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Texas Nodal Market Implementation

TPPA Annual Meeting. August 1, 2006. Background. Reduce local transmission congestion costsProvide better price signals for generation and transmission sitingDevelop a day-ahead energy marketAddress other wholesale market concerns. In September 2003, as part of Project 26376, the PUCT ordered ERC

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Texas Nodal Market Implementation

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    1. August 1, 2006 TPPA Annual Meeting Texas Nodal Market Implementation Trip Doggett ERCOT

    2. TPPA Annual Meeting August 1, 2006 Background Reduce local transmission congestion costs Provide better price signals for generation and transmission siting Develop a day-ahead energy market Address other wholesale market concerns

    3. TPPA Annual Meeting August 1, 2006 Timeline

    4. TPPA Annual Meeting August 1, 2006 Zonal vs. Nodal

    5. TPPA Annual Meeting August 1, 2006 What’s Changing Provides opportunity for parties to participate in a centralized market to optimize around their bilateral contracts Facilitates Qualified Scheduling Entities (QSEs) in finding other trading partners, due to centralized market Gains efficiency because we’ll clear for energy and capacity at the same time

    6. TPPA Annual Meeting August 1, 2006 What’s Changing RUC ensures there is enough generation capacity in the proper locations to reliably serve the forecasted load and transmission congestion RUC is similar to today’s OOMC and RPRS RUC will use “make whole” payments to ensure a generator is adequately compensated for its costs ERCOT will run a day-ahead RUC (DRUC) and an hourly RUC (HRUC)

    7. TPPA Annual Meeting August 1, 2006 What’s Changing ERCOT will run security constrained economic dispatch (SCED) every five minutes, using offers by individual Resources and actual shift factors. SCED determines the most economical dispatch of individual Resources across the grid Generation will be settled based on the LMP of the node where generator is located. Load will be settled based on a load zone price that is a weighted average of LMPs in the load zone.

    8. TPPA Annual Meeting August 1, 2006 What’s Changing A CRR is a financial instrument CRRs are defined by a MW amount, settlement point of injection and settlement point of withdrawal CRR owners pay or get paid the product of the CRR MW amount and the LMP difference between the CRR injection and withdrawal Settlement Points CRRs are auctioned by ERCOT monthly and annually; CRR auction revenues are returned to loads Today, transmission congestion rights (TCRs) are offered for CSC congestion

    9. TPPA Annual Meeting August 1, 2006 What’s Not Changing Bilateral Contracts permitted Retail Operations Renewable Energy Credits (REC) Black Start Metering Transmission and Distribution Losses Unaccounted for Energy (UFE)

    10. TPPA Annual Meeting August 1, 2006 Texas Nodal Program Organization

    11. TPPA Annual Meeting August 1, 2006 Timeline

    12. TPPA Annual Meeting August 1, 2006 Budget

    13. TPPA Annual Meeting August 1, 2006 Date and Budget Update The PUCT established a go-live date of 1/1/09 in their Order signed on April 5, 2006 The program believes that at the current level of planning, there is a low level of confidence in achieving this target The program has yet to identify options that reduce the critical path by the required amount The team – ERCOT and market participants – continue to work this and will confirm the go-live date in September ERCOT will be in a position to provide an achievable budget and timeline on September 19, at the ERCOT Board of Directors meeting

    14. TPPA Annual Meeting August 1, 2006 For more information . . . Texas Nodal Website: http://nodal.ercot.com Subscription-based newsletter published every other Friday: http://lists.ercot.com/cgi-bin/majordomo. Select TexasNodalNews E-mail questions, comments or feedback to: TexasNodal@ercot.com

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