Increased power flows help boost ERCOT's revenues beyond expectations

Houston — The Electric Reliability Council of Texas' revenue in 2019 exceeded budget expectations by 13.3% and expenditures were 3.4% below budget, board members learned Tuesday, largely because of increased interest income and fees tied to energy sales and interconnection studies.

During ERCOT President and CEO Bill Magness' update to the board of directors, he noted that the preliminary budget review for 2019 shows a net positive variance – i.e., more than expected revenue, less than expected expenses – of $35.4 million.

Revenues totaled about $241.3 million in 2019, $28.3 million more than budgeted, including $19.2 million more than expected interest income, $6.5 million more than expected system administrative fees and $2.6 million more than expected interconnection revenue.

ERCOT's 55 cents/MWh system administration fee has remained constant at least as far back as 2016, as load has increased enough to more than compensate for increased project costs.

Judging by average load, power demand increased by about 2% in 2019, compared with 2018, according to ERCOT data.

Since 2010, load growth has increased by 20.35%, Magness said, totaling 384,040 TWh in 2019, he said. During the previous decade, from 2000 to 2009, power demand grew just 7.7%, Magness said, so this past decade's growth "was as substantial as it felt like, and we continue to see growth."

However, relatively mild winter weather so far in 2020 has resulted in lower average loads, about 0.7% less than the average loads for January and February 2019 and about 2.6% less than the average loads for January and February 2018.

The less-than-expected expenditures in 2019 are primarily due to projects costing less than expected, according to Magness' presentation.

REAL-TIME CO-OPTIMIZATION

The expected savings from 2019 is important as ERCOT proceeds with efforts to implement real-time co-optimization of energy and ancillary services, which has been mandated by the Public Utility Commission of Texas and had been estimated to cost at least $40 million.

In combination with previous year's favorable budget variances, ERCOT should have about $52.5 million "available for real-time co-optimization" implementation, Magness said. ERCOT seeks to have the implementation occur around 2024-26.

The board also approved without discussion the following nodal protocol revision requests as part of a consent agenda:

• NPRR 826: Creating a new process for determining the mitigated offer cap for reliability-must-run resources such that the resources are more expensive than capacity offered in the market, but limits the profit that can be derived from RMR deployments.
• NPRR 974: Requiring ERCOT to include in any Operating Condition Notice of capacity insufficiency the amount of projected capacity shortage and the amount that is offline but available to start.
• NPRR 980: Excluding from planning reserve margin calculations any long-term mothballed capacity and planned generation projects that are considered "inactive" because they are not progressing through the interconnection process.
• NPRR 986: Establishing provisions for energy storage resources' energy offer curves, pricing, dispatch and market power mitigation.