June 26 2012
ERCOT board approves pilot for new demand response option, budget for 2013
AUSTIN, TX, June 26, 2012 -- The Electric Reliability Council of Texas (ERCOT) board of directors at its June meeting approved a new pilot project to help reduce demand on the electric grid when electric use is high and power supplies are tight.
The 30-minute Emergency Response Service (ERS) pilot project will allow eligible participants a half hour to respond to ERCOT requests to reduce their electric use. The program is open to electric users -- either as individual customers or as part of an aggregated group of consumers -- who can reduce demand on the ERCOT grid by at least 100 kilowatts, about the amount 20 homes use during peak demand.
The board authorized ERCOT to procure up to a total of 150 MW for the pilot, which will begin in mid-July. ERCOT will operate the pilot program on a quarterly basis for up to nine months to evaluate its long-term feasibility. The ERCOT board will receive quarterly updates and will determine whether the program will continue following the pilot.
The Public Utility Commission of Texas (PUC) in May adopted rule changes that authorize ERCOT to conduct pilot projects to "evaluate resources, technologies, services, and processes that demonstrate the potential to advance the operational and market functions of the ERCOT system." This is the first pilot project approved under the new rule.
"The pilot project gives us a chance to run a meaningful test of this service before we commit to it," said ERCOT Board Chairman Craven Crowell. "We certainly appreciate the (Public Utility) Commission giving the ERCOT Board the opportunity to consider such projects for the first time."
Customers enrolled in the ERS pilot could be deployed during the first stages of an energy emergency. It is one of several market-based products and services designed to reduce demand on the electric grid when generation supplies are not sufficient to keep up with the growing load, or overall electric use.
The ERCOT board this month discussed the future of this and other demand response services as tools to support resource adequacy and grid reliability. Ensuring the ability to keep up with future electric demand continues to be a key priority for the ERCOT board and the PUC, as it has been for the past year.
The ERCOT board in June also approved a $170.6 million 2013 budget that includes $123.5 million in operating expenses, $18.9 million in debt service coverage and $6 million in project spending for next year. The 41.7-cent-per-megawatt-hour system administration fee, which is assessed on all electricity sold within the ERCOT market and serves as ERCOT’s primary source of funding, will remain flat for the ninth consecutive year.
"ERCOT needs sufficient resources to perform its core responsibilities, to continue managing its complex information technology and market systems, and to bring skill and independent expertise to the challenges we face," Crowell said in his opening remarks. He commended ERCOT CEO Trip Doggett and staff for maintaining a "strong focus on cost control" and noted that the June approval will allow the PUC, which has oversight of ERCOT, "plenty of time to complete its review" prior to 2013.
Other June board meeting updates
ERCOT CEO Trip Doggett announced several updates, which included:
- At 59,031 MW, peak electric demand in May exceeded the mid-term forecast and the May 2011 peak. (Since that time, ERCOT has set a new June peak record.)
- ERCOT released its Capacity, Demand and Reserves report on May 22, 2012, and reserves are likely to fall below the 13.75 percent target as soon as 2014.
- The Brattle Group’s report on resource adequacy, released June 1, 2012, and a summary of findings was presented at the meeting.
- Two ERCOT staff members were recognized for their contributions: Denny Voltz, supervisor of the Physical Security Department, will retire; John Dumas, director of Wholesale Market Operations, was recognized for his market leadership and expertise in wind power integration.
- TX SET 4.0, which enables the retail market transactions required under PUC rules, was updated successfully in early June.
- ERCOT staff and board leadership joined other members of the ISO/RTO council May 23-24 to discuss key reliability, security and other timely topics.
- In preparation for summer, ERCOT released a free new mobile app, engaged statewide media in preparations for summer, and hosted a hurricane drill involving numerous stakeholders.
Independent Market Monitor report
In addition to his regular monthly update on electric prices, energy use, heat rate, congestion costs, ancillary services procurement and wind production, Dan Jones from Potomac Economics presented an Analysis of Current Operating Plan Practices.
Technical Advisory Committee recommendations
- NPRR 453 -- Separation of Year 1 and Year 2 of the Annual Congestion Revenue Right (CRR) Auctions by timing
- NPRR 463 -- CRR Auction Structure Enhancements
- Impact Assessment for Parking Deck NPRR 260, Providing Access to MIS Secure Area to MIS Registered Users
The board also approved modifications to the ethics agreements required of ERCOT employees, directors and alternates. Revisions focused on clarifying confidentiality of information and ERCOT requirements related to actual or potential conflicts of interests.
Streaming video and archived broadcasts of ERCOT board meetings are available at Texas Admin.