Trip Doggett - Presentation at TWCA annual conference 2012

1. ERCOT OVERVIEW
TEXAS WATER CONSERVATION ASSOCIATION
MARCH 9, 2012
Trip Doggett
President & CEO
ERCOT

2. CONTENTS
• What is ERCOT?
– ERCOT as a North American Electric Reliability
Corporation (NERC) interconnect
– ERCOT as an Independent System Operator
• Challenges
g
– Demand Growth
– Resource Adequacy
–DDrought
ht
• Options
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3. ERCOT
The ERCOT Region: ERCOT Inc.:
The interconnected electrical system serving A non-profit corporation designated the
most of Texas, with limited external “Independent Organization” under state law
connections and assigned these responsibilities [Texas
• 75% of Texas land; 85% of Texas load Public Utilit Regulatory A t (PURA) 39.151]:
P bli Utility R l t Act 39 151]
• More than 40,000 miles of transmission lines • Maintaining System Reliability
• 550+ generation units • Ensuring Open Access to Transmission
• 68,294 MW peak demand (set August 3, 2011) • Facilitating the Competitive Wholesale
Market
• Facilitating the Competitive Retail Market
Regulatory Characteristics:
• ERCOT is regulated by the Texas
Public Utility Commission with
oversight by the Texas Legislature
• ERCOT is not a market participant
and does not own generation or
transmission/distribution wires
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3

4. ERCOT AS INDEPENDENT SYSTEM OPERATOR
 ERCOT IS ONE OF 10 NORTH AMERICAN ISOS/RTOS
• ISOs/RTOs serve
67% of U.S.
population
• Goal: Reliability,
y,
Efficiency,
Transparency &
Impartiality
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5. PRE-2002
Every utility was vertically integrated,
E tilit ti ll i t t d
from generation to customer service.
Integrated electric utility Customer
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6. TEXAS COMPETITIVE MODEL
Generation T&D (“Wires”) Retailers End Users
REP
REP
Competitive Regulated Competitive Sales
Production Open Access
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7. ELECTRIC GRID OPERATIONS
 ERCOT ‘directs traffic’ on the grid to maintain reliability and ensure
supply of electricity:
• Coordinates scheduling of power by market participants
• Analyzes grid conditions continuously in real-time
• Dispatches generation to ensure power production matches load at
all times
• Secures available generation capacity to meet reliability requirements
including contingencies
• Coordinates planned outages of generators and transmission lines
• Relieves transmission system congestion
• Coordinates emergency actions & recovery
• Operates markets to meet regional energy & capacity requirements
not met through bilateral arrangements
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8. ERCOT CAPACITY AND ENERGY BY FUEL TYPE
Installed Capacity, January 2012 Energy Produced, 2011
~ 80 000 MW
80,000 335 billion kil
billi kilowatt-hours
tt h
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9. CHALLENGES

10. NEW RECORDS IN USAGE
New Peak Demand Record: 68 379 megawatts
68,379
 68,379 megawatts (MW), Aug. 3, 2011
 The 2010 peak demand – 65,776 MW, Aug. 23, 2010 – was broken 3 consecutive days:
- Aug. 1, 2011 66,867 MW
g , ,
- Aug. 2, 2011 67,929 MW
- Aug. 3, 2011 68,379 MW
New Weekend Record
 65,159 MW, Sunday, Aug. 28
- 5 percent increase over 2010 previous record – 62,320 MW
Winter Peak Record
 57 282 MW (February 10 2011)
57,282 10,
- 3 percent increase over 2010 previous record - 55,878 MW
Wind Record
 A new instantaneous wind record of 7,599 MW occurred on March 7 at 20:41.
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11. CREZ
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12. RESERVE MARGINS: PROJECTING ADEQUACY OF SUPPLY
• Target reserve margin for the ERCOT Region is 13.75%
• Defined as:
– Percentage difference between available generating capacity and
forecasted peak system load
• Ensures (but does not guarantee) adequate electric supply will be
available in case of contingency need
– Unexpected weather extremes or loss of major generation units
• Available capacity includes:
– Gas, coal and nuclear fuel units accounted at their season operating limit
level (unless scheduled to retire or mothball)
– Hydro plants and wind farms at their “high confidence summer peak” level
– Planned units (with signed transmission interconnection agreements and
required permits)
– Loads Acting as Resources - Large customers registered and bidding to
provide capacity services in market-based load participation programs
– DC Ties - capacity that can be imported through DC links from
p y p g
neighboring grids
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13. DECEMBER 2011 CAPACITY, DEMAND AND RESERVES (CDR) REPORT
25.00%
Installed Capacity Planned Units Uncommitted Projects 13.75% Target
20.00%
20 00%
As of January 2012,
reserve margin at Reserve margin target 13.75%
13.86% due to
CSAPR stay
15.00%
15 00%
10.00%
5.00%
0.00%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
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14. 2012 CDR – LOAD FORECAST
• U d t d economic forecast from Moody’s
Updated i f tf M d ’
– Slower growth in near-term
• Updated assessment of normal weather profile
100,000
95,000 12,000
90,000
11,000
85,000
mployment (x000)
emand (MW)
80,000
10,000
75,000
Non‐Farm Em
Peak De
70,000
9,000
65,000
60,000
8,000
55,000
50,000 7,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
2011 Peak Demand Forecast 2012 Peak Demand Forecast
2011 Non‐Farm Employment Forecast 2012 Non‐Farm Employment Forecast
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15. SUMMER PEAK SCENARIOS
Normal Weather – 63,898 MW
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16. GENERATION OUTAGES: 08/01 – 08/07
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17. DROUGHT

18. THE 2011 TEXAS DROUGHT
Excerpts from Oct 2011 Report by Office of State Climatologist:
• Large portion of Texas will likely endure a second summer of drought.
• 2011-12 La Niña is forecasted to be less intense than 2010-11.
• It is impossible to determine at this point whether the drought will last beyond a
g y
second year.
– On rare occasions in the past, La Niña conditions were observed for
3 consecutive years.
• Texas precipitation is also influenced by Pacific Decadal Oscillation & Atlantic
Multidecadal Oscillation.
– During the past decade, both patterns have been in an unfavorable state.
• Global patterns tend to reverse themselves over time, possibly leading to an
extended period of wetter weather for Texas, though this may not happen for
another 3-15 years.
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19. SURFACE WATER SUPPLIES AT 10 YEAR LOWS (OCT 2011)
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20. ERCOT ACTIONS TO MANAGE DROUGHT IMPACT
• Surveyed generation entities in the state and reviewed
drought concerns and possible mitigations
• Identified surface water most impacted and projected impacts
to generation for 2012
• Reviewed public sources regarding state and regional water
plans
• Met with TCEQ staff and drought response teams
• Facilitated a workshop with generation and transmission
entities to share best practices relevant to drought conditions
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21. MANAGING DROUGHT IMPACT – GENERATION SECTOR ACTIONS INCLUDE …
• Generators are designed to
– Conserve – minimize water usage
– Reuse – Reuse water from one process for another
– Recycle – Return clean water to the source after usage
• Generators regularly account for all water withdrawn to regulatory
authorities
• Many generators utilize salt water or effluent, where practical
• Generators regularly maintain equipment to avoid water leakage/wastage
• A couple of generators have installed pipelines t access accumulated
l f t h i t ll d i li to l t d
(from rain & seepage) water at mine sites
• Some generator resources are re-engineering their water intake structures
to ll
t allow f deeper i t k level conditions
for d intake l l diti
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22. MANAGING DROUGHT IMPACT – TRANSMISSION SECTOR CONCERNS INCLUDE …
• Increased insulator contamination incidents (salt, smoke, bird
excrement, etc.)
• Fires, smoke implications, vegetation management, and risks
to wooden h-frame infrastructure
• Potential issues associated with transmission system planning
if there are significant generator de-rations
• Coordination with the local authorities (police, fire, etc.)
requesting de-energizing of transmission facilities for safety to
allow for aerial firefighting.
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23. DROUGHT CONCLUSIONS
• Persistent drought conditions are impacting electric
generation resources, but are unlikely to cause significant
generation shortfalls i 2012
ti h tf ll in
• If the drought continues into 2013, consequences to electric
generation availability are likely t b
ti il bilit lik l to become more severe
• ERCOT will continue to analyze survey results and will
continue to keep regulatory authorities well-informed
ti t k l t th iti ll i f d
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24. OPTIONS FOR HANDING THESE CHALLENGES

25. SUMMER PEAK DAY LOAD SHAPE WITH FUEL MIX
August 3, 2011
August 3, 2011 Natural Gas Wind Nuclear Hydro
Other DC Imports Coal Energy Price
80,000 $3,500
$3001
70,000
$3,000
60,000
$2,500
50,000 Natural Gas
MW
$2,000
$/MWh
40,000
$1,500
30,000
Wind
$1,000
Nuclear
20,000
DC Imports
$500
10,000
Coal
$25 - $75
0 $0
0:00
1:00
2:00
3:00
4:00
5:00
6:00
7:00
8:00
9:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00
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26. OFF-PEAK VS. ON-PEAK LOAD BY CUSTOMER TYPE
Wed., Aug. 3, 2011
5:00 PM
ERCOT Load: 68,416 MW
Temperature Dallas:
Temperat re in Dallas 109°
Wednesday
March 9, 2011 Residential
5:15 PM 51.2%
ERCOT Load: 31,262 MW
Temperature in Dallas: 64°
64 (~35,000
( 35 000 MW)
Residential 27.4%
(~8,500 MW) Small Commercial
25.2% • Customer class
breakdown is for
Small Commercial competitive choice
28.9% areas; p
; percentages are
g
extrapolated for munis
Large C&I and co-ops to achieve
Large C&I 23.7% region-wide estimate
43.7% • Large C&I are IDR Meter
Required (>700kW)
3/9/2011 IE 17:15 8/3/2011 IE 17:00
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27. EMERGENCY RESPONSE SERVICE
• Emergency Interruptible Load Service is transitioning to ERS
– PUC Rule and ERCOT Protocol revisions in process
– June 1 effective date for new provisions
p
• Service provided by electricity customers willing to reduce load
or unregistered generators willing to supply energy during grid
emergencies in exchange for payment
g g p y
• An additional tool for ERCOT Operations to manage grid
reliability, deployed only in declared emergencies (EEA)
– Designed to help avoid rotating blackouts
• ERS Resources may be individual or aggregated loads or
unregistered generators
• Procured 24/7/365
– Not just a peak reduction program
– Offers may vary by Time Period (different business & non-business
hour bl k )
h blocks)
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28. EMERGENCY RESPONSE SERVICE
• Qualifications/requirements:
– Relationship with QSE that can receive Verbal Dispatch
Instruction over the ERCOT Hotline
– 15-minute interval metering
– Capability reducing load or providing generation – minimum
obligation of 100 kW -- within 10 minutes of ERCOT dispatch
• Payment to EILS Resources is subject to contractual agreement
between the QSE and the EILS resource owner
• Participants are paid as bid if procured
as-bid
• Historically, reservation payments have ranged from
approximately $6 to $11 per MW per Hour
• 430 MW under contract d i
d t t during 2011 summer peak h k hours
– For 2012, estimating between 560 and 630 MW for peak
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29. FOLLOW ERCOT
Facebook:
Electric Reliability Council of
Texas
Twitter:
p _
http://twitter.com/ercot_iso
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