ERCOT Executing RMR Contract For One Texas Genco Unit

Topics:

• ERCOT Executing RMR Contract For One Texas Genco Unit
• RMR Contract For TXU Unit To Be Discontinued
• Settlements And Billing Application Upgrade Completed; Performance Improved 50 Percent
• Four-Coincident Peak Report Approved
• Senate Bill Clarifies PUC Oversight Of ERCOT
• New ERCOT Chief Information Officer Announced
• FERC Chair Pat Wood Concluding His Term June 30
• Reserve Margin Update Presented To House Committee
• Wind Energy Report Made To House Subcommittee
• ERCOT Meeting Calendar

ERCOT Executing RMR Contract For One Texas Genco Unit

ERCOT staff has concluded that one of Texas Genco’s generating units slated for decommissioning will be needed for reliability. The P.H. Robison unit 4, (737 megawatts [MW]), is needed in order to maintain adequate voltage support in the Houston area to comply with ERCOT reliability criteria.

ERCOT is finalizing the reliability-must-run (RMR) agreement with Texas Genco. During the next 90 days, ERCOT staff and CenterPoint Energy will prepare an exit strategy study to determine potential upgrades that could alleviate the need for the Robinson RMR services. In addition ERCOT will continue to review options to minimize or eliminate the need for the RMR agreement for the Robinson unit during off-peak months. The initial contract will be for 12 months with the ability to cancel it with a 90-day notice.

The other units at P.H. Robinson (unit 1 – 461 MW, unit 2 – 461 MW, and unit 3 – 552 MW) and Webster Unit 3 (374 MW) are not required for RMR service. Last month, ERCOT staff announced that all other generation units identified by Texas Genco Jan. 12, to be decommissioned unless needed by ERCOT, are not be required for RMR services. The other units are Cedar Bayou unit 3, Deepwater unit 7, T.H. Wharton unit 2, Webster unit 21, and the H.O. Clarke plant.

RMR Contract for TXU Unit To Be Discontinued

ERCOT system planning staff has determined that Eagle Mountain Unit 3 is no longer needed for RMR service beyond the end of the current agreement, April 30, 2005. In July 2004, ERCOT entered into an RMR agreement with TXU Generation Co. for Eagle Mountain Unit 3 (375 MW), located in the Dallas-Fort Worth area. With the exit of Eagle Mountain Unit 3, ERCOT will have 10 units representing 967 MW under RMR contracts.

Settlements And Billing Application Upgrade Completed; Performance Improved 50 Percent

ERCOT staff on March 19 successfully implemented an upgrade of Lodestar, the settlement engine database, reducing settlement processing time up to 50 percent. After 10 months of planning, testing and migration preparation, the Project Deployment Team completed the new software migration in 13 hours – 2.5 hours ahead of schedule.

The migration included approximately 250 tasks. The team monitored 25 checkpoints and communicated to internal and external stakeholders. After the upgrade, an analysis indicated dramatic improvements in performance run-times for specific jobs. For example, before the upgrade, it required eight hours to settle three trade days. Since the upgrade, three trade days can now be settled within four hours.

Four-Coincident Peak Report Approved

For the first time since the market opened in 2001, the annual four-coincident peak (4CP) report was accepted without any recalculations. The 4CP report is filed by ERCOT with the Public Utility Commission (PUC) Dec. 1 of each year and used by the PUC to calculate transmission service tariff charges for large customers (those with Interval Data Recorder meters). Parties can file comments and objections to the report, as well as make requests of the PUC to combine the data in a certain way. None of the comments and objections raised about the 2004 report were related to ERCOT’s filing, assuring ERCOT did not have to resubmit the filing based on revised settlement data.

Betty Day, manager of energy analysis and aggregation, said the lack of objections to ERCOT’s settlement data is an indication of the market’s confidence in the underlying data used to support the filing.

The PUC adopted the 4CP filing April 5.

Senate Bill Clarifies PUC Oversight Of ERCOT

The Senate on Thursday approved Senate Bill 743 which clarifies the Public Utility Commission’s oversight authority over ERCOT. The bill is consistent with the Sunset Commission’s report and essentially codifes practices already being followed by ERCOT and the Board of Directors.

The most noticeable changes would be the addition of two unaffiliated board members and a requirement that the chairman of the board be one of the five unaffiliated members. Other provisions of the bill clarify PUC’s authority to require ERCOT to provide reports and information and to conduct audits of ERCOT’s performance, revenues and expenses. The bill also provides that ERCOT would contract with and fund a market monitor selected by the PUC. (The market monitor is currently funded by the PUC.)

The Senate bill now goes to the House for consideration. One other Senate bill, SB 408, and two House bills, HB 1777 and 1779, also address Sunset Commission’s recommendations.

Bill texts and status can be viewed at Texas Legislature Online by entering the bill number in the “Quick Bill Status” search block.

New ERCOT Chief Information Officer Announced

CEO Tom Schrader announced that Ron Hinsley will be joining the ERCOT team as the new Chief Information Officer on April 19. Hinsley comes from a 14-year IT career with Aquila in Kansas City.

“Ron and his team will be working closely with our business units to ensure implementation of an IT strategy that is focused on the needs of both internal and external ERCOT customers, enhances our operational capabilities, and exceeds customer expectations,” Schrader said.

Aquila operates electric and natural gas distribution utilities in multiple states and serves 446,000 electric distribution customers in three states and 901,000 natural gas distribution customers in seven states.

FERC Chair Pat Wood Concluding His Term June 30

Federal Energy Regulatory Commission (FERC) Chairman Pat Wood, III announced last week that he will leave the commission at the conclusion of his term June 30. Before his appointment to FERC, Wood chaired the Public Utility Commission of Texas from February 1995 to August 2001, during the restructuring of the electric utility industry in the ERCOT region.

In an email to ERCOT CEO Tom Schrader, Wood expressed his appreciation of ERCOT. “It has been an honor to lead the FERC through these challenging times in the energy industry, and I particularly enjoyed my long working relationship with ERCOT,” Wood said. “Thank you for your shining example as the Commission endeavored to make markets work and assure reliable and affordable energy supplies for our nation.”

Wood, a native of Port Arthur, plans to return with his family to Texas.

Reserve Margin Update Presented To House Committee

COO Sam Jones presented a reserve margin update to the House Regulated Industries Committee last week. ERCOT projects a reserve margin of at least 13.7 percent for 2005, based on a summer peak demand forecast of 62,906 MW (from the Capacity Demand & Reserve report generated in 2004). This number will change when the official summer peak forecast is released in May, and the projected reserve margin will change accordingly.

Jones’s presentation concludes there is an adequate short-term reserve capacity, but adds that an ERCOT task group is re-evaluating reserve margin calculations and refining methodology.

The complete presentation is posted on the ERCOT Web site as Reserve Margin Update under Reports and Presentations 2005.

Wind Energy Report Made To House Subcommittee

ERCOT has been actively engaged as a resource assisting the Legislature in reaching agreement on a new statewide renewable energy standard, as three bills encompassing different goals have been introduced in each house. Manager of System Planning Ken Donohoo led stakeholder development of a white paper on transmission issues related to renewables, particularly focused on West Texas wind energy.

Kent Saathoff, director of system operations, gave a presentation on wind energy and transmission planning in the ERCOT region to the House Subcommittee on Renewable Energy.

Saathoff’s presentation addressed transmission expansion issues, operational issues related to wind power, and estimated costs to support 5,000 MW of wind power from West Texas. In subsequent meetings of the subcommittee and the full Regulated Industries Committee, Sam Jones provided resource witness testimony.

The ERCOT-led stakeholder white paper and errata are posted on the ERCOT Web site as Transmission Issues Associated with Renewable Energy in Texas under Reports and Presentations 2005.

Saathoff’s presentation is posted on the ERCOT Web site as Wind Energy and Transmission Planning in the ERCOT Region under Reports and Presentations 2005.

ERCOT Meeting Calendar

April, 2005