News Release

    September 23, 2010

    ERCOT NEWS: September Board Meeting Highlights

    TOPICS:

    Nodal market 68 days from launch; All systems go after 7-day market trial

    A seven-day “dress rehearsal” for the nodal wholesale market was successfully completed last week, and no issues are preventing the Dec. 1 “go-live” date at this time, President and CEO Trip Doggett reported Tuesday to the Board of Directors for the Electric Reliability Council of Texas, grid operator and manager of the electric market for most of the state. 

    During the 168-hour full-system testing Sept. 8-15, ERCOT ran several major components of the nodal market:

    • Day-ahead market for seven days
    • Day-ahead reliability unit commitment for seven days
    • Hourly reliability unit commitment for seven days and two runs of the weekly reliability unit commitment
    • Security-constrained economic dispatch every day of the test
    • “Closed-loop” testing for 48 hours
    • The monthly congestion revenue rights auction
    • Outage scheduler synchronization and verification for outages effective during the month of September. 

    Doggett noted that the ERCOT system operators were pleased with the performance scores.  

    A full test report is available online: Market Trial 168-Hour Test Report and Summary. 

    Additional market trials and tests are scheduled for September and October, including a 36-hour load-frequency control test starting Sept. 28, a 24-hour load-frequency control test Oct. 27, and congestion revenue rights monthly auctions for October and November.  ERCOT’s focus for the day-ahead market and reliability unit commitment going forward will be on the quality of solution, said Mike Cleary, senior vice president and chief operating officer.   

    The system cut-over timeline for the Dec. 1 launch – 68 days from today – includes:

    • September-October – Network modeling and outage scheduling go-live
    • Oct. 19 – Board of Directors vote on readiness certification
    • November – Congestion revenue rights auction go-live
    • Nov. 30 – Day-ahead market go-live
    • Dec. 1 – First operating day  

    Dan Jones of Potomac Economics, the independent market monitor appointed by the Public Utility Commission, presented his review of the Market Reform nodal risk assessment presented to the board Aug. 16, 2010. 

    Nodal program updates were presented at the board’s special nodal meeting Sept. 20 and at the regular monthly meeting Sept. 21. 

    Also online:

    2011 budget assumptions reviewed

    Controller Mike Petterson gave a preliminary review of the 2011 budget preparations.  In one scenario, no change in the system administration fee or the nodal surcharge fee would be needed if a portion of the $113 million nodal program board discretionary fund could be used for nodal market stabilization activities in 2011.   

    Without use of the board discretionary fund, the budget work papers suggest an increase in the system administration fee of $0.05 per megawatt-hour (MWh) would be needed in 2011.

    The system administration fee, which is assessed on wholesale energy transactions, has been set at $0.4171 per MWh for the last six years (approximately $0.42 per month, based on a 1,000-kilowatt-hour/month bill).  The nodal surcharge, which is assessed to generation owners, is $0.375 per MWh and will be discontinued when costs for the nodal market implementation are recovered, around 2012-2013. 

    Petterson also reported that activities to control costs resulted in a 6 percent savings in 2009, and a 10 percent savings is forecast for 2010.  Staff has been reduced 5 percent over the past 12 months. 

    The board is expected to vote on the budget in November. 

    CEO reports on August grid events

    In his monthly update, CEO Trip Doggett reviewed the new peak demand records set last month and noted that instantaneous demand surpassed 66,000 megawatt (MW) on Aug. 23, the day ERCOT recorded a new hourly-averaged peak demand of 65,776 MW.  (NOTE: The record was adjusted to 65,776 MW following initial settlement, instead of the first-reported preliminary record of 65,715 MW.) 

    The historical analysis applying actual economic and weather data to the energy forecast showed August energy usage was significantly affected by weather (a 7 percent increase in August energy produced compared to 2009).  Doggett noted that weather in the Dallas area, which represents about 35 percent of the ERCOT load, averaged 4 degrees hotter last month.  The Houston area, representing about 30 percent of total load, averaged 1 degree hotter. 

    Doggett also reported that emergency procedures were implemented on Aug. 20 after the loss of generation totaling 1,531 MW in the Houston area and West Texas.  Operators deployed additional reserves and cancelled the emergency level 1 alert after 47 minutes. 

    Also, Tropical Storm Hermine resulted in numerous transmission outages in the South Texas area and interruption of load in Brownsville for 31 minutes on Sept 7. 

    The year-end budget is projected to have a $10.6 million favorable variance primarily due to $5.8 million favorable balance in salary and benefits, and $3 million favorable balance in interest and expense. 

    Ancillary services calculation changed for transition to nodal

    The board unanimously approved changes to the ancillary services methodology for 2011 primarily intended to accommodate the transition from a zonal to a nodal market in December.  

    The balancing energy market which executes every 15 minutes in the zonal market will be replaced by a 5-minute dispatch in the nodal market.  More frequent execution of the real-time market should result in less required regulation reserves, so the calculation methodology will be changed beginning in February 2011.   

    Regulation reserves are the reserves procured by ERCOT which are used to maintain frequency control. 

    Other board votes included approval of a first-priority security interest agreement, an optional agreement that market participants may sign to receive favorable credit treatment, and acceptance of the 2009 401(k) Audit Report 

    Twenty market rules revisions approved

    In other action, the board approved 20 market rules revisions, including two zonal protocol revisions (PRR) and 15 nodal protocol revisions (NPRRs), in addition to one Commercial Operations Guide revision request (COPMGRR), one Nodal Operating Guide revision request (NOGRR) and one system change request (SCR):

    PRR 846 / NPR R213: Deadlines for Initiating Alternative Dispute Resolution

    PRR 850: Weather Responsiveness Determination for Interval Data Recorders

    NPRR 220: Nodal Requirement of Declaring an Energy Emergency Alert for Reserves more than 500 MW

    NPRR 231: Treatment of Reliability Must Run Units in the Day-Ahead Market

    NPRR 232: Clarification of Block Load Transfer Registration and Deployment

    NPRR 238: Resolution of Alignment Items A47, A59, A104, A105, A114, A115, A130, A188, and A189 - Provides Clarification and Updates to Network Operations Model Processes for Resource Entities

    NPRR 240: Proxy Energy Offer Curve

    NPRR 241: Aggregated Incremental Liability Calculation and Credit Reports Publish Corrections

    NPRR 243: Load Resource Disqualification, Unannounced Testing, and Compliance

    NPRR 247: Retail Market Testing Updates Due to the Merger of the TX SET and Texas Test Plan Team Working Groups

    NPRR 248: Removal of Loads from Pre-1999 Non-Opt-In-Entity (NOIE) Load Zone

    NPRR 249: Resolution of Alignment Item A155 and A159, Removal of Text Reason Requirement

    NPRR 250: Suspension of Annual Profile ID Validation with Advanced-Meter Deployment

    NPRR 251: Synchronization of PRR845, Definition for Interval Data Recorder Meters and Optional Removal of IDR Meters at a Premise Where an Advanced Meter Can be Provisioned

    NPRR 252: Synchronization of PRR758, Clarification of Language Related to Generation Netting for ERCOT-Polled Settlement Meters

    NPRR 254: Updates to Protocol Sections 14 and 18

    SCR 759: acLineSegment Name Length Increase in Information Model Manager

    COPMGRR 020: Creating Subsection 10.3, Unregistered Distributed Generation Reports

    NOGRR 034: Rescind Telemetry Performance Calculation Exclusions 

    Also online:

    Market, grid and IT reports presented

    Other staff reports included:

    Also online:

    Nodal workshop for retail providers Oct. 6 in Austin

    ERCOT is hosting a nodal market readiness workshop for retail electric providers and load-serving entities on Oct. 6 in Austin.  

    “We encourage retail electric providers to attend this workshop in preparation for the transition to the Texas Nodal Market,” said Mike Cleary, senior vice president and chief operating officer.  “It will be very valuable for all entities and individuals doing business in the ERCOT market, as nodal goes live on December 1.” 

    The workshop aims to provide a forum for presentations and discussion of key nodal market concepts and to facilitate the exchange of ideas between market participants on the impacts of the nodal market rules on load-serving entities and retail providers. Several panels of invited guests will share their ideas on the risks and opportunities of the new ERCOT nodal market. 

    The workshop is scheduled for 9:30 am to 3:30 pm at ERCOT’s Austin facility, 7620 Metro Center Dr.  The workshop will also be available via WebEx for those unable to attend in person. To register for the workshop, send an email to NodalTraining@ercot.com. For additional information, contact Retail Client Services at 512-248-3900, option 2. 

    General counsel selected

    Bill Magness has accepted the position of vice president, general counsel and corporate secretary, CEO Trip Doggett announced Tuesday.  Magness has been serving on an interim basis in this position since April and was ERCOT’s outside counsel for many years.   

    Previously, he was a partner with Casey, Gentz and Magness. He served as chief of the Office of Customer Protection and chief counsel of Office of Policy Development at the Public Utility Commission of Texas from 1996-1998.  

    Magness holds a bachelor’s degree from the University of Texas at Austin and a juris doctorate from the University of Pennsylvania Law School.  He is a member of the State Bar of Texas (Public Utility Law Section). 

    Magness replaces Michael Grable who resigned in April.

    The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power to 24 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 570+ generation units. It also performs financial settlement for the competitive wholesale bulk-power market and administers retail switching for 7 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
    Robbie Searcy (512) 225-7213
    rsearcy@ercot.com