February Board Meeting Highlights
Board approves rule changes to improve generation outlook
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 three rule changes Tuesday to promote adequate generation capacity for the future.
Board members approved a process governing ERCOT’s use of emergency authority to recall idled units for capacity and two rule changes to lesson price distortion when additional capacity is brought online for reliability. Under the new rules, responsive reserves that can be supplied by a generation resource will increase to 24 percent, from the current 20 percent threshold, which will allow the transfer of 500 megawatts (MW) of non-spin service to responsive-reserve service. The other revision adds a requirement for energy offer curve submissions to ensure proper prices are set for units deployed for capacity.
The three Nodal Protocol Revision Requests (NPRRs) related to resource adequacy include:
- NPRR 432 – Deployment of Resources to Alleviate Anticipated Emergency Conditions;
- NPRR 434 – Increase the Capacity Limitation of a Generation Resource Providing Responsive Reserve Service;
- NPRR 435 – Requirements for Energy Offer Curves in the Real-Time SCED for Generation Resources Committed in Reliability Unit Commitment.
The board also voted to endorse changes in the ancillary services requirements that will expand responsive reserves with a corresponding reduction in non-spinning reserves, related to NPRR 434. The new methodology is intended to help alleviate the potentially negative effects of reliability deployments on energy prices in the real-time market.
In addition to the protocol revisions, Board Chair Craven Crowell and CEO Trip Doggett reported that ERCOT was working on another resource adequacy initiative – a project to identify factors that influence investment decisions related to generation development. The project will consider both supply-side and demand-side resources from a wholesale and retail perspective, as well as, include suggestions for ways to enhance investments for long-term resource adequacy in ERCOT.
Eight vendor proposals were reviewed and evaluated, and finalists gave on-site presentations earlier in the month, Doggett said. ERCOT hopes to select a vendor and finalize a contract by the end of February to enable completion of the project by June 1.
Additional protocol revisions approved by the board were:
- NPRR 407 – Credit Monitoring Posting Requirements;
- NPRR 408 – Clarification of ERCOT Authority to Deny Energization of Non-Compliant Generators;
- NPRR 422 – Public Day-Ahead Market Shift Factors;
- NPRR 423 – Add Voltage Support Requirement for Intermittent Renewable Resource and Allow Manual Control of Static Volt-Ampere Reactive Devices if Approved by ERCOT;
- NPRR 437 – Allow Aggregation of Multiple Units into a Single Resource for Market and Engineering Modeling.
The board also approved one Planning Guide Revision Request: PGRR 008 – New Planning Guide Section 4, Generation Resource Interconnection.
Price correction approved
A representative from XO Energy made a presentation to the board in opposition to a price correction proposed by ERCOT staff at the January board meeting. ERCOT staff reported that prices assigned during 21 15-minute intervals on Nov. 24, 2011, were inaccurate due to a software and data error. The board voted to approve the resettlement of the affected intervals, effective no earlier than 36 days to allow for appeals.
In other action, the board approved the Market Credit Risk Corporate Standard, as recommended by the board’s Finance and Audit committee. The committee is continuing to review two other standards – Financial Corporate Standard and the Investment Corporate Standard – which they expect to discuss in April.
Natural gas curtailment risks reported
Kent Saathoff, vice president of grid operations and system planning, reported findings of a survey of generator gas contracts for February. The survey respondents reported:
- 22,755 MW of “firm” natural gas with assured priority service for supply and delivery
- 5,951 MW “non-firm” interruptible
- 14,344 MW “spot” market – purchased day-ahead or on the day or delivery.
The survey also found that 5,226 MW of natural gas capacity can operate at least 48 hours on fuel oil backup.
Black and Veatch presented results of a natural gas curtailment risk study commissioned by ERCOT. The study concluded that market liquidity and commercial agreements appear to be effective in procuring natural gas supply for electric generators, and that the small number of curtailment events indentified outside of contractual agreements indicated flexibility in the natural gas market to obtain supply without firm contracts.
Using the December 1983 cold-weather event – ERCOT’s longest sub-freezing event since 1950 – Black & Veatch estimated that ERCOT could lose about 11,000 MW of generation due to supply disruptions if it reoccurred today.
Regional pipeline capacity would to be adequate to meet generation demands, although localized pipeline constraints on delivery systems could result in some curtailments, the study concluded. The majority of ERCOT gas-fired generators have access to capacity in excess of their peak needs and multiple pipeline interconnects, according to the study.
Independent market monitor reviews prices, wind production for 2011
Dan Jones from Potomac Economics, the independent market monitor for the ERCOT region, presented a report on electric prices, heat rate, congestion costs, ancillary services procurement, and wind production.
The average load-weighted price in 2011 was $53 per megawatt-hour, compared to $39 in 2010; $34 in 2009; and $77 in 2008.
CEO, staff reports
Doggett reported that ERCOT operations will soon begin using a new transient security analysis tool in day-ahead and real-time operations. The tool is expected to increase the West-to-North transmission limits as much as 400 MW leading to reduced congestion costs.
Doggett also reported that ERCOT is involved in collaborative research with the University of Texas at Austin’s Pecan Street Project to research the degree to which electric vehicles can participate in the ancillary services market.
Other staff reports included:
Wholesale Market Operations
- Congestion Revenue Rights auction for February collected 149,620 bids/offers; 13,387 auction awards, and a total auction/allocation revenue of $9.078 million.
- Market enhancements under consideration include proposals related to changing the power balance penalty cost; evaluating the feasibility of pilots for fast-response regulation service and 30-minute Emergency Interruptible Load Service; and framing functions for future stages of improvements to the security-constrained economic dispatch.
Commercial Market Operations
- Advanced meters settled with 15-minute data in January totaled 4.4 million.
- Daily average settlement dollars transacted were down in January to $6.1 million, compared to $7 million in December 2011.
- Ancillary services costs were down in January to $16.5, compared to 17.1 million in December 2011.
Grid Operations and Planning
- January’s peak demand of 46,924 MW on Jan. 13 was less than the January 2011 peak demand of 50,737 MW. (The all-time winter peak for ERCOT is 57,315 MW, which occurred on Feb. 19, 2011.)
- System planning is currently reviewing 124 active generation interconnection requests, totaling more than 33,000 MW.
- Wind capacity online as of Jan. 31 is 9,829 MW – 225 MW more than Dec. 31, 2011.
The board’s next meeting is scheduled for April 17.
Archived broadcasts of ERCOT board meetings
Feb. 21 Board of Directors meeting agenda, documents
Feb. 21 Technical Advisory Committee Update
Feb. 20 Finance and Audit Committee meeting
Feb. 20 Human Resources and Governance Committee meeting
The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power to 23 million Texas customers - representing 85 percent of the state's electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects 40,500 miles of transmission lines and more than 550 generation units. ERCOT also performs financial settlement for the competitive wholesale bulk-power market and administers retail switching for 6.6 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.