ERCOTs Perspective On Lessons Learned

1

• ERCOTs Perspective On Lessons Learned
• In Market Design
• Presented To The GCPA Spring Conference
• April 3, 2002
• By
• Sam R. Jones, ERCOT COO

2

• First Of All-
• The Market Did A Good Job Of Design
• The new ERCOT wholesale market is different from
  any other market in North America and it works
• The market design has produced reliable
  operations even though its characteristics do not
  meet some NERC criteria
• Fewer time corrections
• Faster disturbance recovery
• The market design has resulted in a competitive
  balancing energy and ancillary service market
  with few price spikes
• ERCOT staff extends a big thanks to the market
  participants for their hard work and cooperation
  during initial operation

3

• Changes In Market Design Have
• And Will Continue To Occur
• ERCOT is generally neutral in market design
  issues, but believes the recent and planned
  changes are beneficial
• Examples
• Direct assignment of zonal congestion charges
• Greater use of load as a resource
• Changes to ERCOT systems need to be at a
  reasonable rate
• Very expensive
• Require significant ERCOT and market participant
  resources

4

• Greater Market Design Issue
• Preserving The Design
• ERCOT market participants must be active in all
  future North American industry standards
  development
• New NERC reliability standards development
  process
• Will develop core reliability standards not
  market standards
• Will apply to ERCOT operations and, indirectly,
  its market
• Will be a sector based, ballot pool system
  similar to the process ERCOT stakeholders used to
  develop the ERCOT protocols
• Must allow for Regional differences
• Must allow for competitive, market based
  solutions to grid operations
• Many in the NERC organization do not currently
  understand competitive, market based operations
• ERCOT market participants must be active in the
  process

5

• Wholesale And Retail Market
• Design Standards
• NAESB will probably develop the wholesale and
  retail electric market standards under FERC
  oversight
• The NAESB process is just now being developed
• It is proposed to be an open process by sectors
• These standards will affect ERCOT either directly
  or indirectly
• ERCOT and market participants must participate in
  this process to ensure that any wholesale or
  retail electric market standards adopted by NAESB
  are compatible with the ERCOT market design

6

• If Your Company Has
• A Stake In The Wholesale Energy Markets In North
  America
• Participate!!!!!