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Generation Adequacy Task Force Update to WMS

This document provides an update on the December 5, 2012 Generation Adequacy Task Force (GATF) meeting. Topics discussed include the status of the 2012 Loss of Load Probability (LOLP) Study, deep dive review of the ERCOT long-term load forecast, and recent activities concerning various planning reserve margin methodologies.

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Generation Adequacy Task Force Update to WMS

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  1. Generation Adequacy Task Force Update to WMS December 5, 2012

  2. GATF Meeting of December 3, 2012 • Items Discussed: • Status of 2012 Loss of Load Probability (LOLP) Study. • Deep Dive review of the latest ERCOT long term load forecast. • Brief discussion on next week’s scheduled publication of the December CDR report. • Although not discussed in depth at GATF, included herein is a discussion of WMS agenda item 3, recent activities concerning NPRR489, Planning Reserve Margin, PGRR022, Removal of Planning Reserve Margin Calculation Methodology, and PGRR018, Clarify the Prerequisites for Adding a New Generation Resource to the Planning Models and Capacity Demand and Reserves Report.

  3. LOLP Study Update • Kevin Hanson updated GATF on the current status of the LOLP Study. • The draft report is still not ready, but is expected to be ready in the next couple of weeks. • GATF will review the draft results at its next meeting, which is currently scheduled for Monday, January 7, 2013.

  4. Deep Dive of ERCOT Long-Term Load Forecast • Calvin Opheim reviewed the methodology being utilized for the most current version of the long term load forecast. • His presentation was provided to GATF and will be posted on the December 3rd GATF meeting page. • Highlights: • Moody’s used to provide 3 county level economic forecasts of non-farm employment growth (base, high and low). • Moody’s now provides 10 (included in Calvin’s presentation). • ERCOT has noted that a comparison of Moody’s non-farm employment growth forecasts with Texas’ Annual Average Growth Rate indicates an “optimistic” bias by Moody’s, especially in years 2, 3 and 4.

  5. Moody’s Non-Farm Employment Base Forecast – 11/8/2011 • For the last few years, Moody’s has consistently expected non-farm employment to grow in an increasing manner before leveling off • Notice the increases in 2013, 2014, and 2015 • This is what has caused ERCOT’s forecast to behave similarly

  6. Deep Dive of ERCOT Long-Term Load Forecast • ERCOT still has to conduct internal discussions between now and next Monday’s release of the CDR before choosing the underlying economic assumptions for the load forecast. • ERCOT indicated a “blend” of multiple Moody’s forecasts is a possible option to dampen Moody’s shorter term (2 to 3 years) optimistic growth rates.

  7. December CDR Update • ERCOT announced the December update of the CDR will be published next Monday, December 10th. • Since the LOLP study is still not available, the existing 13.75% reserve margin and the currently approved CDR assumptions will be used. • GATF will be going through all of the CDR assumptions in the next few months and attempt to complete the task in time for the May 2013 CDR.

  8. PGRR018, PGRR022 and NPRR489 • A history lesson: • PGRR018 was originally submitted in February 2012 and was titled “Clarify the Prerequisites for Adding a New Generation Resource to the Planning Models and Capacity Demand and Reserves Report.” • PGRR018 added additional requirements for a new unit to be shown in the planning models (financial commitment sufficient to fund the interconnection facilities, air permits and sufficient water rights). • PGRR018 also included these new requirements in Section 8 of the Planning Guides, Planning Reserve Margin (i.e., the CDR methodology), as there were some who felt the new unit assumptions for the planning models and the CDR should be the same. • During the months-long discussions on PGRR018, ROS and WMS agreed that the Planning Reserve Margin section of the Planning Guides (Section 8) should be moved from the Guides and into the Protocols. • That decision resulted in the filing of PGRR022 and NPRR489 in October 2012. • PGRR022 strikes Section 8, Planning Reserve Margin, from the Planning Guides. NPRR489 adds the Section 8 language to the protocols. • During the November 13, 2012 ERCOT Board of Directors meeting, PGRR018 was remanded back to TAC for further review of the financial security language. • At the November 29, 2012 TAC meeting, PGRR018 was tabled and referred to WMS and ROS with instructions to not only review the financial security language, but to also consider “severing” the planning reserve margin language from the PGRR.

  9. PGRR018, PGRR022 and NPRR489 • What does all this mean? What are the recommended next steps?: • The decision to “sever” the Planning Reserve Margin (CDR) methodology from the Planning Guides has already been made, so the TAC instruction to consider severing is moot. • ERCOT will be meeting with TSPs soon to review the PGRR018 financial security language as requested by the Board. • If ERCOT and the TSPs have any recommended changes to the PGRR018 language they will submit comments. • Separate comments to PGRR018 have already been drafted removing a single subsection that references the “Total Capacity Estimate” of the Planning Reserve Margin. • PGRR022 continues to stand on its own, as it strikes all of Section 8, Planning Reserve Margin, from the Planning Guides. • NPRR489 will continue to stand on its own as it adds the Planning Reserve Margin language to the protocols. However, comments will be submitted to clean up the language as NPRR489 had already assumed PGRR018 would be approved. • The Final Result : • If PGRR022 and NPRR489 are approved, the CDR methodology will be in the protocols, not the Planning Guides. • The Planning Guides and the CDR may, depending on the outcome of the votes on PGRR018, PGRR022 and NPRR489, contain different assumptions for the addition of new units.

  10. Miscellaneous • Next GATF Meeting – Scheduled for Monday, January 7, 2013. • Review of the draft LOLP study results. • Questions or Comments?

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