Update on ERCOT Activities

Trip DoggettPresident & CEO

ERCOT

Texas Water Conservation Association

March 5, 2015

What is ERCOT?

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ERCOT Overview

RESPONSIBILITIES

The Texas Legislature restructured the Texas electric

market in 1999 by unbundling the investor-owned

utilities and creating retail customer choice in those

areas, and assigned ERCOT four primary

responsibilities:

• System Reliability - Ensure reliability and adequacy of

regional electric network

• Open Access to Transmission - Ensure nondiscriminatory

access to transmission/distribution systems for all buyers and

sellers

• Competitive Retail Market - Facilitate retail registration and

switching

• Competitive Wholesale Market - Ensure accurate

accounting for electricity production and delivery among the

generators and wholesale buyers and sellers in the region

QUICK FACTS

• 75% of Texas land

• About 90% of Texas load

• More than 43,000 miles of transmission lines

• 550+ generation units

• 68,305 MW peak demand (set August 3, 2011)

• ERCOT Inc. is not a market participant and does not own generation or transmission/ distribution wires

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The Old World: Pre-2002

Each utility was vertically integrated, from generation to customer service.

Integrated electric utility Customer

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Generation T&D (“Wires”)

Competitive

Production

Regulated

Open Access

End Users

REP

Competitive Sales

REP

Retailers

The New World: Texas Competitive Model

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Current Records – February 27, 2015

Peak Demand Record: 68,305 megawatts (MW)

68,305 MW, August 3, 2011

Weekend Record

65,159 MW, Sunday, August 28, 2011

Winter Peak Record: 57,265 MW

57,265 MW, February 10, 2011

Wind Generation Records (instantaneous)

11,154 MW, February 19, 2015, 10:52 p.m.

- Non-Coastal Wind Output = 9,872 MW

- Coastal Wind Output = 1,282 MW

- Supplying 34.2% of the load

- Active Wind Capacity = 13,370 MW

• 39.67% Wind Penetration, December 14, 2014, 2:50 a.m.

- Total Wind Output = 10,240 MW

- Total Load = 25,814 MW

Summer 2014 Demand

- 59,786 MW, June 30

- 63,532 MW, July 21

- 66,454 MW, August 25

- 64,440 MW, September 10

- No new records

Load & Resources

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Annual Energy and Peak Demand (2004-2014)

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Energy Use

Total energy consumed:

324,859,701 MWhTotal energy consumed:

331,624,102 MWhTotal energy consumed:

340,033,353 MWh

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December 2014 CDR compared to May 2014

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Wind Generation Capacity – January 2015

• Texas is #1 in the U.S. in wind capacity.

• Our capacity is more than twice the amount

of #2 (California)

• If Texas were a separate country, we’d be

#6 in the world in wind generation capacity.

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Installed and Planned Solar Capacity by Area – December 2014

27 12210 105

280 200 285

5,555

0

1,000

2,000

3,000

4,000

5,000

6,000

North South West South West Panhandle South West

Installed Planned withInterconnection Agreement

Planned with no InterconnectionAgreement

Megawatt

(as of Dec.31, 2014)

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Cumulative Installed and Planned Solar Capacity – December 2014

159 159 159 15 42 82 121159

1,902

5,9256,425

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2010 2011 2012 2013 2014 2015 2016 2017

Cumulative MW Planned Cumulative MW Installed

Megawatt

s

2,061

6,084

6,584

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Potential Impacts of Environmental Regulations

ERCOT reviewed potential impacts of new and pending environmental

regulations on grid reliability.

• Included CSAPR, MATS, Regional Haze, Clean Water Act Section 316(b), Ash Disposal

Regulations & Clean Power Plan

Studies indicate:

• Half of coal-fired generation capacity (about 9,000 MW) is likely to retire by 2022.

• Retirement of units serving urban areas may result in localized reliability issues.

• Growth in renewable resources may require development of new or additional

generation and transmission facilities and technologies to manage operational issues

(e.g., ramping, inertia, etc.).

• Costs of compliance could drive up consumer energy costs as much as 20%.

o Does not include costs of transmission upgrades or other investments to support

grid reliability

ERCOT and other grid operators support incorporation of “safety valve”

provisions to allow sufficient flexibility to maintain system reliability.

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15-Minute Load Data

The abundance and timeliness of 15-minute load data contributes to

settlement stability and opens the door for other advancements

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Distributed Energy Resources

• Distributed Energy Resources (DERs) include solar photovoltaic

(PV) installations, small wind turbines, batteries, small

generators, and advanced demand response.

• Identify potential future impacts of DERs on ERCOT’s functions

– including but not limited to load forecasting, network

modeling, real-time grid operations, metering and settlement.

• Identify and, when possible, eliminate barriers to DER

participation in ERCOT markets, including developing ways for

appropriate wholesale market price signals to be delivered to

DERs

Selected Transmission Projects

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Houston Import Project

On April 8, 2014, the

ERCOT Board of

Directors endorsed the

Houston Import Project:

• New Limestone-

Gibbons Creek-Zenith

345 kV double-circuit

line deemed critical

• Includes

improvements to

substations and other

existing facilities

• Scheduled for

completion by summer

2018

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Lower Rio Grande Valley Projects

Valley Import Project

• Includes new Lobo – North Edinburg 345 kV line and upgrade of existing

Valley import 345 kV lines

• Scheduled for summer 2016 in-service

Cross Valley Project

• Includes North Edinburg – Loma Alta 345 kV line

• Scheduled for summer 2016 in-service

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Permian Basin

Oil and natural gas related demand has caused a significant

amount of load growth in the ERCOT Far West weather zone

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Recent Permian Basin Transmission Projects

1. Moss – Holt Switch 138 kV line upgrade – January 2014

2. Wink – Loving 138 kV line upgrade – January 2014

3. Odessa North – Goldsmith Junction 138 kV line upgrade

– May 2014

4. Odessa North 138 kV switching station construction –

May 2014

5. Moss 345 kV switching station circuit breaker installation

– May 2014

6. Odessa North – Cowden 69 kV line upgrade – May 2014

7. Moss – Odessa EHV 138 kV line upgrade – May 2014

8. Loving – Elmar 138 kV line upgrade – June 2014

Drought

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Water Use in Texas by Use Type (2010)

Adapted from TWDB 2010 Water Use Survey Estimates

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Historical versus Current Drought Conditions

Maps from National Drought Mitigation Center

95% of the state

in moderate or worse drought

40% of the state

in moderate or worse drought

Jan 2011 Jan 2012

Jan 2015

59% of the state

in moderate or worse drought

Jan 2014

44% of the state

in moderate or worse drought

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Lake Levels Risk Analysis

Risk

MW and Cooling

Technology

Reservoir and Basin Level

Rainfall

Reservoir Demand

Reservoir Temperature

Reservoir Storage

Source Redundancy (additional

Supply)

Intake or Critical Level

MWhProduced

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• After 2011, ERCOT surveyed generation resources on

their water supplies and contracted with Black & Veatch

to develop a tool to provide early warning of possible

drought risks

• Tool identifies generation resources at risk of losing

primary water supply based on:

– Generation resource-specific information

– Current reservoir storage

– Historical water withdrawals

Drought Risk Prediction Tool

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Current Reservoir Storage

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Reservoir Storage Prediction Example

Reservoir conservation storage capacity

Reservoir critical level (location of water intake)

Predicted reservoir storage

(under drought conditions)

Current reservoir

storage

Reservoir could reach

critical level in 17 months

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Drought Monitoring & Preparedness

• SB 662 (83R) added ERCOT and the Public Utility Commission to

the Drought Preparedness Council

• ERCOT has employees focused on resource adequacy issues,

including water supply and environmental issues. ERCOT also

has a meteorologist on staff.

• ERCOT is in frequent communication with Resource and

Transmission owners about water availability and other issues

• ERCOT has developed a drought risk-assessment tool that is used

to track the potential near-term impacts of drought conditions

• ERCOT has incorporated drought issues into the near-term and

long-term resource adequacy reports

Social Media Update

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Improving communications with consumers

ERCOT website – added features

• Today’s Outlook: Now shows Real-

Time demand and capacity (vs.

hourly)

• Weather page: Daily, seasonal

Social media – join us!

• Twitter: 6,200+ followers

• Facebook: 1,500+ friends

• LinkedIn: 3,000+ followers

ERCOT Energy Saver mobile app – upgraded

• System conditions – Real-Time demand and capacity

• Wholesale pricing information – Hubs and Load Zones

• Information sharing options