Reserve margin approximately 17 percent

Austin, June 1, 2006 – The Electric Reliability Council of Texas released today its annual
five-year peak demand and energy forecast, showing a reserve margin of 16.9* percent for this summer, about 3 percent higher than last year’s projected reserve margin for 2006.

The summer peak demand is projected to be 61,656 megawatts (MW) – 1,382 MW higher than the ERCOT Region’s all-time system peak of 60,274 MW, set on August 23, 2005. 

This year’s assessment uses a 2.3 percent increase in the projected annual demand growth rate, up from 1.8 percent used in last year’s assessment, based on an updated economic outlook for Texas.  The "firm load forecast" that ERCOT uses to calculate the reserve margin is 60,544 MW – the total summer peak minus 1,112 MW of interruptible load (large industrial customers under contract to curtail usage if needed for grid reliability), which counts as a resource. 

Total available resources for 2006 are estimated at 70,756 MW, a slight increase from 69,287 MW projected at this time last year.  2,100 MW of 9,000 MW of mothballed capacity (units currently out of service but able to operate at their owners’ discretion) are included in the available resources, based on availabilities provided by unit owners.

NEW SCENARIO ADDED TO FIVE-YEAR PROJECTIONS

This year's report includes the official reserve margin projections for 2006-2011, plus three alternative scenarios:

• ERCOT's official reserve margin – the board-approved methodology which does not include planned generation additions unless a signed interconnection agreement has been completed
• A "high" reserve margin – assumes that all mothballed units return to service
• A "low" reserve margin – assumes that no mothballed units return to service
• Official reserve margin plus public announcements – a new reserve margin calculation including publicly announced thermal units without a signed interconnection agreement if an air permit has been requested or issued.

ERCOT is currently tracking a total of 13,454 MW of thermal generation which has been publicly announced but is in various stages of interconnection studies and air permit proceedings.  Only 1,300 MW of these planned additions are counted in the official reserve margin because they have not completed an interconnection agreement.

In the new calculation including all the publicly announced thermal units, the reserve margin increases to the low 20s in 2009-11.  Without including them, the reserve margin drops below the recommended 12.5 percent minimum beginning in 2008, except under the "high" scenario with all mothballed units returning.

"These reserve margin numbers represent our best estimates at this time," said Bill Bojorquez, director of system planning.  "The importance of getting these numbers out is to allow time for the market to develop new resources to avoid falling below the 12.5 percent minimum in 2008 or later.  While we do have some firm commitments for new plants, our calculations follow the methodology approved by the ERCOT Technical Advisory Committee.  We have added a scenario to show what happens if publicly announced plants which have filed for air and or transmission permits are built."

In 2002, the ERCOT Board approved a minimum reserve margin target of 12.5% for the ERCOT Region. 

Below is a summary of the forecast and reserve margin.  The full CDR report is posted in the News Room Reports and Presentations section.

LOAD FORECAST & RESERVE MARGIN

ALTERNATIVE SCENARIOS

* The CDR was corrected shortly after this news release.  The 2006 Reserve Margin was modified to 16.4%.  Please see the full CDR report for the current numbers.

** Calculation includes official reserve margin plus publicly announced units with air permit requested or issued but no completed interconnection agreement