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Strategic Framework Business Definition and Strategic Issues Board of Director’s Meeting

ERCOT Strategic Planning Task Force. Strategic Framework Business Definition and Strategic Issues Board of Director’s Meeting June 17, 2003. “we don’t make the market… …we make the market better”. What are the constraints that shape our current space?. Value Chain. End Users.

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Strategic Framework Business Definition and Strategic Issues Board of Director’s Meeting

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  1. ERCOT Strategic Planning Task Force Strategic Framework Business Definition and Strategic Issues Board of Director’s Meeting June 17, 2003

  2. “we don’t make the market… …we make the market better”

  3. What are the constraints that shape our current space? Value Chain End Users Geography LSEs TDSPs Texas Retail Services Resources Electricity Telephone Fuel

  4. What business are we in? Value Chain “We don’t make the market… ...we make the market better” End Users Geography LSEs ERCOT: a Market Institution formed to Maximize Market Liquidity TDSPs Texas Retail Services Resources Electricity Telephone Fuel

  5. Why a “Market Institution”? • We are: • an independent market organization; • guided by informal business norms based on industry standards and practices; • governed by formal rules established by the state and market participants; • to direct the procurement and allocation of resources to achieve a desired result. • …we are a market institution.

  6. What is our desired result? • ERCOT is a Market Institution formed • to attain the maximum dollar volume of transactions between Resources and LSEs; • at the lowest possible cost to those entities. • …ERCOT strives to maximize market liquidity.

  7. How do we transform our desired result into practice? Maximize Market Liquidity = Maximize Dollar Volume Minimize Related Costs

  8. Who is responsible for the trade off between costs and dollar volume? Responsibility Cost Resources LSEs • of Generation • of Retail Services • of Market Efficiencies • of Reliability • of Metering and Data Aggregation • of Transmission • of Market Design/Modifications • of Market Monitoring • of Enforcement PMs PUCT TDSPs • market costs – “private good” • socialized costs – “public good”

  9. What are ERCOT’s responsibilities? Responsibility Cost Resources LSEs • of Generation • of Retail Services • of Market Efficiencies • of Reliability • of Metering and Data Aggregation • of Transmission • of Market Design/Modifications • of Market Monitoring • of Enforcement PMs ERCOT (including QSEs) PUCT TDSPs • market costs – “private good” • socialized costs – “public good”

  10. What are ERCOT’s responsibilities? • Reliability • RMR procurement • load forecasting • transmission outage coordination • scheduling and monitoring • RMR dispatch (unit commitment) • procurement • responsive reserve • non-spinning reserve • regulation service • balancing energy - imbalance • balancing energy - congestion • out of merit service • load shedding administration • service interruption investigation • NERC compliance • open & non-discriminatory * • Settlement and Billing • billing • credit and collections • payments • open & non-discriminatory * • Congestion Management • TCR market administration • open & non-discriminatory * • Metering and Data Aggregation • SCADA and polling data aggregation • usage data aggregation • load profiling • UFE analysis • meter inspections • open & non-discriminatory * • Central Registration • Certifications • A/S Provider • Balancing Energy Provider • Retail Electric Provider • maintenance of relationships • technology to Resource • Resource to QSE • ESI ID to REP • REP to QSE • open & non-discriminatory * • Transmission Services • congestion zone designation • grid planning • generator interconnect studies • transmission project tracking • open & non-discriminatory * * coordination, reporting, education and communications

  11. What are ERCOT’s responsibilities? • Reliability • RMR procurement • load forecasting • transmission outage coordination • scheduling and monitoring • RMR dispatch (unit commitment) • procurement • responsive reserve • non-spinning reserve • regulation service • balancing energy - imbalance • balancing energy - congestion • out of merit service • load shedding administration • service interruption investigation • NERC compliance • open & non-discriminatory * • Settlement and Billing • billing • credit and collections • payments • open & non-discriminatory * • Congestion Management • TCR market administration • open & non-discriminatory * • Metering and Data Aggregation • SCADA and polling data aggregation • usage data aggregation • load profiling • UFE analysis • meter inspections • open & non-discriminatory * • Central Registration • Certifications • A/S Provider • Balancing Energy Provider • Retail Electric Provider • maintenance of relationships • technology to Resource • Resource to QSE • ESI ID to REP • REP to QSE • open & non-discriminatory * • Transmission Services • congestion zone designation • grid planning • generator interconnect studies • transmission project tracking • open & non-discriminatory * * coordination, reporting, education and communications

  12. What are ERCOT’s responsibilities? • Reliability • RMR procurement • load forecasting • transmission outage coordination • scheduling and monitoring • RMR dispatch (unit commitment) • procurement • responsive reserve • non-spinning reserve • regulation service • balancing energy - imbalance • balancing energy - congestion • out of merit service • load shedding administration • service interruption investigation • NERC compliance • open & non-discriminatory * • Settlement and Billing • billing • credit and collections • payments • open & non-discriminatory * • Congestion Management • TCR market administration • open & non-discriminatory * • Metering and Data Aggregation • SCADA and polling data aggregation • usage data aggregation • load profiling • UFE analysis • meter inspections • open & non-discriminatory * • Central Registration • Certifications • A/S Provider • Balancing Energy Provider • Retail Electric Provider • maintenance of relationships • technology to Resource • Resource to QSE • ESI ID to REP • REP to QSE • open & non-discriminatory * • Transmission Services • congestion zone designation • grid planning • generator interconnect studies • transmission project tracking • open & non-discriminatory * * coordination, reporting, education and communications

  13. What are ERCOT’s responsibilities? • Reliability • RMR procurement • load forecasting • transmission outage coordination • scheduling and monitoring • RMR dispatch (unit commitment) • procurement • responsive reserve • non-spinning reserve • regulation service • balancing energy - imbalance • balancing energy - congestion • out of merit service • load shedding administration • service interruption investigation • NERC compliance • open & non-discriminatory * • Settlement and Billing • billing • credit and collections • payments • open & non-discriminatory * • Congestion Management • TCR market administration • open & non-discriminatory * • Metering and Data Aggregation • SCADA and polling data aggregation • usage data aggregation • load profiling • UFE analysis • meter inspections • open & non-discriminatory * • Central Registration • Certifications • A/S Provider • Balancing Energy Provider • Retail Electric Provider • maintenance of relationships • technology to Resource • Resource to QSE • ESI ID to REP • REP to QSE • open & non-discriminatory * • Transmission Services • congestion zone designation • grid planning • generator interconnect studies • transmission project tracking • open & non-discriminatory * * coordination, reporting, education and communications

  14. What are ERCOT’s responsibilities? • Reliability • RMR procurement • load forecasting • transmission outage coordination • scheduling and monitoring • RMR dispatch (unit commitment) • procurement • responsive reserve • non-spinning reserve • regulation service • balancing energy - imbalance • balancing energy - congestion • out of merit service • load shedding administration • service interruption investigation • NERC compliance • open & non-discriminatory * • Settlement and Billing • billing • credit and collections • payments • open & non-discriminatory * • Congestion Management • TCR market administration • open & non-discriminatory * • Metering and Data Aggregation • SCADA and polling data aggregation • usage data aggregation • load profiling • UFE analysis • meter inspections • open & non-discriminatory * • Central Registration • Certifications • A/S Provider • Balancing Energy Provider • Retail Electric Provider • maintenance of relationships • technology to Resource • Resource to QSE • ESI ID to REP • REP to QSE • open & non-discriminatory * • Transmission Services • congestion zone designation • grid planning • generator interconnect studies • transmission project tracking • open & non-discriminatory * * coordination, reporting, education and communications

  15. What are ERCOT’s responsibilities? • Reliability • RMR procurement • load forecasting • transmission outage coordination • scheduling and monitoring • RMR dispatch (unit commitment) • procurement • responsive reserve • non-spinning reserve • regulation service • balancing energy - imbalance • balancing energy - congestion • out of merit service • load shedding administration • service interruption investigation • NERC compliance • open & non-discriminatory * • Settlement and Billing • billing • credit and collections • payments • open & non-discriminatory * • Congestion Management • TCR market administration • open & non-discriminatory * • Metering and Data Aggregation • SCADA and polling data aggregation • usage data aggregation • load profiling • UFE analysis • meter inspections • open & non-discriminatory * • Central Registration • Certifications • A/S Provider • Balancing Energy Provider • Retail Electric Provider • maintenance of relationships • technology to Resource • Resource to QSE • ESI ID to REP • REP to QSE • open & non-discriminatory * • Transmission Services • congestion zone designation • grid planning • generator interconnect studies • transmission project tracking • open & non-discriminatory * * coordination, reporting, education and communications

  16. What are ERCOT’s responsibilities? • Reliability • RMR procurement • load forecasting • transmission outage coordination • scheduling and monitoring • RMR dispatch (unit commitment) • procurement • responsive reserve • non-spinning reserve • regulation service • balancing energy - imbalance • balancing energy - congestion • out of merit service • load shedding administration • service interruption investigation • NERC compliance • open & non-discriminatory * • Settlement and Billing • billing • credit and collections • payments • open & non-discriminatory * • Congestion Management • TCR market administration • open & non-discriminatory * • Metering and Data Aggregation • SCADA and polling data aggregation • usage data aggregation • load profiling • UFE analysis • meter inspections • open & non-discriminatory * • Central Registration • Certifications • A/S Provider • Balancing Energy Provider • Retail Electric Provider • maintenance of relationships • technology to Resource • Resource to QSE • ESI ID to REP • REP to QSE • open & non-discriminatory * • Transmission Services • congestion zone designation • grid planning • generator interconnect studies • transmission project tracking • open & non-discriminatory * * coordination, reporting, education and communications

  17. What are our Strategic Issues? • Major Strategic Issues : • What Risks exist and how should we manage them (Credit, Cyber Security, Facilities)? • What Market Design Problems can we help to solve (Texas Nodal, RBS, Day Ahead, Futures)? • What Market Mechanics Inefficiencies can we help to improve (WMS, RMS, TAC, TDSPs)? • What Market IT Needs are appropriate for us to meet (IT Forum, outreach program)? • Additional Strategic Issues : • Should we be in all or a portion of the Transmission business (“Transco Model”)? • Should we play a stronger Enforcement role (as suggested by some Market Participants)? • Should we expand our space to include: • all of Texas? • jurisdictions beyond Texas? • retail services other than electricity? • service to fuel providers and end-users?

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