Analysis: ERCOT load forecasts under spotlight

OREANDA-NEWS. Texas power demand is on the upswing, but the challenge of meeting growing load has sparked a dispute between generation and transmission owners about using different forecasting methods that result in widely divergent conclusions.

Transmission owners planning grid expansions estimate demand across the Electric Reliability Council of Texas (ERCOT) could be nearly 82,000MW in 2016 and rise to more than 87,000MW in 2020 under high-demand conditions.

Meanwhile, ERCOT's public demand forecast, prepared by the grid agency, reflects much lower peak demand and slower growth in coming years: 70,014MW in 2016, climbing to 73,784MW in 2020.

The transmission planning forecasts are running more than 11,000MW, or least 17pc, higher than the official forecast, known as the capacity, demand and reserves (CDR) report, and the wide discrepancy has generation owners and state regulators asking why.

A three-year debate over ERCOT demand growth and resource adequacy ended in 2014 as three new power plants came on line, new transmission accommodated more wind power and mild summer weather limited peak use and price volatility.

ERCOT revamped its peak-load forecasts after criticism from regulators, but that has done little to allay generators' fear that supply is not keeping up with growth.

ERCOT's revised peak forecast methodology, using growth trend in customer counts instead of economic growth models, pared about 4,000MW, or 5pc, from earlier peak projections.

The discrepancy between CDR and transmission owners' load projections became a point of contention in last year's dispute over a proposed power line to serve the booming Houston zone.

Generators Calpine and NRG Energy complained to Texas regulators that methods used to project load overstated Houston demand growth and the need for building the line.

The Texas Public Utility Commission rejected the generators' specific argument, but directed staff to open a docket to look at the discontinuity between resource adequacy planning and transmission planning.

Whether ERCOT "is using different methodologies to do different things when addressing one issue — reliability — concerns me," commissioner Ken Anderson said.

The CDR forecast is used to evaluate the level of power reserves available across ERCOT during the summer when demand peaks under normal weather conditions.

The transmission forecast shows the grid under stress from extreme load when all ERCOT zones peak, an event which is not coincident with an overall ERCOT system peak. Total demand reflects the potential peak in every zone which contributes to the wide discrepancy from the CDR.

"I believe that needs to be fixed," NRG's director of ERCOT market policy Adrian Pieniazek said during transmission planning meetings this week. "It makes no sense that two groups, all in [ERCOT], are saying two different things about what they expect the load to be in that year."

Transmission planners defended the forecasting method.

"Using these load forecasts is a way to stress the system to see what the limits of the system are," a transmission owner said. "If you do not put stress on the system, you do not know when the system is going to break. It has nothing to do with market function and prices; it is about reliability," he said.