Texas January market opening still on, says ERCOT executive

The Texas electricity market will open to competition as scheduled come Jan. 1, despite setbacks on the retail side, high transmission congestion costs, and problems with settling wholesale transactions, insisted Sam Jones, chief operating officer of the Electric Reliability Council of Texas.


By Ann de Rouffignac
OGJ Online

HOUSTON, Aug. 23 -- The Texas electricity market will open to competition as scheduled come Jan. 1, despite setbacks on the retail side, high transmission congestion costs, and problems with settling wholesale transactions, insisted Sam Jones, chief operating officer of the Electric Reliability Council of Texas.

"We are still tuning the system," Jones said Thursday at a meeting of the Gulf Coast Power Association in Houston. "But 1-1-02 looks good. I don't think it's an issue."

Transmission congestion has proved to be a bigger problem than previously anticipated. In just 3 weeks of operation, ERCOT racked up $7.7 million of congestion charges, Jones said. The total has since risen by a few million dollars.

When ERCOT reaches $20 million of congestion charges, the rules call for a transmission congestion market to be set up 6 months later. Market participants didn't think ERCOT would reach $20 million of congestion charges until 1 � years after the market opened.

Jones said a new trading system for congestion rights would essentially make those who cause congestion pay for it. But until a congestion trading system is implemented, congestion charges are allocated among all ERCOT market participants.

Under the existing scheme, if excess generation is scheduled to operate in the south for transmission to the north, congestion occurs on those lines. ERCOT has to pay the generators in the south to turn off that power. What ERCOT pays those generators is "uplifted" or charged to all market participants.

This means everyone shares paying for one participant's profits made off congestion. Jones said this week he's observed some high prices even when electricity loads are light and for power moving from west to east.

Jones admitted the existing system could "promote gaming" or market manipulation. But Jones said he has no evidence gaming is taking place. The congestion trading system will help alleviate the problem, Jones said.

Computer glitches associated with wholesale transactions are being corrected, Jones said. For example at 5 a.m. one day shortly after the market opened, the entire balancing energy market database disappeared, he said. ERCOT computer systems allowed a technician to accidentally delete the database, but the error has since been corrected.

Problems continue to crop up with settlement statements. "We knew it would be rough," Jones said. "Some generators received some settlement statements that were horrible." He blamed the problems on a lack of historical meter read data. ERCOT was forced to guess what the loads were. "We can always go back and settle up dollars," Jones said.

That's not so easy with retail transactions, he noted. ERCOT said it will take its time accelerating the backlog of retail accounts it switches from utilities to new electricity suppliers for the pilot that was scheduled to begin June 1. But once the computer systems are fixed, the process should go quickly, he said. That's why Jones said he doesn't think the Jan.1 date for full market competition is at risk.

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