Market Information System Grid and Market Conditions

News Release

February 19, 2009

ERCOT News: Board Approves Nodal Budget for 2010 Launch

TOPICS:

  • Board Approves Nodal Budget for 2010 Launch
  • Protocol Revisions Sent Back to Technical Committee
  • Ancillary Services Methodology Approved
  • Other Board Action, Staff Reports
  • Quick Facts Update on Website

BOARD APPROVES NODAL BUDGET FOR 2010 LAUNCH

The Board of Directors for the Electric Reliability Council of Texas, grid operator for most of the state, approved a not-to-exceed budget of $658.7 million for the nodal market redesign and expanded schedule with a go-live date of December 2010. 

“Based on the assumptions we have and the work that needs to be completed… based on what we know, it’s a good number,” independent consultant Mike Cleary of Utilicast told the board members at Tuesday’s monthly meeting.  

CEO Bob Kahn expressed his confidence in the new schedule and the changes that have been made since ERCOT announced in May that the nodal market would not be ready by the Public Utility Commission’s Jan. 1, 2009 deadline. 

“Prior to May we did not have an integrated schedule.  We’ve identified 5,400 tasks that need to be done,” Kahn said.  “As [Utilicast] finds things, we’re making the corrections.  We made some progress prior to May, but now we’ve got the integrated schedule and the new team which has made all the difference.” 

The board’s actions are subject to approval from the Public Utility Commission, which has regulatory oversight over ERCOT, a non-profit independent system operator responsible for scheduling electricity over the high-voltage transmission grid in 75 percent of the state.  The commissioners indicated at their Jan. 14 meeting that they would address the schedule and nodal surcharge at the commission’s Feb. 26 open meeting.   

The commission in January authorized ERCOT to continue collecting the nodal surcharge of $0.169 per megawatt hour (MWh) through February 2009.  The nodal surcharge is assessed to generation resources. 

Along with the budget, the board also approved a flat-fee funding option to recover the remaining nodal costs with a flat surcharge from January 2010 to December 2014.   The amount of the flat rate is projected to be between $0.273 and $0.285 per MWh, depending on whether the commission authorizes a surcharge increase for the remainder of 2009 to $0.226 per MWh (the amount requested in a non-unanimous filing last month by ERCOT and others, including market participants and consumers). 

ERCOT Chief Operating Officer Trip Doggett’s nodal market presentation detailed progress on action items from the Utilicast’s consultant’s January report and program highlights since development of the integrated schedule, starting last June.   

“Of the 16 scheduled tasks on the critical path, the program has hit all 16,” Doggett said, “and 2,262 of the 2,575 scheduled tasks to date are on schedule.” 

To address the Utilicast-cited risk regarding integration testing strategy, ERCOT has identified a leader for the entire enterprise verification effort (interface and end-to-end testing, market trials and system cutover). 

Utilicast presented a new report focused on the system integration assessment portion of the nodal project. The findings on the current state of integration of the program stated “notable progress” in:

  • Redefining the scope and objectives of the integration initiative
  • Developing and communicating a coordinated integration approach
  • Assigning ownership and accountability and experienced personnel in key leadership roles. 

 Cleary told board members there was a very high probability of program completion within the given schedule and budget. 

Links:

Nodal Revised Budget and Integrated Schedule

Nodal Surcharge and Debt Financing

Texas Nodal Market Implementation Program Update

Status Update on Utilicast Report 8 Recommendations

Utilicast Nodal Program Oversight Report 9

PROTOCOL REVISIONS SENT BACK TO TECHNICAL COMMITTEE

After a lengthy discussion on the appeal of the Technical Advisory Committee’s tabling of Protocol Revision Request (PRR) 776, the board remanded PRR 776 back to TAC, along with PRR 791.  Instructions to TAC also included a request for the most complete versions of PRRs 776 and 791 and the most complete version of both combined for board action at the next meeting. 

PRR 776 impacts the market clearing price for energy during intervals of Non-Spinning Reserve Service (NSRS) deployment.  PRR 791 is related to a shortage-pricing mechanism.   

A large portion of the discussion concerned the legal interpretation of whether TAC’s failed votes to approve either PRR could be considered an action and subject to appeal to the board, in accordance with the board’s procedures. 

Links:

Independent Market Monitor’s Review of Zonal Improvement PRRs

TIEC Appeal. TAC Action Regarding PRR 776 & 791
Comments Regarding PRR 776 & 791

ANCILLARY SERVICES METHODOLOGY APPROVED

The board approved changes to the methodologies for determining ancillary service requirements, effective March 1, 2009.  One change allows ERCOT to begin procuring Non-Spin Reserve Service in four blocks for the operating day instead of two blocks for on-peak and off-peak hours.  The other change will allow Loads Acting as A Resource (loads under contract to be interrupted if needed) to provide up to 50 percent of Responsive Reserve Service for procurements that range from 2300 MW to 2800 MW.   

OTHER BOARD ACTION, STAFF REPORTS

Other action at the board meeting included approval of:

Staff reports at the board meeting included:

QUICK FACTS UPDATE ON WEBSITE

An updated ERCOT Quick Facts is now available on the ERCOT website at this link

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

media@ercot.com

512-275-7432