AUSTIN, Texas — Making his first presentation to ERCOT’s Board of Directors as CEO, Bill Magness alluded to the unseasonably warm Texas weather as a calming influence during his first month on the job.

“This beautiful, fantastic weather [is] great for my nerves starting out as ERCOT’s CEO,” Magness said. “But it’s terrible for revenues.”

Magness said the milder-than-expected weather resulted in a $1.3 million shortfall in system administration fees for 2015, a major reason why net revenues for the year were $1.8 million below budget.

Magness also reported $2.7 million in over-budget costs for employee benefits and additional responsibilities under NERC’s new transmission-planning standard.

The increased costs were partially offset by lower interest and technology expenses.

“We had unusually high benefit costs … a number we’re really not happy about,” Magness said.

ERCOT’s 2016 operating budget will use a more “granular” load-forecasting methodology that will produce better results, Magness said. Staff recorded a -0.8% error in forecasting load last year, “and we think from an operations standpoint, [the new methodology] helps us better track our finances,” he said.

Warmest Winter Ever?

ERCOT meteorologist Chris Coleman told the board the “crazy winter” Magness lamented can be attributed to El Niño, the warming climate pattern in the tropical Pacific Ocean, and he said there’s a “greater potential for a warmer forecast” than a colder one for the remainder of the winter.

“This is the strongest [El Niño] has been at this point in the cycle ever. It will go down as one of the two strongest ever,” surpassed only by the 1997-98 El Niño, Coleman said. “This one is finishing stronger. We could be seeing our warmest winter ever.”

Austin has seen just three freezes since Nov. 1 after having recorded 28 over the previous two winters and has spent less than four hours at or below freezing this winter. Temperatures have yet to dip below 31 degrees so far, the warmest minimum temperature recorded through January in 20 years.

Looking ahead, Coleman projects a wet winter for much of Texas and an above-average number of ice events. He said the state’s northwestern portions could see a wet spring, but it will be drier elsewhere, which could lead to a return of drought conditions.

ERCOT’s next seasonal assessment of resource adequacy, early next month, will include an updated weather forecast.

ERCOT Unveils New Logo in State of Grid Report

ERCOT released its annual State of the Grid report Feb. 9, highlighting a new fluid, open-ended logo that it said reflects “the perfect flow of power on a high-demand summer day.” The report details ERCOT’s record in each of five areas: accountability, leadership, innovation, trust and expertise. It also provides updates on a number of initiatives and milestones, including successfully managing the first system peaks since 2011 and integrating the nation’s largest amount of wind capacity.

IMM Says Real-Time Prices Dropped

ERCOT’s Independent Market Monitor said real-time energy prices were down 34% in 2015, averaging $26.77/MWh compared to $40.64/MWh the year before, which began with a cold winter.

IMM Director Beth Garza said ERCOT’s implied heat rate indicated a number of inefficient units were being used to meet demand. Real-time and day-ahead heat rates peaked at 13.94 MBtu/MWh and 20.28 MBtu/MWh, respectively, in August, when ERCOT recorded its five highest daily demand peaks ever.

Special Meeting to Replace Director

The board unanimously approved staff’s recommendation for a special meeting to select an unaffiliated director before June 30. ERCOT bylaws call for five unaffiliated directors on the board, but the Texas grid operator’s Nominating Committee will not be able to meet and select a candidate to present to corporate members before June 30, when Jorge Bermudez’s second term expires. He will seek re-election for a third and final term.

The board also re-elected Craven Crowell and Judy Walsh as chairman and vice chair, respectively, and approved ERCOT’s two newest officers: Chad Seely, who replaced Magness as general counsel, and Senior Vice President and COO Cheryl Mele.

Randa Stephenson was re-confirmed as Technical Advisory Committee chair. Previous vice-chair Adrianne Brandt recently left Austin Energy for San Antonio’s CPS Energy; she will have to be re-elected to her position by TAC members before she can be confirmed by the board.

Finally, the board welcomed five new segment alternates: American Electric Power’s Wade Smith (Investor-Owned Utilities), DC Energy Texas’ Seth Cochran (Independent Power Marketers), Chapparal Steel Midlothian’s Sam Harper (Industrial Consumers), Invenergy Energy Management’s Mark Soutter (Independent Generators) and CenterPoint Energy’s Kenneth Mercado, (Investor-Owned Utilities).

Consent Agenda Passes Unanimously

The board unanimously passed its consent agenda, approving eight protocol revision requests and a nodal operating guide revision (NOGRR147, Reactive Power Testing Requirements) that were previously endorsed by the TAC. (See “Protocol Revision Requests OK’d,” ERCOT: No Consensus on Operating Reserve Changes.)

— Tom Kleckner