News Release

June 23, 2011

ERCOT NEWS: June Board Meeting Highlights (Update)

UPDATE: July 6, 2011 -- Corrects percentage of savings in nodal wholesale market energy prices compared to zonal prices in the first two paragraphs.
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First six months of nodal market show savings from improved efficiencies

Energy costs in the Electric Reliability Council of Texas wholesale market decreased approximately 12.8 percent in the new nodal market, according to an analysis by ERCOT staff.   

Energy prices since Dec. 1, 2010 – excluding February due to the extreme weather event – averaged $32.55 a megawatt hour (MWh), compared to $37.33 in the zonal market during the same time last year, Chief Operating Officer Mike Cleary said.    

Costs for regulation reserves – energy used to regulate grid frequency – were $35.8 million less in the new nodal market compared to the previous year, due to improved congestion management tools in the nodal market, Cleary noted in a report at Tuesday’s monthly board meeting.  

Operators are able to manage transmission congestion more effectively since the launch of the nodal market Dec. 1, 2010, Cleary said, primarily due to a more efficient five-minute unit dispatch, instead of 15 minutes in the zonal market, and more precise and transparent unit-specific dispatch, instead of a portfolio of units.  

According to a staff analysis using estimated costs for 22.5 hours of unresolved congestion in 2008, the ability to manage that congestion  with the nodal tools available today would have reduced the load charges by $90-$180 million had it been in place in 2008, Cleary said. 

Cleary noted that the few issues experienced so far – primarily the de-energized bus issue – were not significant compared with what other markets have had to deal with in new market launches, and dispute volume continues to be low.   A total of 343 disputes have been filed since nodal go-live, much lower than the estimated 5,300 disputes in the first six months of ERCOT’s zonal market launch in 2002, he said. 

Daily average settlement totals are ranging from $8 to $10 million, and ERCOT is posting over 1.1 million reports and extracts, generating 25 million downloads a month. 

“The implementation and stabilization of the nodal market has been successful – that’s a compliment to ERCOT and also to our market participants who made a huge contribution to making this a success,” Cleary said.  “This is a very good story to tell....  There was a very high risk when we opened the doors on Dec. 1, but we really haven’t had the type of issues you would expect in such a complex market implementation.”

New wind record reported

CEO Trip Doggett reported that ERCOT reached a new wind record on Sunday, June 19.  Wind generation hit 7,355 MW at 10:26 pm, representing 14.58 percent of the load at the time (50,447 MW).   The new wind record exceeds the previous record of 7,227 MW (Dec. 11, 2010), by 128 MW. 

In his monthly board update, Doggett also reported that ERCOT is now using advanced meters for settlement in more than 3 million accounts.  More than 70 percent of the load is now being settled using 15-minute data from either advanced meters or interval data recorder meters. 

Other items from the CEO update included:

  • The budget had an $8.3 million favorable variance through May, compared to $6.5 million the previous month, and a forecasted year-end favorable variance of $9.7 million;
  • ERCOT’s June 8 workshop for generators to share lessons-learned regarding winter weatherization and to discuss summer preparedness had a high attendance; a similar workshop is being planned for transmission operators.

Nine market rule changes approved

Board members approved seven Nodal Protocol Revision Requests (NPRRs), one System Change Request (SCR), and one Planning Guide Revision Request (PGRR).  The changes approved included:

  • NPRR 264 – Clarification of Nodal Protocol Requirements for Generators with Multiple Points of Interconnection;
  • NPRR 311 – Correction of Wind Adjust Formula to Account for Daylight Savings Time;
  • NPRR 317 – Clarification of Entity Responsible for Hydro-Responsive Testing;
  • NPRR 318 – Alignment of Nodal Registration Requirements with Current Registration Process;
  • NPRR 322 – Real-Time Point-to-Point Option Modeling;
  • NPRR 326 – Adjust the Calculation of the Real-Time Settlement Point Price for a Resource Node;
  • NPRR 330 – Change in Frequency of Four Protocol Required Audits from Annual to Periodic;
  • SCR 765 – Public Aggregated Wind Dashboard;
  • PGRR 007 – New Planning Guide Section 6, Data/Modeling and 6.4, Transmission Project and Information Tracking Report and Data Requirements. 

One revision request, NPRR 312 – Clarification of Qualified Scheduling Entity Requirements for Split Generation Resources, was remanded back to the Technical Advisory Committee to reconsider it. 

The Technical Advisory Committee report also included an update of the project prioritization list and the 2011 goals for the market participant/stakeholder committee.

Other board action

In other action, the board approved an increase in the fees for security screening studies which are required before generation resources can connect to the ERCOT transmission system.   The board also approved revisions to the Investment Corporate Standard and the 2011 board meeting schedule.   

Board Chair Laura Doll announced recent changes in board membership since the May board meeting.  The three-year term of Alton D. Patton, one of the five independent board members (unaffiliated with any market participants), expired in mid-June creating a vacancy on the board; and Marcie Zlotnik resigned from her board position representing the retail electric provider segment on May 27, due to the acquisition of her company StarTex Power by Constellation Energy, represented by the independent power marketers’ segment.   Segment alternate Eric Hendrick of Stream Energy is currently representing the retail provider segment.   

Also, board member Jean Ryall, representing the independent power marketers’ segment, was elected as the new vice-chair of the board’s Human Resources and Governance Committee, formerly held by Patton. 

The board’s nominating committee is actively conducting a search for unaffiliated director candidates to fill the position formerly held by Patton.

ERCOT staff reports on price correction option, forecast models

John Dumas, director of wholesale market operations, reviewed a potential price correction option for a software error in the day-ahead market which was discovered and corrected in early April.  The issue affected 29 days for a total impact of $331,000.  Dumas noted that the protocols allow the board to call for price corrections when prices are “significantly affected by software error or data error.”   After discussing the merits of the cost and time for ERCOT and market participants to make the price corrections, board members declined to vote on the price correction and asked staff for a clearer determination or definition of what market participants consider a “significant” impact. 

Director of System Planning Dan Woodfin reviewed the long-term load forecast and the capacity, demand, and reserves report.   

Two types of models are used to create the long-term load forecast: monthly energy models that describe energy use for each of the eight weather zones across ERCOT as a function of weather and economic parameters; and hourly energy models that describe the hourly shape of that energy consumption based on expected weather and temporal variables.  

Economic parameters that drive the year-to-year change in the forecast are based on Moody’s base economic forecast.  Last year’s forecast models used Moody’s low economic forecast, but recent energy consumption has trended more toward Moody’s base forecast, after accounting for weather conditions. 

The long-term load forecast is based on normal weather for each year of the forecast.  Additional capacity requirements needed to provide adequate reliability for higher-than-normal weather, as well as generating unit outages, are accounted for in the reserve margin.  ERCOT’s accounting of reserves is based on specifications approved by the stakeholder committees and board.  In November 2010, the ERCOT board endorsed a new target reserve margin of 13.75 percent, up from 12.5 percent which had been used since 2002. 

Other staff reports covered:

ALSO ONLINE

Archived broadcasts of ERCOT board meetings

June 21 ERCOT Board meeting

June 20 Finance and Audit Committee meeting

June 20 HR and Governance Committee meeting

Black-start simulator training scheduled for July-August

ERCOT will be conducting simulator-based “black-start” training courses in July and August to provide training for transmission and generation operators on restoration procedures in the event of a system-wide black out.   

The control center simulator at ERCOT’s Taylor facility, completed in 2007, allows operators to receive hands-on training without any impact to the grid.   The system replicates the ERCOT control center computer systems and also includes a power system model to mimic the behavior of power systems and a subsystem to create events under various operating conditions.   

Black-start procedures have never been necessary in the ERCOT region, but in the event of a major system disturbance, ERCOT has black-start units under contract to assist in restoring the system to a normal state as quickly as possible.  Black-start units must be able to start up on their own without support from the grid and then be able to pick up their own internal load.   

During the simulator training, the transmission operators will be required to build stable islands with the ultimate goal of reaching synchronization points with other neighboring black-start islands.  The generation operators will start and control their resources as necessary. The transmission operators will contact ERCOT’s operators participating in the training from the simulator control room when the islands are ready to be synchronized.   ERCOT operators will be in control of the restoration and coordinate the synchronization and frequency control until the entire system is reconnected. 

ERCOT contracts every two years for black-start units and holds this annual training exercise with the black-start resource providers and transmission operators to test the black-start procedures. 

ERCOT’s black-start training is recognized by the North American Electric Reliability Corporation as an approved learning activity for continuing education hours.

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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