News Release

May 16, 2006

CEO Tom Schrader Statement to ERCOT Board

It has been an extremely difficult decision to resign as the CEO of ERCOT.  I have formed many valuable friendships and business relationships in my time at ERCOT.

Before leaving this meeting, I would like to say a few things to you all.

To Electric Consumers

The last two years have seen significant progress on the value you receive from ERCOT services.

  • The administrative fee request is more than 8% lower in 2006 than in 2004.
  • We cut $6 million from the budget and found an additional $2 million in cost savings without sacrificing performance.
  • The real value improvement is from work by people in ERCOT System and Market Operations.
    • Annual local congestion costs have been reduced by $147 million from 2003 to 2005
    • Transaction processing and data access – we have greatly improved timeliness of process and availability of information to market participants
    • Finished the move-in/move-out stacking project (biggest improvement to date to the Texas SET systems)
    • We shortened the initial settlement cycle from 17 days to 10 days

To Market Participants

You are one of the critical strengths of the ERCOT process and one of the key reasons for the success of the Texas market.

Projects you have requested to improve operations or market performance are important.  Improved project management practices are underway but will take time to take hold.  I am confident that we are making substantial progress.

Service level agreements will help define expectations and set performance levels needed for your business activities and for Texas consumers.  We’re pleased that several service levels have been agreed to and hope there will be more.

To the Public Utility Commission of Texas

Policy issues — Texas Nodal, resource adequacy, demand response, renewables, the Independent Market Monitor, and the establishment of a Regional Entity for reliability in the region under the Federal Energy Policy Act — all are critical pieces shaping the future of this region.  You are addressing them in various proceedings, and I wish you well.

A proactive effort is needed to develop and to better define and establish the working relationship between the PUC and ERCOT.  I hope the ERCOT Board and management and the Commission can approach this challenge in a collaborative way, particularly to formalize processes and identify decision points and needed information flows. Information flows need to occur timely and automatically.

To ERCOT Employees

I am grateful to have had the opportunity to work with an outstanding team of employees and executives.

I have great confidence in the ERCOT employees.  Your capabilities, resilience and commitment will be vital to:

  • Implementing the nodal market redesign.
  • Continuing the high quality of operating performance and improvements in business practices that we have introduced.

To the ERCOT Board

One of the main reasons I joined ERCOT was the strength and active commitment of the Board and its ability to work through different views constructively for the benefit of Texas consumers. 

Thank you for the opportunity to serve, and thank you for your support and counsel during my tenure.

Finally, to everyone

We all have shared the goal of advancing the Texas electric market for the benefit of Texas consumers.

Working together we brought substantial change and development to ERCOT since the summer of 2004.  I am proud of what we have accomplished.  

A lot remains to be done and I regret that I will not be part of helping ERCOT and the Texas electric market continue to build on its standing as the leading electric market in North America.

Thank you. 

The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power to more than 26 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.