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January 21, 2014 RPG Meeting. NRG Comments/Concerns with HIP Assumptions. Baseline – Planning Assumptions We Should all Agree On. The Coastal region load (and Houston particularly) is likely to continue growing in the foreseeable future.

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nrg comments concerns with hip assumptions
January 21, 2014 RPG Meeting

NRG Comments/Concerns with HIP Assumptions

NRG Comments/Concerns with HIP Assumptions - January 21, 2014

baseline planning assumptions we should all agree on
Baseline – Planning Assumptions We Should all Agree On

The Coastal region load (and Houston particularly) is likely to continue growing in the foreseeable future.

Like the Coastal region, there are other regions in the state that are also expected to see continued load growth thanks to Texas’ growing economy (west Texas, D/FW metroplex, regions in the south and central portions of the state such as Corpus Christi, Austin/San Antonio corridor, and the Rio Grand valley.)

There is not enough generation to meet the Planning load in 2018.

A planning assumption of reduced load in one area of the state is electrically equivalent to adding that same amount of generation in that one area.

The assumptions used in any planning scenario are the key drivers for the results.

assumptions used in ercot s hip analysis appear to be pushing towards a particular result
Assumptions Used in ERCOT’s HIP Analysis Appear to be Pushing Towards a Particular Result

Table 1: Load Reduction Assumptions Utilized in HIP Analysis

Note: Planning Peak is the higher of SSWG load or the 90/10 load.

what do these assumptions mean
What do these Assumptions Mean?

The data in the previous slide shows that ERCOT reduced the load by greater than 8,000 MWs in the North Central, North, West and Far West weather zones, while holding the Coastal, East, South Central and South weather zones at the planning case levels.

Electrically, this added 7,587 MWs of generation in the North Central load zone (a 26% reduction in load), primarily in the D/FW metroplex.

Electrically equivalent to adding X amount of “zero-cost, must run” generation at each load bus where load was reduced. The size of the generation is a percentage of the peak load at the bus. The percentage was determined by how much is needed to have a “solvable” case.

Note: In addition to reducing load in the North Central, North, West and Far West weather zones, the HIP analysis included mothballed generation outside the Houston region, but excluded mothballed generation inside the Houston/coastal region. This is equivalent to adding 1,273 MWs in the North and removing 206 MWs of generation from Houston and the South.

load assumptions ensure large quantities of transmission are needed to serve houston
Load Assumptions Ensure Large Quantities of Transmission are Needed to Serve Houston

Reduced load 274 MW

Reduced load 7,587 MW - electrically equivalent to adding a 7,587 MW unit, mainly in DFW. Also added an additional 1,273 MWs of mothballed gen.

Reduced load 333 MW

=2018 Planning peak load

= 2018 Planning peak load

Reduced load 401 MW

= 2018 Planning peak load

Undoubtedly, these types of assumptions would lead to a conclusion that major transmission infrastructure is needed into Houston from the North.

= 2018 Planning peak load

the assumptions are not supportable
The Assumptions Are Not Supportable
  • For any type of HIP transmission expansion to work there has to be something to import!
  • Is it proper to assume that generation is never added in the coastal region or the south, but approximately 10 GW is added in the North, mostly in DFW? [Load reduction plus mothballed units]
  • Would an assumption of “any” level of generation (or load reduction) in the southern and coastal region significantly change the HIP results?
  • The HIP assumption that load is growing in Houston and nowhere else is not supported by other Planning data. For example, ERCOT’s December 2013 Report on Existing and Potential Electric System Constraints and Needs discusses in detail the large load growth expected to continue in far west Texas and in the Denton/DFW area.
  • North Central load in the HIP (SE) case is lower than the actual peak in 2013.
  • A review of other data elements provided by ERCOT’s Planning Group indicates modifications to the assumptions should be made that are better supported by the data.
if load reduction is required for planning what is the proper criteria
If Load Reduction is Required for Planning, What is the Proper Criteria?

Table 2: ERCOT Data from October 22, 2013 RPG

  • At 10/22/13 RPG meeting, ERCOT stated that “Decreasing the loads in North, North Central, West and Far West Weather zones is reasonable because they are geographically & electrically far from the Coast Weather zone, and historical data … indicates the loads in the weather zones do not experience peaks load at the same time as the Coast weather zone.
  • Questions: Should peak loads in other regions be based on “average” coincident peaks? A closer review shows maximum coincident peaks are closely aligned. Isn’t the HIP analysis supposed to be a “peak” case?
  • How can an assumption of a 26% reduction of load in the North Central weather zone be justified based on the above numbers?
ercot s sgia data doesn t support the load reduction assumptions
ERCOT’s SGIA Data Doesn’t Support the Load Reduction Assumptions

Table 3

Table 4: IAs by Region

Source: ERCOT System Planning Monthly Status Report – December, 2013, Renewables Removed.

ercot s full interconnect study data doesn t support the load reduction assumptions
ERCOT’s Full Interconnect Study Data Doesn’t Support the Load Reduction Assumptions

Table 5

Source: ERCOT System Planning Monthly Status Report – December, 2013, Renewables Removed.

ercot s full interconnect study data doesn t support the load reduction assumptions cont
ERCOT’s Full Interconnect Study Data Doesn’t Support the Load Reduction Assumptions, Cont.

Table 6

Table 7: Total FIS’s by Region

Source: ERCOT System Planning Monthly Status Report – December, 2013, Renewables Removed.

slide11
If There Isn’t Enough Generation, Aren’t These Load Reductions More Supportable Based on FIS Data (Table 7)?

Reduce 6.6%

Reduce 9.1%

Reduced 7.3%

= Reduce 16.4%

Reduce 34.2%

Reduce 6.3%

Reduce 1.6%

Reduce 18.5%

slide12
If FIS Data Isn’t Considered, Then Shouldn’t Load Reductions be Closer Aligned with Actual SGIA Data (Table 4)?

Reduce 14.5%

Reduce 43.3%

Reduced 7.6%

= Reduce 9.1%

Reduce 31.4%

Reduce 3.2%

No Change

No Change

other questionable assumptions
Other Questionable Assumptions

ERCOT’s December 17, 2013 Update on the HIP Project to the RPG included an evaluation of the impact of retirement of older than 50 year old generation “inside Houston area”.

  • 11 units (total 1939 MW) are more than 50 year old by 2018 Sam Bertron G1, G2, G3, G4 and GT2; T.H. WartonGT1; W.A. Parish G1, G2, G3, G4, and GT1

However, if the HIP projects are dependent on imports from the north, why ignore units that will be greater than 50 years old in the North zone?

The North zone contains 17 units more than 50 years old by 2018 for a total of 2,857 MW.

  • Handley 3, Mountain Creek 6, Mountain Creek 7, Mountain Creek 8, PowerlanePlant 2, Ray Olinger1, Spencer 4, Stryker Creek 1, Stryker Creek 2, Atkins G3, Atkins G4, Atkins G5, North Texas 1, North Texas 2, North Texas 3, Valley Unit 1, Valley Unit 2.

What is basis for assumption that only >50 year old units in the Houston area will retire and others outside of Houston won’t?

conclusions
Conclusions

The load reduction (generation addition) assumptions used to make the HIP analysis “solvable” are questionable, not supported by other available data, and can only lead to one conclusion – build major transmission infrastructure from the North into the Houston area.

  • Approximately 10,000 MWs of new, low cost generation added in the North, primarily in the DFW metroplex.
  • No generation added in the Coastal weather zone or in the South.
  • Older units retire only in the Houston area, nowhere else.
  • Mothballed generation is only available if it’s outside of Houston.

Building a major transmission corridor with nothing to import could lead to stranded, costly transmission investments placed on the backs of consumers.

NRG believes that more supportable assumptions would significantly alter the HIP results and likely result in a more cost-effective utilization of consumer dollars.