News Release

December 17, 2013

ERCOT load forecasting methodology goes to stakeholders for review

New representatives named to board and Technical Advisory Committee

DEC. 17, 2013, AUSTIN, TX -- Before the Electric Reliability Council of Texas (ERCOT) releases its next long-term outlook for resource adequacy, the numbers behind its forecast for future energy needs are undergoing a thorough review.

The ERCOT Board at its Dec. 10 meeting provided comments on a staff proposal to adjust the formulas ERCOT uses to estimate future peak demand, in hopes of addressing a widening gap between economic indicators and actual growth in energy use during those hot summer days when demand is highest.

“Electric demand growth has slowed to about 1 percent a year in recent years, although the economic forecasts and non-farm employment statistics used in recent load forecasts have resulted in growth estimates of 2 to 3 percent in the two- to three-year outlook,” said Calvin Opheim, ERCOT’s manager of Load Forecasting and Analysis. “This implies a less direct correlation between these economic indicators and electric demand than in the past, apparently due to factors such as increased efficiency and consumer actions to reduce load during peak demand periods.”

The proposed changes include a move to a growth forecast that is based on the number of accounts in competitive regions rather than economic indicators, such as nonfarm employment. A 2013 benchmarking study representing about half the electric use in the United States indicated that electric consumption has been growing at an increasingly lower rate than the economy since the late 1990s. That decoupling also appears to be occurring in Texas, Opheim explained.

Other proposed changes include a shift in how weather patterns are incorporated into the model, with a goal of better reflecting the diversity of weather conditions in different regions during peak demand periods.

“There’s a lot of diversity across the state,” said ERCOT CEO Trip Doggett. “Growth rates are different across the regions, temperatures are different, and the peak day is occurring on different days across the state. We’re attempting to hone in and take advantage of what we know about that diversity.”

ERCOT stakeholders provided feedback on the proposed methodology during a Dec. 16 workshop, and an independent consultant, Itron, will review the proposed forecasting methodology and provide an assessment by late January. This review will include evaluation of the proposed approach and the model itself, an assessment of national trends in load forecasting, and creation of an economy-based premise forecast to use as an input into the proposed model.

Following receipt of this input and subsequent board discussions, ERCOT will set a release date for the next Capacity, Demand and Reserves (CDR) report.

A previous stakeholder proposal to increase the 13.75 percent target reserve margin — a measure of the appropriate amount of reserve generation capacity that exceeds anticipated demand  remains under consideration by the ERCOT board. If the board takes action on the target reserve margin prior to the release of the CDR, the report will reflect that decision. If not, the report will continue to incorporate the current target reserve margin of 13.75 percent and the current effective load-carrying capability (ELCC) of wind power — the portion of installed wind generation capacity ERCOT expects to be available over system peak — at 8.7 percent.

The board also authorized changes to certain frequency Regulation Service requirements to reflect increasing needs for the services to support reliability as more wind generation is added to the system.  

 

Other December board meeting updates

 

Chief Executive Officer and Operations Reports

ERCOT CEO Trip Doggett provided an update, which included:

  • ERCOT’s collection of system administration fees was $1.7 million behind its 2013 forecast at the end of November 2013.
  • Kent Saathoff, who was one of the first four employees when he joined ERCOT in 1988, was recognized for more than 25 years of service.
  • The Macomber Map®, which enables ERCOT operators and other users to monitor grid conditions from a variety of data sources simultaneously, has been released as an open source software product for use by other entities that could benefit from a similar method of viewing data from a wide geographic perspective.

 

Technical Advisory Committee (TAC) recommendations

The board approved 11 Nodal Protocol Revision Requests (NPRRs) and one Planning Guide Revision Request on consent, and later in the meeting approved NPRR 541 and NPRR 571, which defines rules for qualifying providers of weather-sensitive Emergency Response Services.

The board also confirmed the 2014 representatives to the Technical Advisory Committee, all of whom were elected by the corporate members from their respective market segments.

 

Annual membership meeting

During the 43rd Annual Membership Meeting, ERCOT Board Chairman Craven Crowell announced that Mark Carpenter of Oncor Electric Delivery Company had been elected to represent investor-owned utilities on the ERCOT board, with Wade Smith of American Electric Power Service Corporation elected as the segment alternate. Additionally, Read Comstock of Direct Energy LP was announced as segment alternate for the Independent Retail Electric Provider segment.

Texas State Representative Jim Keffer, chairman of the House Committee on Energy Resources, delivered the keynote address.

The next meeting of the ERCOT Board of Directors will be Feb. 11, 2014.

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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 600+ 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.

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