ERCOT forecasts adequate winter generation

Peak electricity demand is projected to grow 7% this winter, but supplies will be adequate, says the Electric Reliability Council of Texas (ERCOT).

However, the Federal Energy Regulatory Commission (FERC) pointed out ERCOT suffers from transmission constraints that could limit the ability to deliver power among sub-regions.

Winter demand will peak at 42,018 MW compared to last season’s peak of 39,075 MW, according to ERCOT’s report. Capacity in ERCOT totals 59,775 MW, producing a seasonal reserve margin of 40%. Fuel supplies are adequate and no delivery problems for gas or coal are anticipated, ERCOT notes.

“We are prepared this winter to handle a demand that is anticipated to be nearly 3,000 MW higher than experienced last year,” Tom Noel, CEO of ERCOT said in a statement. ERCOT administers and insures reliability of the electric grid that covers most of Texas.

In a review of ERCOT’s bulk power markets earlier this month, FERC agreed with ERCOT neither reliability nor spiking wholesale prices in times of peak demand will be an issue this winter.

“Generation is added at a sufficient rate and the liberal use of forward contracting should mitigate any rate shocks,” FERC stated in its report Investigation of Bulk Power Markets: ERCOT.

ERCOT officials are not worried about reliability, but transmission is another question. There are constraints from south to north flowing through the Jewett substation and from west to east at Morgan Creek which will have some impact on availability of alternative supplies within the constrained regions.

Transmission constraints could limit the ability to deliver power between ERCOT subregions, reducing “competitive alternatives,” FERC said. ERCOT and the PUC recognize the existence of transmission constraints, but they rarely link them to the ability of generators to dominate the market within a constrained subregion.

“Transmission constraints don’t always translate into outages but can into higher costs and prices,” says Clarence Johnson, director regulatory analysis for the Office of Public Counsel in Texas. “When there are constraints, someone has to be paid to turn off or on certain generation that might not have been economically dispatched. The redispatch costs raise prices for all consumers in the state.”

The transmission and distribution utility will probably be affiliated with the dominant generation supplier within a constrained region, said Johnson. The transmission utility may propose transmission capital improvement projects to ERCOT that may not resolve the problem, keeping prices high in the constrained region, Johnson says.

With nine transmission projects begun or under review, ERCOT is moving “aggressively” to get certain transmission projects constructed, according to the FERC report. Eight of those projects are scheduled for completion by 2002.

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