ERCOT Concerns FYI

Here are some of the ERCOT explanations for operations that past few days. These come from Sam Jones, the COO of ERCOT. Also, if we have not started to do so, we need to catalogue, irregularities that we see or perceive in the market. Especially, in the time that we are communicating with ERCOT and the Commission, specific well documented examples are compelling and assist us as we further our advocacy

Pre Day One-Scheduling/Bidding. In the bidding of ancillary services at least two QSEs (Dynegy and TXU), did not bid into the market. The price cleared however, there was an insufficiency was declared and the market was re-opened and cleared at 80% by rule.

Day One Operations. The ERCOT main server failed and market participants were asked to schedule via the OASIS and the portal when it became operational. Market participants were asked to schedule via the OASIS and Portal/API. ERCOT cancelled certificates that allowed them to look at QSE data and systems, in doing so they also cancelled the certificates that allowed internal systems to communicate.

Balancing Energy Problems. There have been continued problems with the balancing energy and the first issue is the way it is being calculated. When calculating balancing energy requirements, the operator looks at the load forecast and the QSE schedules and an initial amount is determined. Then the system will look at the resource plans which have not been updated frequently and then will override the previous calculation for balancing energy. The reason the system looks at the resource plan is to control/relieve local congestion. The problem is that settlements are based on the schedule and not the resource plan and ERCOT has not had the ability to override the system to account for the error in the resource plan. One, ERCOT has determined a way to override the system to account for the inaccurate resource plans. Two, ERCOT has discussed with ESCA changes to the system so that the system will look as SCADA data rather than the resource plan for clearing local congestion.

Part Two. Recently there have been discrepancies on the price awarded for B/E in the market and the amount credited to the settlement statement. Also, deployment was based incorrectly on unit specific instructions that were supposed to be zonal or ERCOT wide. The incorrect coding was located and corrected. Subject to what happens today, the systems seems to be operating correctly.