ERCOT Project Criticized For Slow Pace

Energy companies criticize the Electric Reliability Council of Texas for its slow start.
Are problems with the IT system at the Electric Reliability Council of Texas threatening to short-circuit the state's electricity industry's deregulation efforts? ERCOT executives portray the problems as routine glitches in the system, which was developed to track all electricity consumers in the state. But the program has come under fire from energy companies because of the project's slow pace.

The ERCOT project is in the spotlight because of California's deregulation problems, says AMR Research analyst Allison Bacon. "Any bad press [about ERCOT] is going to lower confidence in deregulation," she says.

ERCOT is managing all transactions related to deregulation and also will be responsible for maintaining the reliability of Texas' electricity grid. The corporation has built a large-scale IT system and database to store customer registration and electricity usage data for the entire state. The system, now being run on a trial basis, is needed for customer enrollment and switching processes as deregulation gets underway. Assembled for ERCOT by consulting firm Accenture LLP, the IT system uses custom-built software and Compaq servers.

But while 103,000 customers have signed up to be switched to new electricity providers, only 2,668 have actually been switched over and only 567 of those have had their first meter reading, ERCOT acknowledges. In recent weeks, energy providers such as The New Power Co. and Shell Energy Services Co. have criticized ERCOT for its slow pace: Late last month The New Power Co. blamed the ERCOT project, in part, for a shortfall in second-quarter revenue.

The ERCOT system has suffered "some basic startup problems," says Sam Jones, ERCOT chief operating officer. But he says such problems, which he described as "hiccups" but declined to describe in detail, are to be expected during early use of such a large-scale system. "I think this last round of upgrades we installed will improve the system to handle the volume of [electricity consumer] switches needed to go into full production," he says.

The most problematic part of the ERCOT project is building the links between the ERCOT system and IT systems of other players in the deregulation project, including customers, electricity generators, and electricity transmission companies, says Kevin Mueller, global managing partner for utilities at Accenture.

ERCOT is now in a seven-month trial period during which 5% of all the state's energy customers can switch to new electricity providers. Starting Jan. 1, 2002, individuals and corporations in most Texas cities will be able to choose their power supplier.