News Release

January 16, 2008

ERCOT NEWS - January 16, 2008

 TOPICS:

Board Approves Revised Budget for Nodal Program

The ERCOT Board of Directors voted Tuesday to increase the nodal costs to be financed to $269.1 million.  Financing costs will be $42.2 million for a total of $311.3 million in expenditures to be recovered through the nodal surcharge.  The board also endorsed ERCOT staff to proceed with a filing at the Public Utility Commission (PUC) to increase the nodal surcharge to $0.169 per megawatt hour (MWh), from the current $0.127 MWh. 

The board’s finance and audit committee chair reported that the committee had reviewed the options and endorsed the staff’s recommendation for the budget and surcharge increase. 

After a nodal update from staff and discussion, Board Chair Mark Armentrout summarized the major reasons for the budget increase: changes to the project scope, adjustments in the schedule necessitated by the scope changes, and vendors coming in over budget, primarily from one vendor. 

The program’s previous expenditure estimate of $248.9 million (including $33.5 million in financing costs) was authorized by the board in January 2007.  The PUC approved the current nodal surcharge in May 2007 and required that it be paid by energy schedulers (Qualified Scheduling Entities) representing generation resources. 

The nodal market implementation is currently on schedule for the Dec. 1 launch, said Jerry Sullivan, executive director of the market redesign.  The greatest risks for the go-live date include a tight schedule for the delivery and testing of the Market Management System; infrastructure constraints (power, space and cooling limiting the speed of some projects and trials); and integration issues (building 400-500 interfaces and working with the three main vendors on integration of models and communications).

The final critical release of the Market Management System is scheduled for mid April, Sullivan said.  The board asked for an update at the May meeting on the likelihood of meeting the schedule launch date.  A market readiness determination is scheduled for August.  

Additional Board Action

In other board action, the directors approved four Protocol Revision Requests (PRRs) and three Nodal Protocol Revision Requests (NPRRs):  

PRR 727: Process for Transition to Nodal Market Protocol Sections 

PRR 738: Remove Old Versions of Standard Form Agreements 

PRR 744: Revision to 16.2.8, Monitoring of Creditworthiness by ERCOT 

PRR 748: Settlement during EDS 3 LFC Testing 

NPRR 078: Simplifying the Dispute Process 

NPRR 086: Settlement Clarifications to RUC Capacity Shortfall Ratio Share Formula 

NPRR 087: Market Monitor Terminology Change 

Armentrout recognized Don Ballard, the new general counsel at the Office of Public Utility Counsel.  He replaces Suzi McClellan as the ex officio board member representing the residential consumers.  Armentrout praised McClellan for her service on the board which began in 1999. 

Armentrout also expressed the board’s appreciation to the ERCOT staff for system reliability in 2007, cost management, customer service, stakeholder committee support and insuring fair and impartial access to the grid. 

ERCOT Staff Reports

CEO Bob Kahn updated the board on ERCOT’s credit risk study.  In mid 2007, the board authorized ERCOT to engage an outside consultant Oliver Wyman to quantify potential credit exposure in the market via a statistically-based model to educate stakeholders about the level of credit risk in the market and to provide a common framework for stakeholders to discuss the level of credit exposure. 

Oliver Wyman is wrapping up the study, and ERCOT will begin vetting the preliminary results with stakeholders during the next few weeks.  The study results will be presented at the board’s Feb. 19 meeting. 

The Market Operations Report highlights included:

  • Retail switching activity is down 13 percent compared to last year.
  • Residences that have switched to a provider other than the incumbent retail electric provider are at 41 percent of electric service identifiers (ESI IDs), compared to 36 percent last year.
  • Small non-residential migration to another provider is at 44 percent of ESI IDs, compared to 37 percent last year.  Large non-residential migration is at 71 percent compared to 72 percent last year.
  • Three new retail electric providers have been qualified: Chain Lakes Power, Etricity, and Juice Energy.
  • Three new energy schedulers (QSEs) have been added: Airtricity QSE Southwest, Prier Energy, and Juice Energy. 

The Information Technology Report included summaries on performance metrics, net service availability, retail transaction processing, Texas Market Link availability, and MarkeTrak availability. 

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

General Counsel Selected

CEO Bob Kahn announced that Mike Grable has been selected as ERCOT’s new vice president, general counsel and corporate secretary.  Grable joined ERCOT in 2006 as assistant general counsel, focusing on regulatory and governmental affairs.  

He spent several years in private practice focusing on telecommunications and technology issues, and served as electric and telecommunications advisor to Texas PUC Chairman (then Commissioner) Barry T. Smitherman from 2004-06. 

Grable holds a bachelor’s degree from Duke University and a juris doctorate from the College of William and Mary.  He clerked for Justice Craig Enoch of the Supreme Court of Texas. 

Grable replaces James L. Thorne who announced his resignation in September 2007. 

In accordance with ERCOT bylaws, the board of directors ratified the 2008 officers at the Tuesday meeting.  In addition to Grable, ERCOT officers include Bill Bojorquez, vice president of system planning; Steve Byone, vice president and chief financial officer; Nancy Capezzuti, vice president of human resources and organizational development; Ray Giuliani, vice president and chief of market operations; Ron Hinsley, vice president and chief information officer; and Kent Saathoff, vice president of system operations. 

Energy Use for 2007 Up Slightly from Last Year

Preliminary ERCOT settlement data for demand and energy indicates total energy use for 2007 was 307 million MWh, which was 0.4 percent higher than 2006.  The total was 1.9 percent below the normal weather forecast for consumption.   

The unofficial peak demand for 2007 is 62,188 MW, which occurred on August 13 in the 3-4 pm interval, based on 60-day final settlement data which is subject to change after the six-month true-up.  The all-time maximum peak demand is 62,339 MW, set on Aug.17 in the 4-5 pm interval.  

Energy consumption for the year as measured by fuel type is:

  • Natural gas – 45.5 percent
  • Coal – 37.4 percent
  • Nuclear – 13.4 percent
  • Wind – 2.9 percent
  • Water – 0.4 percent
  • Other – 0.4 percent

ERCOT Tracking 220 Generation Requests

The system planning division is currently tracking 220 active generation interconnection requests totaling over 97,000 MW, including more than 41,000 MW of wind generation, according to the December System Planning Report.  Nuclear projects in the interconnection queue total 15,586 MW; natural gas is at 31,644 MW, and coal is at 7,549 MW.   

Two wind farms with a total capacity of 183 MW started commercial operations in December 2007:

  • Barton Chapel Wind Farm, 120 MW, Jack County
  • Snyder Wind Farm, 63 MW, Scurry County 

The regional planning group is reviewing proposed transmission improvements estimated at $133.25 million.  

The full report is posted with the meeting documents from the January Reliability and Operations Subcommittee meeting.   

Year-end Retail Transactions Over 26.2 Million

Retail transactions completed as of Dec. 31, 2007 totaled 26.2 million, including:

  • 3.8 million switches
  • 12.7 million move-in’s
  • 7.3 million move-out’s
  • 0.3 million drops to POLR
  • 1.9 million CSA. 

Black Start Training Seminars Scheduled Through March

ERCOT System Operations training staff is conducting the annual Black Start Training Seminars for each of the black start regions in ERCOT (North, South, East, and West), through March 27.  The training is required by the ERCOT Protocols and Operating Guides.  

The objectives of the seminars is to learn about the individual black start plans of the transmission operators in each region as well as ERCOT’s role in system restoration. The agenda includes discussion of electrical theory as it applies to black start and a four-hour hands-on simulation of system restoration. Each session will have 20-40 participants, who receive NERC Continuing Education hours for the training.

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