Market Information System Grid and Market Conditions

News Release

July 23, 2009

ERCOT News: July Board Meeting Highlights

TOPICS:

BOARD APPROVES MARKET RULES CHANGES, RMR EXIT STRATEGY

    The Board of Directors for the Electric Reliability Council of Texas, grid operator for most of the state, approved seven market rules revisions at the July 21 board meeting and endorsed an $11 million transmission improvement plan to allow release of two units under reliability-must-run contracts. 

    The Protocol Revision Requests (PRR), and Nodal Protocol Revision Requests (NPRR), approved were:

    • PRR 806: “Re-Registration of market participant due to mass transition of ESI IDs;” Due to the use of the current mass transition process as an interim solution for facilitating the transfer of ESI IDs from one competitive retailer to another, market participants will be required to re-register if they transfer ESI IDs using the mass transition process; effective Aug. 1.
    • PRR 807: “Clarify Definition of Messaging System;” revises the definition of “Messaging System” to include a process that makes real-time messages available to bidding Qualified Scheduling Resources (QSEs) without resources; effective upon system implementation.
    • PRR 808: “Clean-up and Alignment of Renewable Energy Credit Trading Program Language with PUCT Rules;” aligns Section 14, State of Texas Renewable Energy Credit Trading Program, with P.U.C. Subst. R. 25.173; effective Aug. 1.
    • PRR 815: “CSC Process Clarification;” clarifies the process used to determine Commercially Significant Constraints (CSCs) as a result of PUCT Docket No. 36416; effective upon system implementation.
    • NPRR 158: “EILS Self-Provision Formula Correction and Clarifications;” corrects terms contained in the settlement equations related to Emergency Interruptible Load Service (EILS) self-provision to make the formulas consistent with the verbal description of EILS self-provision settlement.
    • NPRR 170: “Synchronization of PRR806, Re-Registration of Market Participant due to Mass Transition of ESI IDs.” 

    The board discussed PRR 805: “Adding Provider of Last Resort (POLR) Customer Class and Advanced Metering System Meter Flag to the Database Query Function on the Market Information System;” and the related NPRR 171 and remanded them to the Technical Advisory Committee for additional work. 

    The board also approved amendments to the ERCOT Regional Planning Charter requiring ERCOT to perform an independent economic analysis of the transmission projects associated with generation interconnection that are expected to cost at least $25 million.

    The board voted 9 to 5 in favor of the NPRR “parking deck” process (for management of nodal protocol revisions deemed not needed for nodal go-live) recommended by the Technical Advisory Committee, but the vote failed because it did not achieve the required two-thirds majority.  

    RMR Exit Strategy Approved for Permian Basin Units 

    The board voted to endorse transmission improvements needed to exit from reliability-must-run agreements for two Permian Basin units which Luminant has requested to shut down.  

    Generation owners are required to notify ERCOT before suspending operations of units to ensure that local reliability issues, if any, are addressed.  If ERCOT requires the units for transmission congestion management or voltage support, ERCOT may enter into a temporary reliability-must-run agreement (RMR) with the unit owner to maintain reliability in the area.  ERCOT is required to have an exit strategy for RMR agreements rather than continued renewal. 

    ERCOT currently has an RMR agreement for Permian Basin unit 5 and is working to finalize an RMR agreement for unit 6.  Both are in Ward County in West Texas. 

    The exit strategy approved by the board includes two planned projects and one new project:

    • Upgrade of a 69 kilovolt (kV) transmission line from Ackerly Vealmoor to Lamesa; preliminary cost estimate of $11 million; estimated in-service date by end of 2011;
    • Autotransformer installation in Odessa area; estimated in-service date of December 2010; already included in the planned transmission projects database;
    • Completion of the Oncor Stanton East – Big Spring Switch 138 kV line; estimated in-service date of December 2010; already approved through the Regional Planning Group review. 

    The independent analysis presented to the board concluded that the upgrade to the Ackerly Vealmoor - Lamesa 69 kV line was economically justified as cost-effective in avoiding the costs incurred to run the RMR units.

    The board’s vote endorses the need for the transmission; approval for transmission construction comes from the Public Utility Commission which regulates the transmission and distribution providers.  The cost of transmission is rolled into costs that all ratepayers pay (also known as a “postage-stamp” transmission rate because – like stamps – it’s the same access fee no matter where the location is).  

    Nodal Software Deliveries Complete; Single-Entry Model Program Launch on Target 

    Chief Technology Officer Mike Cleary reported that all vendor software deliveries are complete and the single-entry model program launch is on target for Aug. 31.  After the August go-live, transmission service providers will begin using the nodal network model submission software to submit changes to the ERCOT network model (a representation of the physical grid). 

    Chief Financial Officer Steve Byone reported that favorable financing terms have locked in lower interest rates through 2010, expected to result in project savings which will be applied to the board’s nodal discretionary fund.   The program currently carries under-runs of $16.2 million and continues to hold the board’s discretionary fund of $58.6 million.  New estimates at completion for all projects are under review and are to be presented at the October board meeting. 

    Board Chair Jan Newton expressed her appreciation to everyone involved in the nodal program.  

    “The development of the models is completed, contract renegotiations completed, and financials are on target,” she said.  “We still have a lot of work to go and a lot of risks, but we need to pause a moment to thank the people who got us to where we are.” 

    Online:
    Nodal Update
    Nodal Monthly Financial Review 

    Staff Reports Reviewed 

    Additional staff presentations reported at the board meeting included:

    Financial Summary Report

    • 2009 Operating Activity Status – Year-to-date revenue remains below forecast overall despite June revenue coming in above budget; expense reductions needed to offset the expected total year revenue shortage has been assigned to department managers and is being closely monitored.
    • 2010 Preliminary Operating Budget – First-cut budget for 2010 completed; will be seeking initial feedback from the board’s Finance and Audit Committee at the July meeting; on schedule to provide a final management recommendation at the August meeting; public hearing scheduled for Aug. 17.

    Market Operations Report

    • Retail Activity – Switching activity continues to be very strong in 2009.
    • Advanced Metering Update – Completed all “as-built” detail design documents except data aggregation; Milestone will be complete in early August; Development completion is still on target for July 24.
    • Wholesale Activity – Energy Services – Total energy volumes continue to be lower in 2009 than 2008; balancing energy prices, while up somewhat in May, continue at overall lower levels in 2009 than 2008.
    • Retail Electric Providers update – Our Energy, LLC, added.
    • Qualified Scheduling Entities update – Aspire Capital Management, LLC, and BPTX (SQ5) Hudson added; Gulf States Wholesale Equity Partners, LP, terminated.

     Grid Operations and Planning Report

      • May 2009 Operations – Monthly peak demand of 51,246 MW on May 8 was lower than the most current long term demand forecast of 52,607 MW; Day-ahead load forecast error for May was 2.90 percent; Two Advisories for Adjusted Responsive Reserve (ARR) below 3000;
      • Effective May 1, OGRR 213, – Synchronization with PRR 775, Changed the defined term “Alert” to “Watch” and Emergency Electric Curtailment Plan (EECP) to Energy Emergency Alert (EEA).
      •  June 2009 – Monthly peak demand on June 25 of 62,297 MW was 42 MW lower than all-time peak demand of 62,339 MW set in August 2006.
      • 8,135 MW wind on line June 30; (no change from May).
      • June Planning summary – ERCOT is currently tracking 242 active generation interconnection requests totaling almost 97,000 MW, including more than 49,000 MW of wind generation; (no change from May).
      • Regional Planning is currently reviewing proposed transmission improvements with a total cost of $948.3 million; all projects (in engineering, routing, licensing and construction) total $4.1 billion. 

      Information Technology Report 

      All board meeting documents are available at this link. 

      NODAL COMPLETES VENDOR CONTRACTS RENEGOTIATIONS

      ERCOT successfully renegotiated existing contracts and established new maintenance contracts with the nodal program’s five largest vendors by the June 30 target deadline, said Mike Cleary, ERCOT’s chief technology officer with responsibility for the nodal program. 

      The renegotiated contracts will help the program better manage its costs, work flows, schedule, and vendor resources, Cleary said. “These renegotiations are part of the nodal program’s ongoing effort to ensure every single dollar and resource assigned to the nodal implementation is scrutinized.” 

      Cleary thanked the vendors for their cooperation and effort during the negotiations. 

      “I must thank the executive teams at ABB, Areva, Siemens, Nexant, and Triplepoint for their efforts and commitment,” Cleary said.  “Our vendors are a critical part of our implementation team and play a key role in bringing the nodal program to market on time and under budget.” 

      ENERGY YEAR-TO-DATE DOWN 5 PERCENT FROM 2008

      Energy consumed in June was 31,231 gigawatt-hours (GWh) – 5.2 percent higher than the normal-weather forecast, and 1.5 percent less than June 2008, according to the monthly demand and energy report.  The energy for the year-to-date is 145,211 GWh, representing 4.5 percent under last year at this time. 

      The report also includes a breakdown of total energy consumed by fuel type through June:  

      Fuel Type

       

      Jan-June 2009  

      MW hours

      Jan-June 2009

      Percent of Total

      2008

      Percent of Total

      Natural Gas

      15,389,993

      39.8

      43.0

      Coal

      9,809,689

      36.3

      37.1

      Nuclear

      3,601,141

      15.3

      13.2

      Wind

      1,500,353

      7.0

      4.9

      Water

      102,657

      0.3

      0.2

      Other

      468,373

      1.4

      1.6

      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 710+ 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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      512-275-7432