News Release

February 21, 2008

ERCOT News -- February 21, 2008

TOPICS:

Board of Directors Review Nodal Market Implementation

The nodal market implementation remains on schedule for the December 2008 launch, and some key checkpoints are approaching, Jerry Sullivan, executive director of the market redesign, told the ERCOT Board of Directors Tuesday. 

Major “health checks” over the next six to seven months will cover the Common Information Model (March-April), integration (April-May), performance (May-June), and defects (June-July).  Sullivan said he expected to have “good visibility” in late May regarding performance of the systems. 

Nearly all systems and their integration will be independently checked and tested prior to the final qualification test – the 168-hour test – in September.    It will be conducted by the intended users of the systems, and all market participants will be required to participate.  

The board also heard a report on nodal from IBM Global Business Services, their fifth report since being asked by the board to perform an external review of the program.  The report on the project management control system stated that controls in place are generally functioning as expected, but noted that certain control activities should be enhanced. 

For more information about the nodal program and nodal training courses, see the Nodal Market Implementation Web site: http://nodal.ercot.com/index.html 

In other board action, the directors approved the following Protocol Revision Request (PRR) and Nodal Protocol Revision Request (NPRR):

  • PRR 750: Unannounced Generation Capacity Testing after amending it to ERCOT operations staff “may” stop the test during an emergency event, instead of “required” 
  • NPRR 090: Corrections of Fuel Index Price-Fuel Oil Price in Energy Offers. 

ERCOT staff reports included:

  • Market Operations Report: summaries on retail transactions, retail performance measures, settlement and billing performance measures, energy services, and ERCOT hubs pricing data (showing weighted average price of balancing energy)
  • Grid Operations Report: reports on peak demands (actual vs. forecast), load forecast performance, zonal congestion, update on Emergency Interruptible Load Service, and dates for upcoming NERC readiness audit
  • Information Technology Report: summaries on performance metrics, net service availability, retail transaction processing, Texas Market Link availability, and MarkeTrak availability
  • System Planning Report: update on Competitive Renewable Energy Zones (CREZ) Transmission Optimization study (see additional information below)
  • Compliance and Internal Controls Update: internal and external audit results, management compliance self-assessment, and enterprise risk management update
  • 2009 Budget Preparation Preview and Assumptions: dates for 2009 budget preparation, key budget assumptions, new financial issues confronting ERCOT and impacting future fees (running nodal market, data center capacity constraints and expiration of Austin building lease)  

Board meeting documents are posted on www.ercot.com  with the February 19 meeting agenda.  

Two Gas Plants Added to Capacity Projections; New Wind Online

Interconnection agreements for two gas plants totaling 783 megawatts (MW) have been completed, and three wind farms totaling 436 megawatts began commercial operations last month, according to the January System Planning Report

New signed interconnection agreements posted last month include:

  • Cedar Bayou 4, natural gas, 539 MW, Chambers County, in-service June 2009
  • South Houston Green Power Expansion Project, natural gas, 244 MW, Galveston County, in-service March 2008. 

The addition of the gas plants is expected to increase the 2009 reserves by 1.2 percent, raising the reserve margin from 12.1 percent to 13.3 percent.

The wind farms which started operations last month were:

  • Stanton Wind Energy, 101 MW, Martine County
  • Roscoe 1 Wind Farm, 209 MW, Scurry County
  • Champion Wind Farm, 126 MW, Scurry County. 

The system planning division is currently tracking 222 active generation interconnection requests totaling over 100,000 MW, including 43,930 MW of wind generation.  Nuclear projects in the interconnection queue total 15,586 MW; natural gas is at 32,288 MW, and coal is at 8,305 MW.   

The regional planning group is reviewing proposed transmission improvements estimated at $185.05 million.  

The full report is posted with the meeting documents for the February Reliability and Operations Subcommittee Feb. 15 meeting.   

Wind, CREZ Transmission Studies Reviewed

Director of System Planning Dan Woodfin presented an overview of the wind impact/ancillary services study at the joint Regional Planning Group/Competitive Renewable Energy Zones (CREZ) Task Force meeting, Feb. 15.  

With input from ERCOT staff and stakeholders, General Electric (GE) analyzed the need for additional or modified ancillary services to meet reliability requirements for increasing levels of wind penetration. Phase I findings of the GE wind impact/ancillary services study were presented Oct. 22. 2007.  Phase II draft results were presented at the Reliability Operations Subcommittee Wind Impact Study Task Force on Feb. 1.  GE will be presenting its final results to stakeholders at a meeting open to all stakeholders on February 27, and the final report on the study is due to ERCOT in late March. 

Woodfin also presented an overview of the process being used for ERCOT’s CREZ transmission optimization study at the Feb. 15 meeting.  Texas Senate Bill 20 directed the PUC, after consultation with ERCOT and Southwest Power Pool, to designate CREZs in areas with sufficient renewable resource potential and financial commitment by developers and to designate a plan for transmission to the areas.  ERCOT is currently developing a recommended transmission plan for each of the four scenarios of wind development specified by the PUC in the interim order on this topic.  ERCOT staff also presented several of the conceptual transmission plans that are under development.  

The results of the CREZ transmission optimization study are expected to be filed with the PUC on April 2. 

Bid Cap Increasing March 1

ERCOT will increase the bid cap for balancing energy and ancillary services from $1,500 to $2,250, effective March 1, in accordance with the Public Utility Commission’s Substantive Order 25.505(g), for scarcity pricing mechanisms in the energy-only market design that applies to the ERCOT region.  

Scarcity pricing mechanisms are intended to encourage market participants to build and maintain a mix of resources that sustain adequate supply of electric service in the ERCOT region, according to the PUC rule, and to encourage market participants to take advantage of practices such as hedging, long-term contracting between market participants that supply power and market participants that serve load, and price responsiveness by end-use customers. 

In addition, the wholesale market stakeholder committee approved a system change to increase the Commercially Significant Constraint (CSC) Shadow Price Cap from $2,500 to $5,600 to reflect the change in the system-wide offer cap.  With this change in the CSC Shadow Price Cap, it will be possible for the market clearing price for energy (MCPE) to go below -$1,000.  In testing some historical cases, ERCOT observed the MCPE decrease to as low as -$2,010. 

ERCOT CEO Testifies at Legislative Hearing

CEO Bob Kahn presented testimony at a public hearing of the Texas House Select Committee on Electric Generation Capacity and Environmental Effects, Feb. 6.  Kahn’s presentation is available on the ERCOT Web site in News/Reports & Presentations. 

Nodal Newsletter Available

Texas Nodal News is a free subscription-based newsletter featuring nodal project news, announcements, activities and upcoming training courses. The newsletter is published biweekly on Fridays. Highlights from the Feb. 15 Texas Nodal News include:  

  • Early Completion of Early Delivery System 3 Release 7.1 – Congestion Revenue Rights User Interface Connectivity Testing -- Strong participation by market participants allowed an early completion of the first sub-release of Congestion Revenue Rights (CRR) testing on Feb. 13, two days ahead of schedule. Read more.  
  • Nodal Training Progress Report -- Over the last year, the Nodal Training team has been working diligently to develop and deliver training courses defined in the Nodal Market Training Curriculum designed to help market participants understand and prepare for the transition to the nodal market. Read more.  
  • TPTF Feb. 4-6 Meeting - Nodal Program Update --The following information highlights recent Texas Nodal progress as reported by Jerry Sullivan to the Transition Plan Task Force (TPTF) on Feb. 4. Read more. 
  • TAC Feb. 7 Meeting - Nodal Program Update -- At the Feb. 7 meeting of the Technical Advisory Committee (TAC), the committee received Transition Plan Task Force (TPTF) milestone completion and Readiness metric updates and Nodal update. Read more.

To receive the biweekly nodal newsletter, go to ERCOT E-Mail List Manager and select “texasnodalnews.” To receive nodal market notices, select “nodalmarketreadiness.”

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

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