Electricity choice program delayed 1 month in Texas

By Ann de Rouffignac
OGJ Online

HOUSTON, May 16 -- Texas' retail electricity pilot was delayed for a month Tuesday the same day a national reliability organization put the state under a "watch" while it makes the transition to a competitive market.

The Electric Reliability Council of Texas board of directors delayed the pilot program for retail electric choice to July 6 from the original start date of June 1.

The decision was made during a Tuesday board meeting and is the result of problems consolidating 10 separate grid control areas into one centrally dispatched grid operator, said Milton Lee, senior vice-president City Public Service of San Antonio and an ERCOT board member.

The decision was not announced by ERCOT or the Texas Public Utility Commission and came on the eve of Wednesday's confirmation hearings for PUC chairman Pat Wood to the Federal Energy Regulatory Commission.

Wood has championed the deregulation process in Texas for not making the same mistakes as other states. He frequently cites rules encouraging ample power plant and transmission construction as examples of how Texas is doing things right in creating a competitive wholesale and retail electric market.

On Tuesday, the North American Electric Reliability Council (NERC) released its summer assessment that identified Texas as an area of the country to be "watched" along with New York and New England.

"Texas, New England, and New York City should be closely watched despite having adequate resources to meet demand. New England and New York City are particularly sensitive to long-term heat waves; Texas is undergoing a major shift in its operation in June by consolidating to a single control area," the NERC report said.

The warning drew an instant rebuke from ERCOT officials. CEO Tom Noel said he "strongly" disagreed with NERC's assessment that Texas might have problems over the next few months and "should absolutely not be considered in the same category as New England and New York City."

He said ERCOT adopted a phased approach for the start of the pilot project so market participants can test communications and operating systems before customers are switched, and before control functions are consolidated within a single control area in the ERCOT system.

No 'show stoppers'
As late as Apr. 24, ERCOT had not reported any "show stoppers" and the retail competition pilot was still on schedule, according to a recent issue of Gulf Coast Power Association Newsletter. The pilot originally scheduled to begin June 1 will test the functioning of the market and also give a chance for consumers to choose electric providers. About 5% of each investor-owned utility's customer base can participate.

ERCOT officials warned the PUC May 8 the conversion to a single control area by June 1 is "really not feasible," according to a transcript of the meeting.

"There are not serious problems to the point we can't have them resolved, but we think some of those single control area functions may not be ready exactly on June 1. It's better to implement all this process in a phased approach," said Sam Jones, ERCOT chief operating officer.

Customers can still enroll in the program. But the energy would not start flowing from the new providers to the customers until the single control area is implemented, Jones said.

Lee who attended ERCOT's Tuesday board meeting said he understood from ERCOT staff the 'interfaces' among generation suppliers, generation owners, individual generating units, and the end use meters are not functioning correctly.

"They are getting some faulty data," Lee said.

While ERCOT works to consolidate into one control area, meters of individuals who signed up to participate in the pilot will be read by the local utility until they are switched to new providers. The regular meter cycle will be used to get a final read for customers in the pilot before they switch, Lee said.

City Public Service of San Antonio, a municipally owned utility, is not participating in retail competition. But dispatch of its generating units will be under the control of ERCOT since CPS participates in the wholesale electricity market.

Lee said if there is any compromise to the reliability of the system, ERCOT can go back to its 10 separate control areas within minutes. He's not worried about reliability.

"We don't think there will be any problems," Lee said.

Contact Ann de Rouffignac at annd@pennwell.com