News Release

December 13, 2006

ERCOT at a Glance: News Update - Dec. 13, 2006


2007 Board Confirmed at Annual Membership Meeting

The ERCOT membership approved the board of directors for 2007 at the 36th annual membership meeting Tuesday. Dan Wilkerson of Bryan Texas Utilities replaced Bob Kahn of Austin Energy as the municipal segment representative. Nick Fehrenbach of the City of Dallas filled the position of commercial consumer representative, formerly held by Bob Manning of HEB Grocery Company. Manning was recognized for eight years of service on the board, including four years as vice chair. Kahn was recognized for five years of service and three years as chair of the human resources and governance subcommittee.

The 16-member board includes five independent board members– unaffiliated with ERCOT market participants – three consumer representatives, one representative from each of ERCOT''s six electric market segments, the ERCOT CEO, and the chairman of the Public Utility Commission of Texas (non-voting, ex-officio).

CEO Sam Jones presented a report on ERCOT''s accomplishments in 2006. Dallas lawyer Steve Wolens, former Texas state representative and chief sponsor of the 1999 retail electric deregulation bill (Senate Bill 7), was the keynote speaker.

Board Meeting Highlights

Board members approved independent board member Mark Armentrout to continue as chair and selected independent board member Michehl Gent as vice chair, filling the position left by Manning.

Other action included confirmation of the Technical Advisory Committee members and approval of several protocol revision requests, nodal protocol revision requests and guide revisions. Board operating reports and documents are available on the ERCOT Web site.

Future Generation, Transmission Needs Analyzed in Three New Reports

ERCOT system planning staff completed three studies this month addressing generation and transmission needs for the future.

Transmission Alternatives for Competitive Renewable Energy Zones (CREZ) in Texas

The CREZ study was initiated in response to Senate Bill 20 (August 2005), which requires the Public Utility Commission (PUC) to designate renewable energy zones and develop transmission plans to deliver the power from these zones to the customers. The analysis provides a menu of options based on four areas: the coast, southwest Texas (McCamey area), central-western Texas and the Panhandle.

Additional findings:

  • New bulk transmission lines would be required to support additional export of wind generation out of the West Texas area;
  • The coastal area has a lower capacity factor (a measure of the use of the installed wind capacity), but the wind output is more consistent with ERCOT''s load and the transmission cost is the lowest;
  • The Panhandle area has more wind generation resources with high annual capacity factors, but transmission cost is higher and the area is within Southwest Power Pool, not ERCOT.

ERCOT currently has 2,508 megawatts (MW) of wind generation in service and at least 4,850 MW of wind resources likely to be in service by the end of 2007. Interconnection analysis requests are being processed for an additional 17,000 MW in wind generation.

Constraints and Needs Assessment: Five-Year Transmission Plan

The Constraints and Needs Assessment identifies and analyzes existing and potential constraints in the transmission system that could either pose reliability concerns or increase costs to the electric power market and, ultimately, Texas consumers.

Projects identified to serve the electric system through 2011 are estimated to cost $3.1 billion for 3,295 circuit-miles of transmission lines and 17,900 megavolt-amps (MVA) of autotransformer capacity to the ERCOT system.

Other findings of the report:

  • Zonal congestion costs have decreased from $140 million in 2001 to less than $80 million in 2005 and less than $40 million for January-August of 2006; the decrease is attributed to the implementation of direct assignment of zonal costs to market participants and ongoing improvements to the transmission system; and
  • Intrazonal congestion costs decreased from $400 million in 2003 to $250 million in 2005 and less than $150 million January-August of 2006; attributed to improvements in the transmission system and operations.

Since 2005, ERCOT transmission providers have completed improvement projects totaling over 1,800 circuit-miles of transmission and 22,000 MVA of autotransformer capacity, with an estimated capital cost over $1.3 billion.

Long-Term System Assessment: 10-Year Generation, Transmission Study

The Long-Term System Assessment analyzes generation and transmission needs in the ERCOT region through 2016. The longer-term look at system needs is intended to provide guidance for nearer-term transmission planning.

Findings included in the 90-page report:

  • New generation and transmission infrastructure is essential to maintain system reliability to accommodate load growth in the ERCOT region and to offset the probable retirement of older units;
  • Transmission upgrades, estimated to cost around $3 billion, will be required between 2011 and 2016 (compared to $3.1 billion expected in 2007-2011, as reported in the five-year transmission plan);
  • Continued high gas prices will likely induce more coal and wind generation additions, likely to be built in areas at greater distances from load centers in major metropolitan areas, which will require more bulk transmission lines to deliver power from the generation to the load.

Nodal Executive Director Announced

Jerry Sullivan, formerly of PA Consulting Group, New York, joined ERCOT this month as executive director for the nodal market redesign project. Sullivan has almost 25 years of experience in the electric and gas utility industry, including operational experience with locational marginal pricing and electricity market restructuring. With PA Consulting, he served as project manager for retail choice restructuring project and retail choice assessment for CLECO and open access restructuring project for Unicom and Commonwealth Edison. Prior to joining PA Consulting, he gained 15 years of management experience with General Public Utilities (now First Energy) and Consolidated Edison of New York. He has a bachelor''s degree in engineering from United States Military Academy, West Point, and a master''s of business administration from New York University.

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.