Topics:

1. Board of Directors Meeting Highlights
2. Report on ISO/RTO Benefits
3. RMR Contract Renewals
4. Independent Market Monitor Search

November 15 Board Meeting Highlights

Actions:

• Approved the amended Financial Policy & Investment Policy
• Remanded PRR 567 (Block Bidding for Ancillary Services) back to TAC for return to the board later with a more detailed cost/benefits analysis and a reconsideration of its project priority status
• Approved additional protocol revisions: PRRs 598, 601, 611, 617, 618, 636 and 637; PRRs may be viewed on this site.

Discussion Items:

• Updates on Potomac 14 Recommendations
  Six of the items have been implemented; two are in progress and two under board review; two will be covered by the nodal market redesign; and two were rejected.
• Credit Aspects of Mass Transition
  Focused on credit exposure in the market and options available to mitigate credit exposure, including increasing collateral requirement, increasing notice period for LSEs being dropped by their QSE, and reducing exposure period through changes in the current process
• Enterprise Risk Management Project Overview
• PRR 525 SCE Performance and Monitoring
  The board agreed to discuss PRR 525 in detail at its December meeting.

CEO Report:

CEO Tom Schrader gave the board an update on the default of a REP this week.  The company’s 12,259 customers, primarily small commercial, were assigned to another Providers of Last Resort Nov. 10.  The impact to the market is not yet known, Schrader said.

Board meeting presentations and background materials can be found on this site.

Report Illustrates Value of Independent Management of Regional Electricity Systems

The ISO/RTO Council (IRC) this week released a report that highlights the collective benefits and value regional grid operators bring in managing the flow of electricity to two-thirds of the U.S. population.

The paper cites the financial benefits of increased reliability and more efficient use of the grid, reduced reserve requirements, and coordinated planning for new generation and transmission resources.   

Load on the electric grid in the regions covered by the IRC has grown from 1.1 billion megawatt hours (MWh) in 1999 to a projected 2.5 billion MWh in 2006.  The development of new competitive markets to serve this load required sophisticated new information technology.  Costs incurred in building out these information systems have now stabilized and the industry average cost per MWh has been flat since 2003, the report concludes.  The cost for ISO/RTO services to the average customer is about $5 per year.  

The existence of ISOs/RTOs has resulted in greater coordination of generation and transmission assets and has encouraged intra-and inter-regional planning to improve the efficient operation of regional power systems. This has produced a significant amount of investment in new grid infrastructure, including more than 54,000 megawatts (MW) of new efficient generation and more than $16 billion of new transmission investment.                   

The newer, cleaner power plants that have been built within regions served by ISO/RTOs have also produced environmental benefits, lowering emissions of harmful pollutants, such as sulfur dioxide, mercury, nitrogen oxide, particulates and carbon. 

ERCOT is the ISO for its region and a member of the IRC, and provided data and information for the report.  However, a number of significant ISO/RTO issues are unique to ERCOT, including the fact that it is not jurisdictional to the Federal Energy Regulatory Commission, and that it has been assigned a major role in administering the retail electric market for its region. 

The report is available on this site.

RMR Contract Renewals Announced

ERCOT has determined that it requires Reliability Must-Run (RMR) Agreements for Laredo 1, Laredo 2, Laredo 3, LaPalma 5, LaPalma 6, and LaPalma 7 for all or part of 2006.   In addition, either B.M. Davis 1 or B.M. Davis 2 will also be required for RMR for all or part of 2006; ERCOT is conducting further review of both of these resources. 

RMR Agreements will not be needed for J.L. Bates 1, J.L. Bates 2 or LaPalma 4 for 2006.

The RMR determinations are based on previous studies already published.  See Operations and System Planning Data for Reliability Must-Run (RMR) Studies and other studies in progress which will be posted shortly. 

Proposals for Independent Market Monitor Due December 5 

The Public Utility Commission (PUC) of Texas and ERCOT are searching for an Independent Market Monitor (IMM) for the ERCOT region.  Senate Bill 408, approved by the Texas Legislature earlier this year, directs the PUC to hire a wholesale electric market monitor, to be funded by ERCOT.  The main functions of the IMM will be to analyze information concerning the operation of the wholesale electric market in the ERCOT region, analyze market rules to detect opportunities for strategic manipulation of the market, conduct investigations into irregular market events, and support the PUC’s enforcement activities.   

The IMM will be required to be completely independent from market participants and must have no conflicts of interest. The PUC and ERCOT have issued a Request for Qualifications and Information open to qualified firms and individuals. Proposals are due no later than Dec. 5, 2005.

More information is available on the PUC Web site. 

ERCOT Meeting Calendar

November 2005