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ERCOT Wholesale Market Basics

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Title: ERCOT Wholesale Market Basics


1
ERCOT Wholesale Market Basics
  • Module 1
  • Overview

2
TOPICS
Module 1
  • Quick facts about ERCOT
  • Mission and Organization
  • Role of ERCOT
  • Market Participants

3
TOPIC 1 Quick Facts
Module 1
4
Quick Facts
Module 1
  • About ERCOT
  • Member-based 501(c)(6) nonprofit
    corporation
  • Annual 2009 budget of 168 Million
  • Over 700 full-time employees in Taylor and
    Austin, Texas
  • Revenue neutral
  • Fees charged to cover expenses

5
Quick Facts
Module 1
  • ERCOT IN TIME
  • 1995 Texas PURA enabled wholesale market
    deregulation
  • 1996 ERCOT became a non-profit ISO
  • 1999 SB7 enabled retail market competition
  • 2000 ERCOT Protocols developed by stakeholders
  • 2001 Wholesale pilot retail markets opened
    7/31
  • 2002 Full retail market opened 1/1
  • 2003 PUCT orders wholesale market redesign
  • 2006 NODAL Protocols approved by PUCT
  • 2010 Texas Nodal Market Implementation

6
Quick Facts
Module 1
  • ERCOT is
  • The Texas Reliability Entity under NERC/FERC
  • A NERC Interconnected System
  • 1 of 3 in USA
  • An Independent System Operator
  • 1 of 7 RTO/ISO in USA

7
Quick Facts
Module 1
  • ERCOT Capacity and Demand
  • One of the largest single control areas in US
  • 38,000 miles of transmission
  • 85 of Texas load
  • Capacity
  • 73,000 MW
  • Reserve Margin 16 for 2009
  • 70 Natural Gas
  • All-time Peak Demand
  • August 2006 62,339 MW

8
Quick Facts
Module 1
  • ERCOT Market Involvement
  • Bilateral Wholesale Market
  • 95
  • 27 billion
  • Balancing Energy and Ancillary Services market
  • Other 5
  • 1.9 billion
  • Registered Market Participants gt900
  • Include QSE, LSE, Resources, TDSP

9
Quick Facts
Module 1
  • ERCOT Retail Market Involvement
  • How many retail customers in ERCOT?
  • 21 million
  • How many customers with the Power to Choose
    electric service provider?
  • 5.9 million
  • How many of those have exercised the Power?
  • 50 of residential load
  • 76 of non-residential
  • 30 million retail transactions (330,000/month)

10
Quick Facts
Module 1
  • For additional details about ERCOT, please go to
  • http//www.ercot.com/content/news/presentations/2
    008/ERCOT_Quick_Facts_May_2008.pdf
  • For more information on the Nodal market
    redesign, please go to
  • http//nodal.ercot.com
  • For more information on the Retail Market, please
    go to
  • http//www.powertochoose.org

11
TOPIC 2 Mission and Organization
Module 1
12
Mission and Organization
Module 1
  • The mission of ERCOT
  • Nurtures the development of an effective and
    highly reliable electricity market in Texas
  • To fulfill obligations established by Texas
    Legislature, we will
  • Ensure access to transmission and distribution
    systems
  • Ensure reliability and adequacy of the regional
    electrical network
  • Ensure information relating to customer choice
    is conveyed in timely manner
  • Ensure that electricity production and delivery
    are accurately accounted for

13
Mission and Organization
Module 1
  • Governed by
  • ERCOT Board of Directors
  • Governmental oversight by
  • Texas Legislature
  • Establishes laws related to electricity industry
  • Public Utility Commission of Texas
  • Provides regulatory oversight
  • Creates substantive rules based on laws
  • North American Electric Reliability Corporation
    as the Electric Reliability Operator
  • Texas RE monitors and reports compliance to NERC

14
Mission and Organization
Module 1
  • The Board of Directors is made up of sixteen
    members
  • Nine representatives from seven market segments
  • One Independent Retail Electric Provider
  • One Independent Generator
  • One Independent Power Marketer
  • One IOU
  • One Municipal
  • One Cooperative
  • Three Consumers
  • One Office of Public Utility Counsel as an ex
    officio voting member
  • One Commercial
  • One Industrial
  • Five Unaffiliated Directors
  • ERCOT CEO as an ex officio voting member
  • Chair of the PUCT as an ex officio non-voting
    member

15
Mission and Organization
Module 1
  • ERCOT Administration
  • Board of Directors
  • Finance and Audit Committee
  • HR and Governance Committee
  • Special Nodal Program Committee
  • Texas Regional Entity Advisory Committee
  • Technical Advisory Committee
  • Distributed Generation Task Force
  • Renewable Technologies Working Group
  • TAC and Subcommittees Organizational Review Task
    Force
  • Training Seminar Working Group
  • Transition Plan Task Force
  • Five Subcommittees
  • Commercial Operations Subcommittee
  • Protocol Revision Subcommittee
  • Reliability and Operations Subcommittee
  • Retail Market Subcommittee
  • Wholesale Market Subcommittee

16
Mission and Organization
Module 1
  • ERCOT Stakeholders
  • Retail consumers, investor- and municipal-owned
    electric utilities, cooperatives, river
    authorities, independent generators, power
    marketers and retail electric providers
  • Stakeholder Process
  • Each market segment elects representatives to
    serve on the Board of Directors and stakeholder
    committees, subcommittees, working groups and
    task forces, which make recommendations to the
    board regarding ERCOT market rules and procedures

17
Mission and Organization
Module 1
  • Board and Committees are comprised of ERCOT
    stakeholders and establish the policies and
    procedures for ERCOT, including the Market Rules
  • To become involved in the stakeholder process
  • Participate in the public meetings
  • Sign up for email distribution lists
  • To find additional information, visit the
    following sites
  • Committee and Subcommittee webpage
  • http//www.ercot.com/committees/index.html
  • Meeting and event calendar
  • http//www.ercot.com/calendar/index.html
  • Email distribution lists
  • http//lists.ercot.com

18
Mission and Organization
Module 1
  • Market Rules
  • ERCOT Protocols and Guides are established,
    revised and approved by market participants
    through the stakeholder process
  • ERCOT Guides constitute amplifications to the
    ERCOT Protocols
  • Commercial Operations Market Guide
  • Competitive Metering Guide
  • Data Transport Guides
  • Load Profiling Guide
  • Operating Guides
  • Retail Market Guide
  • Settlement Metering Operating Guide
  • Texas SET Guides

19
Mission and Organization
Module 1
  • ERCOT Protocols
  • Protocol Revisions
  • Any Market Participant can submit a Protocol
    Revision Request
  • Any Market Participant can submit comments on any
    pending PRR
  • Protocol Interpretations (PIR)
  • Submitted to ERCOT General Counsel
  • ERCOT shall respond within ten (10) Business Days
    of receipt
  • For more information on Protocols, go to
  • http//www.ercot.com/mktrules/protocols/index.html

20
Mission and Organization
Module 1
  • ERCOT Protocol Revision and System Change
    Requests
  • Protocol Revision Request Process
  • Changes to ERCOT systems or processes and related
    protocols
  • Submitted for evaluation through the stakeholder
    governance process
  • System Change Request Process
  • Changes to ERCOT computer systems which do not
    require protocol revision
  • Submitted for consideration to appropriate TAC
    subcommittee, TAC, and ERCOT Board

21
Mission and Organization
Module 1
  • ERCOT Protocol Revision Count
  • Since 2001
  • Over 800 Zonal Market Protocol Revisions Proposed
  • Not all are passed for implementation
  • Nodal Market Transition
  • Approximately 170 Protocol Revisions have been
    issued though Nodal Market is scheduled for 2010
    launch

22
Mission and Organization
Module 1
  • Typical Protocol Revision Lifecycle

Comment Period
Day 1
PRR
ERCOT Market Rules
21
Draft PRR
Working Group
Stakeholder Committee
Sub Committee
Protocol
Task Force
30
PRS
ERCOT BOARD
60
Single Stakeholder
TAC
120
90
23
TOPIC 3 Role of ERCOT
Module 1
24
Role of ERCOT
Module 1
  • ERCOTs role as defined in the Protocols
  • Ensure system reliability
  • Run a competitive wholesale market
  • Facilitate retail registration / switching

25
Role of ERCOT
Module 1
  • Core processes to fulfill role
  • Wholesale Market Operations
  • Power Operations
  • Commercial Operations
  • System Planning

26
Role of ERCOT
Module 1
  • Wholesale Market Operations
  • Day-Ahead Ancillary Services Capacity
  • Market
  • Selection Dispatch based on
  • competitive bids
  • Balanced schedules by QSEs
  • Financial Market for Hedging Congestion

27
Role of ERCOT
Module 1
  • Power Operations
  • Managing Reliability
  • Monitoring and coordinating transmission capacity
  • Ensuring adequate reserves (Ancillary Services),
    just in case
  • Issuing dispatch instructions to ancillary
    service and transmission service providers
  • Real-time congestion management

28
Role of ERCOT
Module 1
  • Power Operations
  • The ERCOT power operations system monitors and
    analyzes all grid components every 2-4 seconds
    for status, loading and output
  • ERCOT directs the safe and reliable operation
    of the power system in conjunction with
    transmission control centers of the TDSPs

29
Role of ERCOT
Module 1
  • Commercial Operations
  • Operation of the retail transactions and
    financial settlement of the wholesale market
  • Registration
  • Retail premises
  • Market participants
  • Retail Transactions
  • Data Acquisition
  • Load Profiling
  • Data Aggregation
  • Settlement and billing

30
Role of ERCOT
Module 1
  • ERCOT Client Services
  • Wholesale Client Services
  • Retail Client Services
  • Market Rules
  • Market Education
  • Contact us
  • Send an e-mail to ClientRelations_at_ERCOT.com
  • Call us at 512-248-3900

31
Role of ERCOT
Module 1
Wholesale Client Services
  • Account Management Services
  • Market Participant Education Support
  • Market Participant Registration Support
  • Market Participant Qualification Support
  • Market and Operations Interfaces
  • Market and Operations Support
  • Protocol Assistance
  • Market Participant Settlement Support

32
Role of ERCOT
Module 1
Wholesale Client Services
  • Market Support Services
  • Market Participant Communications
  • Market Education Support
  • Market Participant Registration Management
  • Market Participant Settlement Forensics
  • Market Participant Identity Management

33
Role of ERCOT
Module 1
Retail Client Services
  • Address needs of Market Participants during the
    certification process
  • Actively participate in the Stakeholder process
    to communicate and resolve issues, and monitor
    the rules of the Market to assist MPs with any
    questions/issues
  • Provide education as needed for Retail Issues
  • Liaison between ERCOT and MPs for all Retail
    Market Operation functions
  • Retail Market Call Bi-weekly Mondays and
    Wednesdays

34
Role of ERCOT
Module 1
Account Managers
  • Act as the liaison between ERCOT and MPs as the
  • primary contact for all Market questions and
    issues
  • Maintain business relationships with all MPs to
    facilitate
  • issue resolution
  • Analyze issues as they arise to provide support
    to MPs in their business functions with ERCOT and
    between other MPs
  • Advocate MP issues within ERCOT and provide
    communication back to Market

SME
Account Manager
Account
35
Role of ERCOT
Module 1
Market Education
  • Learning Management System https//www.ercottrai
    ning.com/lms/default.asp
  • Market Operations
  • NERC Compliance
  • Texas Nodal Training
  • http//nodal.ercot.com/training/index.html

36
TOPIC 4 Market Participants
Module 1
37
Market Participants
Module 1
  • Qualified Scheduling Entities (QSE)
  • Resource Entities (RE)
  • Load Serving Entities (LSE)
  • Transmission and Distribution Service
  • Providers (TSP, DSP, TDSP)
  • Others
  • Power Marketers
  • Aggregators

38
Market Participants
Module 1
Electricity sellers
Electricity buyers
Load
Power delivery
Bilateral
TDSP
Serving
Resources
transactions
Entities
Bilateral
QSEs
QSEs
transactions
Power reliability
39
Market Participants
Module 1
  • Qualified Scheduling Entities (QSE)
  • Only QSEs can schedule, bid and financially
    settle with ERCOT for energy and capacity
  • Typical Functions
  • Schedule Load and Generation
  • Bid into the Ancillary Service market
  • Provide Ancillary Services
  • Power Marketing

QSE
40
Market Participants
Module 1
  • Resource Entities
  • Generation Facilities capable of providing
    energy
  • Loads capable of decreasing demand (LaaR)
  • Can provide reserve capacity
  • All Resource Entities must be represented by a
    QSE.

41
Market Participants
Module 1
  • Load Serving Entities (LSE)
  • Provide electric service to Retail and
    Wholesale customers
  • LSE Types
  • CR
  • REP Any entity that sells electricity to
    customers in Texas in a competitive area
  • Opt-in Entity Municipality or Cooperative that
    offers Customer Choice
  • NOIE
  • Municipality or Cooperative that does NOT offer
    Customer Choice
  • All LSEs must be represented by a QSE.

42
Market Participants
Module 1
  • Transmission Distribution Service Providers
  • (TSP, DSP, TDSP)
  • Local distribution / electric delivery company
    (DSP)
  • Own, operate, and maintain transmission and
    distribution lines (TSP, TDSP)
  • Work with ERCOT in retail switching process
  • Provide meter data to ERCOT for Settlement
  • Rates for service remain regulated by PUCT
  • Collaborate with ERCOT for transmission system
    planning and reliability
  • Transmission Reservations are not required in
    ERCOT.
  • ERCOT polls certain meters some entities use a
    MRE

43
Market Participants
Module 1
  • Other Market Players Power Marketer
  • Buy and sell electricity at wholesale
  • No certificated service area
  • Eitherauthorized by FERC to sell electricity at
    market-based rates
  • Oris registered with PUCT as a power marketer

PUCT Substantive Rule 25.105, Registration and
Reporting by Power Marketers
44
Market Participants
Module 1
  • Other Market Players Aggregators
  • An Aggregator is a Buyers Agent
  • Represents a group of customers who have banded
    together to buy electricity
  • For example, groups may form from religious
    group, neighborhood association, or employer
  • Can recruit members from competitive areas
  • Must be registered with the PUCT

45
Summary
Module 1
  • ERCOT is overseen by the PUCT and is
    revenue-neutral
  • Market Rules are established revised by the
    market
  • ERCOTs role is
  • To keep the lights on
  • To run a competitive wholesale market
  • To facilitate retail switching transactions
  • To enforce Protocols
  • QSEs submit schedules bids to ERCOT
  • ERCOT settles financially only with QSEs
  • All participants play a significant role
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