Enron Mail

From:doug.gilbert-smith@enron.com
To:clint.dean@enron.com
Subject:FW: ERCOT Update
Cc:
Bcc:
Date:Mon, 22 Oct 2001 11:51:26 -0700 (PDT)



-----Original Message-----
From: =09Twiggs, Thane =20
Sent:=09Wednesday, October 17, 2001 12:13 PM
To:=09Gilbert-smith, Doug; Jester, Larry; Curry, Mike; Wagner, Joseph; Port=
z, David; Ochsner, Preston; Forney, John M.; Day, Smith L.; Herndon, Rogers=
; Benke, Terrell
Cc:=09Nicolay, Christi L.; Ryall, Jean; Steffes, James D.
Subject:=09ERCOT Update


The ERCOT Board approved the congestion zones for next year, 2001. The ERCO=
T Board accepted the 3 CSC 4 CM Zone model for use in commercial congestion=
management for 2002. Effective date is January 1, 2002. The three CSC's =
are Graham-Parker 345 kV DCKT, Sandow-Temple 345 kV DCKT and STP-DOW 345 kV=
DCKT. The four CM Zones are West02, North02, South02 and Houston02. A po=
wer point presentation along with a map is available at ftp://ftp.ercot.com=
/CSCDATA/csc.htm. =20

Current Congestion Cost and Outlook. The congestion charges that have been=
incurred are 55.6 million or 137 million depending on the methodology used=
to calculate the charge. If you look purely at the scheduled MWs then it i=
s 137 MM based upon the ERCOT protocols. The actual cost to redispatch and =
clear congestion as of Sept. 22, 2001 was 55.6 MM. Both obviously are very =
high considering it is for one month of operation.=20
When the 20 MM trigger was hit August 14, 2001, ERCOT has 6 month by Protoc=
ol and reaffirmed in the commission order to implement the full zonal model=
. This means that there will no longer be an uplift of interzonal congestio=
n, rather a direct assignment of the charge. The charge may be partially of=
fset by the TCR that will be auctioned. The PUCT has indicated an interest =
to move to direct assignment prior to the development and implementation of=
a TCR instrument as a hedge. I am chairing the congestion management work=
ing group that is deciding the TCR issue and will be dealing with the local=
congestion issues when that trigger has been hit. I will attach a copy of=
the current draft of the TCR white paper. In short, the TCR is a financia=
l option that can be purchased as hedge against zonal congestion. There is=
no physical requirement for the TCR in that you do not have to physically =
schedule to receive the benefit of the TCR. There will be an auction on or=
about the 4th of February, 2002 and the full zonal implementation will tak=
e place February 15, 2002. The tentative schedule is as follows:
?=0910/5/01 - Distribute draft TCR White Paper
?=0910/22/01 - Review and edit draft TCR White Paper
?=0910/30/01 - Distribute TCR White Paper to WMS
?=0911/1/01 - WMS Meeting; vote on PRR
?=0911/8/01 - TAC Meeting
?=0911/19/01 - Board Meeting
?=0912/4/01 - ERCOT issues notice of TCR Auction
?=092/15/02 - First effective date of TCRs and direct assignment of CSC Con=
gestion Costs
=20
Capacity Auction. The capacity auction workshops have begun to rework that=
capacity rule and problems experienced with the last round. There was an =
initial discussion on the problems that were experienced with credit and ho=
w the standard was one-way and the buyers of capacity were left without rec=
ourse. There was a subsequent conference call with the credit professional=
s to discuss the issues ( I did not participate) and there will be an addit=
ional meeting on the 19th. The purpose of the short-term meeting are to re=
ctify issues such as credit and documents prior to the March and July 2002 =
auctions. Substantive issues such as the actual products, zone determinati=
on and the auction process will be part of a rulemaking prior to the Septem=
ber 2002 auction which includes annual products.=20

Protocol Implementation. ERCOT is in the process of determining what shoul=
d be included in the Phase II design which will begin January 2001. There =
is a priority list that is currently under review by ERCOT vendors to deter=
mine lead times of Phase II items in an attempt to deliver Phase II items A=
SAP. Parviz Adib from MOD stressed that there are certain issues that the =
PUCT expects to be addressed in Phase II. Issues that do not require major=
system changes might still be doable in Phase II if the PRR Process is sta=
rted immediately. There is a placeholder in the Protocols related to BULs =
and loads acting as resources.

Mechanism for Simultaneous Procurement of Ancillary Services. The PUCT ha=
s expressed concern that there could be price reversals associated with the=
ancillary services market (if it is assumed that the various ancillary ser=
vices have different levels of value to the market). The Board had approve=
d a contingency plan to allow price modifications in the early markets, how=
ever the plan has not been implemented. The WMS discussed, at length, the =
issue of simultaneously clearing all three markets - non-spinning, regulati=
on, and responsive reserve. A task force was formed to initially identify =
the principles for developing a mechanism for simultaneous procurement of a=
ncillary services issue. It was suggested that a consultant be hired to de=
velop Protocol language once the principles are identified. The first task=
force meeting was cancelled and has not been rescheduled. =20

Demand-Side Task Force. Jay Zarnikau reported on activities of the Demand-=
Side Task Force that is addressing Balancing Up Load (BUL) Market Issues an=
d other demand-side issues. The PUCT expects the full functionality to be =
in place on January 1, 2002. The DSTF met last on October 1st (third meeti=
ng). The DSTF completed a draft status report on Demand-Side Resources and=
Demand Responsiveness. It was noted that the work of the DSTF is not comp=
lete and has not been approved by any ERCOT Committee or the Board. Howeve=
r, ERCOT was required to file a report on these issues in the STF Report. =
The report reviews the policy considerations that have prompted interest in=
the demand side of ERCOT's market, reviews the PUCT's directive, reviews t=
he role of demand-side resources in ERCOT's markets, and identifies the iss=
ues and impediments that the DSTF is presently addressing. It also summari=
zes the options discussed by the DSTF to date. The PUCT staff has suggeste=
d that ERCOT hire a consultant, such as Eric Hirsch, to provide more resour=
ces for this effort. The group expects to wrap up BUL issues and address d=
irect load control issues at its next meeting.

Unit Specific Deployments. At the next WMS meeting October 24, 2001, there=
will be a discussion regarding unit specific deployments and ERCOT will di=
scuss the issues and the difficult that participants are having to meet the=
ramp rates of the deployments. The WMS will develop a list of issues and =
case studies for ERCOT to discuss. The WMS also briefly discussed PRR 282 =
related to defining OOME as an Instructed Deviation.