News Release

February 22, 2006

ERCOT at a Glance: News Update - February 22, 2006

TOPICS:

FEBRUARY 21 BOARD MEETING HIGHLIGHTS

Actions:
  • Approved a temporary change to the 2005 residential annual load validation requirements to accommodate implementation of a new residential profile assignment algorithm in 2006
  • Approved PRR 543 to clarify the protocols regarding use of direct current ties with the Comision Federal de Electricidad de Mexico for emergency services
  • Approved PRR 627 to establish requirements for transmission and distribution service providers (TDSP) regarding exit strategies for reliability-must-run and/or must-run-alternative contracts
  • Approved PRR 638 to change the settlement invoice due date from 16 calendar days to five bank-business days
  • Approved PRR 639 to allow a TDSP, in emergency situations, to repair its EPS metering without first notifying ERCOT
  • Approved SCR 746 to provide transmission of element dynamic rating data between ERCOT and transmission service providers through ERCOT’s Inter-Control Area Communications Protocol; implementation estimated at $100,000-$500,000 includes cost of additional software licensing and 1.5 additional FTE’s to manage the additional data flow; the cost-benefit analysis estimated a savings to the market of $454,000 over a four-year period due to improved accuracy of data for dynamic line ratings
  • Did not approve PRR 567 to create block bidding of ancillary services; discussion focused on the low ranking of the PRR that would preclude the likelihood of implementation before the need became obsolete due to implementation of nodal market projects
Presentations and Discussion:


COO Sam Jones reported on the progress regarding NERC’s draft filings for certification as the Electric Reliability Organization (ERO) to comply with the federal Energy Policy Act of 2005:

  •  The second draft of the ERO filing posted on Jan. 26 is more “regional friendly” and includes a more realistic time schedule
  • ERCOT staff will meet with the NERC Board of Trustees compliance committee on March 15 to describe the current ERCOT compliance program
  • Regional managers will meet with senior NERC staff March 6 to discuss the issues and negotiate further revisions for draft three of the filing
  • The NERC board is scheduled to vote on the final filing documents at a special March 28 meeting and expected to file for ERO certification in early April 2006
  • A decision on the ERCOT regional entity’s structure and governance should be made at the March ERCOT board meeting
  • NERC anticipates certification in the June – July time period; regional entities should be prepared to file when the ERO is certified, but not necessarily be in compliance at the time of its filing
  • To view NERC’s draft ERO application and comments, see NERC’s ERO implementation site.

CMO Ray Giuliani presented a market operations update:

  • Congestion services cost was $97 million for 2005, down from $126 million in 2004, a significant decrease, given the increase in gas prices, Giuliani said.
  • 36 percent of residential load has switched from the affiliated retail electric provider (a one-time switch rate)
  • 81 percent of small non-residential and 73 percent of large non-residential have switched
  • CIO Ron Hinsley reported on planning for the Texas Nodal Market Redesign:
  • The program director search is nearing completion
  • PA Consulting has been selected for project management
  •  A 90-day plan and project flow of major activities has been completed
  •  Immediate staffing needs have been identified; approximately 60 positions
  • A preliminary budget breakdown for 10 categories was presented, totaling $117.6 million for internal and external costs plus $6.3 million for financing costs, for a total cost of $123.9 million

System Planning Director Bill Bojorquez presented the preliminary results of the pre-nodal transmission study requested by Public Utility Commission Chairman Paul Hudson:

  • No additional long-lead-time projects were identified (besides the 11 which have already received ERCOT recommendations)
  • 34 short-term projects were identified as potentially needed for reliability and to reduce congestion across ERCOT
  • ERCOT will be soliciting additional stakeholder input before issuing final recommendations.

Board meeting presentations and background materials are posted on the Web site meeting calendar.

Approval Received for Transmission Line Expected to Save $63 Million in Congestion Costs


A 68.3-mile, 345kV line estimated to save $63 million in annual congestion costs to the market received has received certification from the Public Utility Commission.  The line will connect an existing substation in Fort Bend County to a proposed substation in Wharton County, and then to an existing South Texas substation located in Matagorda County.  ERCOT designated the project as critical to the reliability of the grid prior to the application filing by CenterPoint Sept. 19, 2005.  The PUC final order will be issued less than six months following the application filing.

“This is a major project with significant reliability improvements and congestion reduction,” said ERCOT System Planning Director Bill Bojorquez.  “Thanks to a lot of hard work by all, this project moved through the ERCOT and PUC approval process on an exceptionally fast track.”

The project was endorsed by the ERCOT board in March 2005 following ERCOT’s studies on the economic and reliability benefits.  ERCOT’s regional planning group trimmed the scope of the work from the initial CenterPoint application by $30 million, in addition to completing the studies estimating $63 million in annual congestion cost reduction from the project.

Interconnection Requests Up


Interconnection requests increased by 2,200 MW last month, System Planning Director Bill Bojorquez reported in the system planning report at the Reliability Operations Subcommittee (ROS) Feb. 16 meeting.  The total capacity of all generation interconnection requests was 18,703 MW in January, including 8,994 MW in publicly announced projects.

Also, two projects totaling 756 MW were synchronized to the grid in late December and January:
Sweetwater Wind Phase 3 project in Nolan County, 136 MW
Jack County Generation Facility (natural gas plant), 620 MW

The South Regional Planning Group has initiated a review of the AEP Uvalde/Del Rio Area project submitted Jan. 10, and estimated to cost over $156 million.

The system planning report is posted on the Web site in the ROS meeting documents.

Former Board Member Tom Darte Retiring


Former ERCOT board member Tom Darte is retiring as general manager of the Greenville Electric Utility System (GEUS), the municipally-owned utility, cable and Internet provider in Greenville.  Darte, who became GEUS general manager in 1988, will be replaced by David McCalla.

Darte served on the ERCOT board from 1996-2000 during the planning for restructuring in Texas. During his tenure, he served on the bylaws committee and chaired the nominating committee and a subcommittee of board members that made recommendations regarding the installed generation reserve issue.

David McClanahan, then ERCOT board chairman, is quoted as referring to Darte as the “conscience of the board regarding reliability.” 

“I look back with pleasant memories concerning my service on the board,” Darte said. “I was always treated with respect and was given a chance to express my opinions openly.  I will never forget the honor of having served on the ERCOT board.”

ERCOT Meeting Calendar


February 2006

The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power to more than 25 million Texas customers -- representing about 90 percent of the state’s electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects more than 46,500 miles of transmission lines and 650+ generation units. It also performs financial settlement for the competitive wholesale bulk-power market and administers retail switching for nearly 8 million premises in competitive choice areas.

ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. Its members include consumers, cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities, transmission and distribution providers and municipally owned electric utilities.

Contact

media@ercot.com

512-275-7432