ERCOT News: April Board Meeting Highlights
- Board approves price resettlement for December-January period
- Staff reviews challenges after four months of new nodal market
- Fifteen market rule changes approved
- Market monitor reports $30 million savings in first months of nodal
- Preliminary assessment shows adequate reserves for summer peak
- Emergency loads performed at 99% in Feb. 2 event, in preliminary report
- CEO reports on budget, March event
- ERCOT staff reports
- Smart grid, synchrophasors presentation available online
Board approves price resettlement for December-January period
April 21, 2011, AUSTIN – The Board of Directors for the Electric Reliability Council of Texas (ERCOT), the state grid operator and manager of the wholesale electric market, approved price corrections at Tuesday’s monthly meeting for selected settlement point prices affected by a data error during December 2010 to Feb. 1, 2011.
ERCOT staff reported last month on pricing issues at de-energized resource nodes – also known as dead buses – that surfaced since the launch of the new nodal market Dec. 1. ERCOT discovered the issue in January and added new electrical buses on Jan. 31. By the time the new buses were added, prices had already become final under ERCOT market rules.
Since the new electrical buses and their locational marginal prices were not implemented before Feb. 1, ERCOT staff recommended recalculating the settlement point prices based on the new locational marginal price for each interval in which settlement points were de-energized.
The price corrections will apply to day-ahead market prices for Dec. 1-Feb. 1 and real-time market prices for Dec. 1-Jan. 31 for some de-energized settlement points. The corrections will be implemented no earlier than May 25 to allow time for an appeal of the board’s decision.
In addition, the board approved a market rule change (NPRR 339) to modify the pricing rules to remedy inconsistent pricing due to split bus stations and de-energized resource nodes being assigned an average locational marginal price within the same station.
The board also authorized ERCOT staff to offer point-to-point obligations for the balance of the current calendar year for all settlement points, including all resource nodes, load zones and hubs. ERCOT market rules require board approval to offer point-to-point obligations for specified settlement points for terms longer than one month since longer terms increase default risk. ERCOT can mitigate the risk of default by requiring larger amounts of collateral for each cleared point-to-point obligation.
John Dumas, director of wholesale market operations, briefed board members on two additional challenges that ERCOT is addressing in the four-month-old nodal market: settlement point pricing at certain point-to-point scenarios and a new issue regarding oscillation of the west to north transmission constraint.
ERCOT is implementing a systems fix this week for the point-to-point issue and also investigating the extent of the impact to see if there is a need for a price correction.
The oscillation issue is apparently due to a flaw in the logic settings that establish output limits for wind generation immediately following a release from curtailment (an instruction to reduce output due to transmission congestion). ERCOT conducted a WebEx conference with market participants April 12 to discuss the oscillation issue and present options to address the issue.
Also in the wholesale market operations report, Dumas presented a graph showing that hedged energy prices exceeded the day-ahead load forecast on average for all 24 hours in March, indicating a conservative approach. Hedged energy represents energy purchased/sold in the day-ahead market plus point-to-point obligations and options carried forward to real time.
Day-ahead prices followed the hourly load profile more closely than real-time prices last month. Real-time prices are dependent on real-time ramp-rate capability.
The congestion revenue rights auction for the next three months completed with the following:
- March – 158,620 bids/offers; 18,287 auction awards; total auction/allocation revenue of $20.2 million;
- April – 151,891 bids/offers; 17,850 auction awards; total auction/allocation revenue of $20 million;
- May – 147,008 bids/offers; 19,911 auction awards; total auction/allocation revenue of $31.4 million.
In other action, the board approved the 2010 Audited Financial Statements , 2011 key performance indicators for ERCOT staff, and 14 Nodal Protocol Revision Requests (NPRRs) and one Planning Guide Revision Request (PGRR). The market rule changes approved included:
- NPRR 290 – ERCOT Publication of the Day-Ahead Market PSS/E Files
- NPRR 294 – TX SET v4.0 Including Acquisition and Transfer of Customers from One Retail Electric Provider to Another; Meter Tampering Transactional Solution
- NPRR 298 – New Definitions Related to Black Start
- NPRR 301 – Correct Energy Trade Language for Adjustment Period
- NPRR 304 – Removal of Frequency Bias Methodology Approval Requirement
- NPRR 316 – Negative Self-Arranged Ancillary Services Quantity
- NPRR 320 – Minimum Point-to-Point Option Bid and Settlement
- NPRR 329 – Correct Security Classification Changes for Extracts/Reports
- NPRR 331 – Addition of the Balance of the Year Pre-Assigned Congestion Revenue Rights (PCRR) Allocation
- NPRR 335 – Transmission Service Provider Request for Interval Data
- NPRR 339 – Modifications to Heuristic Rules to Determine Locational Marginal Pricing at De-energized Electrical Bus and Treatment of Congestion Revenue Rights Offers at De-energized Settlement Points
- NPRR 341 – Remove Ancillary Services Offers from Supplemental Ancillary Services Market That Do Not Meet the Lead Time
- NPRR 342 – Notification and Actions to Address Outcomes Inconsistent with Efficient Operation of the ERCOT Market
- NPRR 343 – Congestion Revenue Rights Bid and Point-to-Point Obligation Bid Criteria Change
- PGRR 002 – New Planning Guide Section 2, Definitions and Acronyms, and Section 8, Planning Reserve Margin and Associated Change Process for the Planning Reserve Margin.
In addition to the market rule changes, the Technical Advisory Committee update included a draft of the project prioritization list.
Dan Jones of Potomac Economics, the independent market monitor for the ERCOT region, presented a report on the first four months of the nodal market operations. Since the nodal market launched, there has been a $30 million reduction in the costs for regulation reserves – an ancillary service that provides capacity for immediate, continuous frequency control.
His report also reviewed generation by fuel type for the first three months of 2011, compared to 2010, indicating increases in coal, 6.8 percent; nuclear, 6.4 percent; and wind 15.5 percent. Gas generation was down 9.4 percent.
Joel Mickey, director of grid operations, presented a preliminary summer assessment based on information filed with the North American Electric Reliability Corporation. (ERCOT’s annual summer assessment, based on market-approved methodologies for determining generation capacity and reserve margins, is completed in May.)
The current peak forecast for the summer – based on normal weather conditions – is 64,964 megawatts (MW), compared to last year’s peak forecast of 64,056 MW. The actual peak demand recorded last summer was 65,776 MW (Aug. 23), which was the result of higher-than-normal temperatures.
Generation expected to be available for summer peak is 72,255 MW, leaving an anticipated reserve margin of 14.3 percent – above the 13.75 minimum threshold approved for the ERCOT region. The current generation includes 106 MW of biomass and 9,427 MW installed wind capacity – 8.7 percent (820 MW) is included as available capacity for peak demand under ERCOT’s market-approved methodologies. (A list of ERCOT generation units by fuel type and capacity is available in the December 2010 capacity, demand and reserves report.)
Mickey also noted that several transmission projects will be completed prior to this summer which will improve grid operations, including:
- 165 mile 345 kilovolt (kV) line from Zorn/Clear Springs to Hutto Switch, completing a 239 mile 345 kV project between Zorn/Clear Springs to Salado
- Roanoke Tap to West Denton 345 kV project which will increase the energy import into Denton
- 9 mile 138 kV line from Palo Duro to the Dilley Switch in conjunction with the upgrade made to the Pearsall to Dilley 69 kV line project expected to address constraints in the Frio county area.
Mark Patterson, manager of demand integration, reviewed the performance of the emergency interruptible load services during the Feb. 2-3 severe weather event. For first three hours of event, the emergency interruptible loads provided an average of 381 MW of demand response – 99 percent of384 MW obligation. For the next five hours, following the second dispatch, they provided an average of 588 MW of demand response – or 126 percent of 468 MW obligation.
Patterson noted that these were preliminary numbers presented in a Public Utility Commission report and it appears the final numbers will exceed these. The final report on the event performance is expected in May.
Patterson also reported that ERCOT had procured an additional 117.7 to 130.4 MW of emergency interruptible load service for the four time periods in the April-May contract period at a maximum projected cost of $1.1 million.
CEO reports on budget, March event
CEO Trip Doggett reported a $4.8 million favorable variance in the March budget, for a year-to-date favorable variance of $7.6 million.
In his departmental updates, Doggett noted that ERCOT experienced a brief level-one energy emergency alert on March 23 when 1,000 MW of generation failed unexpectedly. Operators deployed non-spinning reserves (off-line or reserved capacity capable of deploying within 30 minutes, intended to cover the contingency of losing resources or under forecasting load). Normal operations were restored within an hour.
Doggett also noted that ERCOT has added a “today’s outlook” graph on www.ercot.com which shows the forecast peak for the day and the current load.
Monthly staff reports included:
- Grid Operations and Planning Report
- Wholesale Market Operations Report
- Commercial Market Operations Report
- Information Technology and Facilities Report
- Business Integration Update
- Financial Summary Report
- External Affairs Update
CEO Trip Doggett presented “Overcoming Barriers to Smart Grids and New Energy Services” at the University of Texas Smart Grid Conference on April 7. The presentation is posted in ERCOT News/Reports & Presentation in the System Planning section.