TOPICS:

• 2008 Board Confirmed At Annual Membership Meeting
• Board Approves Responsive Reserves Increase
• ERCOT Receives ‘Clean’ SAS 70 Audit

2008 BOARD CONFIRMED AT ANNUAL MEMBERSHIP MEETING

Three new board members and three new segment alternates were approved at ERCOT’s annual membership meeting Tuesday.  New board members are:

• Bob Helton, International Power America Services, independent generator segment
• Robert Thomas, Green Mountain Energy, independent retail electric provider segment
• Charles Jenkins, Oncor, investor-owned utility segment. 

New segment alternates are Mark Walker, NRG Texas, independent generator segment; Marcie Zlotnik, StarTex Power, independent retail electric provider segment; and Calvin Crowder, American Electric Power Service Corporation, investor-owned utility segment. 

Board Chair Mark Armentrout recognized the exiting members and alternates including William Taylor, Calpine Corporation; Scott Gahn, Just Energy Texas; Tom Standish, CenterPoint Energy, and Mike McCall, TXU Energy. 

Armentrout also thanked Commissioner Paul Hudson for his service as a board member during his tenure as chairman of the Public Utility Commission.  Barry Smitherman, the new PUC chairman, now fills the ex officio position on the board.  Smitherman was the keynote speaker at the meeting. 

The new members were seated at the afternoon board meeting which followed the annual meeting. 

BOARD APPROVES RESPONSIVE RESERVES INCREASE

After a lengthy discussion, the ERCOT Board of Directors approved a revised methodology for acquiring additional responsive reserves as recommended by the Technical Advisory Committee (TAC). TAC’s original proposal for a 500 megawatt (MW) increase in responsive reserves was returned to TAC for more study at the October board meeting.  Following input from a task force created to review the issue, the Wholesale Market Subcommittee recommended the revised proposal, which TAC approved for submission to the board. 

The revised methodology links the amount of additional responsive reserves procured to the day-ahead forecast and the forecast reserve discount factor (RDF) between 6 am and 10 pm.  For each hour when the RDF is projected to be above 2 percent, ERCOT will adjust the day-ahead responsive reserves upward by 100 MW per percentage point, not to exceed 500 MW. 

ERCOT currently procures 2300 MW of responsive reserves at all times and applies a discount based on weather zone temperatures:

• 7 percent for 95 degrees or higher
• 5 percent for 85-94 degrees
• 4 percent for less than 85 degrees. 

The new methodology also instructs ERCOT to use the higher of the hourly forecast temperatures for the north central or the coastal weather zone to predict the RDF that will be applied in real time. 

The practice of discounting responsive reserves was implemented in December 2006, following an analysis of actual reserves available on April 17, 2006, when rotating outages were implemented to avoid a system blackout.  (Originally, a 7 percent discount was applied; in November 2007, it was changed to a variable discount based on weather zone temperatures.)   

The discounted reserves resulted in an increase in the number of alerts, which require ERCOT system operators to take command and control actions.  At the October board meeting, the independent market monitor discussed market pricing issues caused by the increase in alerts, which the responsive reserves increase is intended to mitigate. 

ERCOT RECEIVES ‘CLEAN’ SAS 70 AUDIT

Finance and Audit Committee Chair Clifton Karnei, Brazos Electric Power Cooperative, congratulated the ERCOT staff on receiving an unqualified SAS 70 audit – the first time that ERCOT has passed the audit with no exceptions. 

ERCOT has scheduled a market conference call on Dec. 18, for chief financial officers, controllers, or other senior financial personnel from ERCOT member companies and market participants who are responsible for financial reporting and complying with related SEC requirements to discuss the audit results.  

The ERCOT 2007 SAS 70 Type 2 audit was prepared by PricewaterhouseCoopers (PwC).  SAS (Statement on Auditing Standards) is an auditing standard developed by the American Institute of Certified Public Accountants to enable an independent auditor to evaluate and issue an opinion about a service organization’s controls.   

PwC’s audit covered controls related to the market settlements process, the information technology infrastructure that supports the markets, and security.   The unqualified audit affirms the reliability of the foundational processes performed and data provided by ERCOT staff for each market participant.

Additional Board Action

In other board action, the directors approved four Protocol Revision Requests (PRRs), four Nodal Protocol Revision Requests (NPRRs) and one Load Profiling Guide Revision Request (LPGRR): 

PRR 717: Emergency Interruptible Load Service Disputes and Resettlements

PRR 735: Incorporating the ERCOT Internal Audit Department and Other Clarifications

PRR 741: Revision of Digital Certificate Procedures

PRR 746: Revisions to EILS Provisions to Conform to Amended PUC Substantive Rule 25.507

NPRR 076: Synchronization of Emergency Electric Curtailment Plan Event Realignment

NPRR 077: Incorporating ERCOT Internal Audit Department and Other Clarications

NPRR082: Performance Monitoring and Compliance, Revisions to Monitoring and Qualification Test

NPRR 083: Remove Real Time Energy Charge for a Block Load Transfer from List of Real-Time Charges

LPGRR 026: Load Profiles with Three Digits to the Right of the Decimal Point 

The Board also confirmed the TAC representatives for 2008.  

ERCOT staff reports included:

• Nodal Update – Market Management System Project
• IT Report
• Grid Operations Report
• Market Operations Report. 

Board meeting documents are posted on www.ercot.com with the December meeting agenda.