directs and supports three regional planning groups of transmission providers that have studied these and other transmission issues and proposed solutions. These solutions include new facility construction and special protection systems, if necessary, that activate when contingencies occur until new facilities can be constructed. Capital-intensive transmission projects to serve remote locations in Texas are also being evaluated against other economic means to meet the NERC and ERCOT reliability criteria. Continued congestion management through RMR services and market protocols (including demand participation) may prove cost effective in these areas.  A number of 345 and 138 kV lines have been completed and are under construction in west and south Texas that will provide relief for existing constraints.

In 2003, the Morgan Creek-Red Creek-Comanche 345 kV line in west Texas and the San Miguel-Pawnee-Coleto Creek 345 kV line in south Texas were or will be completed. A total of almost 1,000 miles of new 345 kV line construction is planned to be in service between 2003 and 2008.  Numerous other projects are in the planning stage or under way that will address localized congestion issues.  Construction plans for 345 and 138 kV lines have been approved to relieve the existing and future constraints on wind generation in west Texas. However, long transmission construction lead times will likely require continued active congestion management by ERCOT throughout the assessment period.

Operations

Operational challenges during the assessment period are anticipated to continue to center around transmission congestion management. A market “redesign” initiative just beginning in ERCOT may change current congestion management procedures from a zonal to a more nodal-based system. This transition may present some operational challenges, but may also improve the efficiency of transmission congestion management.  As previously discussed, there are operational issues connected with potential reduction of available capacity due to natural gas curtailments. Emergency operating procedures may need to be modified if such curtailments become more frequent.

ERCOT has 135 members that represent independent retail electric providers, generators, and power marketers and investor owned, municipal, and cooperative utilities and retail consumers. It is a summer-peaking region responsible for about 85% of the electric load in the state of Texas. ERCOT serves a population of over 15 million in a geographic area of about 200,000 square miles with over 78,000 MW of generating capacity and 37,000 miles of transmission lines.

www.ercot.com

Download the full NERC Summer Reliability Assessment Report.

The ERCOT assessment is on pages 53-55.  The NERC website also includes information about reliability standards, publications, technical committees, and related programs and activities.