The state of Texas has embarked on a path that is decidedly different than the rest of the nation. Because Texas is the only state in the continental U.S. with a grid contained entirely within the state, utilities have opted out of oversight by the Federal Energy Regulatory Commission (FERC). Today, the power grid is administered by the Electric Reliability Council of Texas (ERCOT). As of Jan. 1, 2002, individual consumers and corporations in most of Texas can choose their power supplier. ERCOT oversees the transactions that result from this restructuring, while maintaining the overall reliability of the electrical grid. Ken Donohoo, manager of system planning with ERCOT, provides insight on how ERCOT works with state regulators, power generators and electric utilities to plan and construct the transmission facilities necessary to serve 85% of the state's electric load. The ERCOT region has access to 70,000 MW of generation and oversees 37,000 miles (59,546 km) of transmission.

T&D World: What is it like to start over in your career?

Donohoo: I left a controlled environment with plenty of support folks and went to an environment where you are essentially on your own. It was a rude awakening. I went from the security of a large utility to what is essentially a start-up. I had to address things I took for granted, like how to get a computer. You've got to write a purchase order and, well, how can you write a purchase order without a computer? Some of the folks went down to the Dell outlet, had to type up the purchase order, run back to the office, get it signed and then run back to Dell to get the computer.

T&D World: Weren't you at Oncor, which was previously TXU?

Donohoo: I was at TXU holding down a senior staff position. I was in planning and special studies doing transient analysis-type work — very specific, very technical. At Oncor, we experienced staff cuts right and left. I didn't see the potential for personal growth. I had challenges to address, but I wanted more. One day I just decided to go and see what was out there. I had worked on several ERCOT task forces and working groups, and I knew the people. I applied for a posted position and within two weeks was getting ready to move from Dallas-Fort Worth to Taylor, Texas. I'm in my seventh year with ERCOT now.

T&D World: Do you miss getting your hands dirty?

Donohoo: No, I still get my hands dirty. I regularly go out and see what is going on in the field. The same is true with our engineers. I send them out to the regions to get to know what is going on.

T&D World: Do you think it's critical in your group to remain plugged in with engineering issues to keep that innate sense of what is going on?

Donohoo: We really can't afford to lose those technical skills that can provide a benefit. We have to keep up with the technical issues: What are the tools out there? What are the options out there? What tools might we use to solve a problem?

T&D World: On the national scale, do you believe the North American Electric Reliability Council's (NERC) push to create large regional transmission organizations (RTOs) is the right way to go?

Donohoo: Everyone recognizes we are essentially a connected network. Just because a utility is in another location or in another state doesn't change how networks perform. We need a combined effort working together to identify and solve problems. Everybody benefits by being connected to the network, but we also need to plan the connected network together.

T&D World: Do you think that Federal Energy Regulatory Committee (FERC) Commissioner Pat Wood-proposed state regional planning commissions will work?

Donohoo: I don't know many details about the regional planning he's proposing. I know that when we brought the regulator, transmission owners and the consumers together, we made significant progress. Better communications and better understanding among all the parties has worked in Texas. If regional planning commissions let all parties have the opportunity to express their concerns, and their opinions are legitimately considered in the process, we will find the middle ground.

T&D World: Do you think that regulators in adjoining states could work cooperatively in planning?

Donohoo: I think they have to work together, yes. In the old days, when the industry was first changing, we were all saying, “We can't do that.” Now we know we can work through adversity and find solutions to real problems. We just have to work together.

T&D World: What feedback are you receiving from the utilities?

Donohoo: They are very supportive now. Utility people have a lot more trust in what we're doing and how we're doing it here at ERCOT.

T&D World: What's working right at ERCOT?

Donohoo: We've all recognized the radical change in generation patterns and the effect of these changes on how we upgrade and run the transmission grid. Some things that we thought would never happen now occur regularly. Situations arise depending on where generation is placed and whether it is running. Local constraints and large zonal constraints all have to be managed. It's a different world, a fast-changing world.

T&D World: Can you contrast the poor results of deregulation in California with the Texas experiment?

Donohoo: We recognized that basics come first. We also took it a lot slower than California. We had a lot of comments at ERCOT that both California and Texas were crossing the street. We took the crosswalk while California was building a rocket ship. Some of the California planners were aware of what could possibly happen. We took what happened in California as a good learning tool. We're still very concerned about voltage control, very concerned about generation reserve margins, very concerned about continuing to get generation to come into the state. We continue to consider every aspect of the business

T&D World: Are there people in other regions coming to learn from you?

Donohoo: We've visited people inside and outside the United States. We see a lot of interest right now from Japan. We've had people visit from Australia as well.

T&D World: Explain why utilities in Texas are actually building transmission?

Donohoo: The first thing is to work with the regulators to get a fair rate of return. Second, a coordinated planning effort is needed where we understand everyone's concerns and where we get the public involved in the process, mainly through the consumer groups. One reason for our success is the ERCOT structure, which includes all segments of the market.

T&D World: How do you decide when to build?

Donohoo: Number one, we have to meet our planning criteria, which determines the base need, and we try to build facilities to meet that planning criteria. That's our minimum goal. Then we look at adding capacity to address local congestion and then zonal congestion. We only have so much capital to go around. Right now, it seems like local congestion has the highest priority.

T&D World: Who are we? Is it you and the Public Utility Commission of Texas (PUCT) and the utilities and the public? Are you all making the decisions?

Donohoo: Yes, essentially. ERCOT is split into three regions: west, north and south. And the transmission owners within those regions do studies and develop plans. We then bring in stakeholders to public meetings, with regional planning groups providing opinion and feedback. The resulting project plan is presented to several of our working groups and committees, and large projects ultimately go to ERCOT's board of directors for approval.

T&D World: How much have you invested in upgrading the grid in Texas?

Donohoo: Over a five-year time span, I know we've done more than US$400 million in five major 345-kV upgrades alone. Of course, we've also got the series capacitors in the Rio Grande Valley, STATCOM in the valley and significant upgrades in Houston.

T&D World: Do you address demand-side issues?

Donohoo: Demand side is in its infancy but growing. If the load gets a fair return and is able to respond, then we have another tool in our tool box. We have large industrials now affecting the demand side. Load entering into the market is also opening up within ERCOT. Still, we are mainly focused on, “Hey, we have a limitation on transmission. How can we adjust the generation?”

T&D World: Who is on your board?

Donohoo: Essentially, it's made up of consumer representatives, transmission companies, market participants, independent power producers and retail electric providers. We've now added some independent board members. It is really a nice diverse board.

T&D World: Have you had many market power issues?

Donohoo: Not really, I think that's something the market oversight division of the PUCT watches. Again, they've learned from other markets. We call them the MOD squad, the Market Oversight Division.

T&D World: Now you have a zonal model. Why did you decide to go against the nodal model?

Donohoo: It's much easier to implement; it's much easier to control; it's much easier to understand. The transparency is greatly increased with the zonal model. The nodal model is much more complicated.

T&D World: Does ERCOT set rates?

Donohoo: No, we don't set rates. We're not a rate-making entity. We're not a regulatory body. We're a not-for-profit corporation. We essentially manage the power grid and support market activities within the ERCOT region, which includes operators stationed at two operating centers. We do the transmission planning and coordination along with performing settlements. We're like a clearinghouse for transactions.

T&D World: Do you cut checks after you collect money?

Donohoo: I don't think check cutting is done very much anymore. I think it's all wire transfers. But essentially we have a credit manager; we have a financial staff. We handle the market for ERCOT.

T&D World: Since you've been there, what has been ERCOT's biggest mistake?

Donohoo: We've really had no big mistakes. The biggest thing I'd do differently is to get people involved earlier in the process; that would have helped quite a bit. There's a lot of talking and education that goes on. If you're open with people and fully answer their questions and provide them with the background, usually they're receptive. Of course, there are other people who have just made up their minds and won't ever change.

T&D World: Do you have any kind of personal contact with FERC Commissioner Pat Wood?

Donohoo: Yes and also with his staff. I've been in on a number of meetings with him. I think he's probably one of the smartest people I've ever met. He seems to read everything and remember everything. He is a very energetic person.

T&D World: And what impact did he have when he was at the PUCT?

Donohoo: The biggest thing he did was to give us very clear direction. But he was also an extremely good listener. And he wasn't set in stone. If you gave him information and provided him with justification, he would adjust and move with it. As a technical person and as a legal person, I don't think there's any better. He's a significant mover and shaker in the industry.

T&D World: And do you think he'll have similar success on the national scale?

Donohoo: I hope so. I think Pat Wood will probably excel at anything he does. He seems to be that type of person.

T&D World: What is the secret to ERCOT's success?

Donohoo: The biggest thing is to focus on the solution, not the problem. That requires you to get good, knowledgeable people and work as a team.

Kenneth A. Donohoo, Manager of System Planning — Transmission Services, ERCOT

As manager of system planning — transmission services at ERCOT, Donohoo oversees a team that administers planning activities, including collection of power system planning data. System planning conducts technical and simple economic assessments, and provides strategies, polices, procedures and methodologies associated with the planning and reliable operation of the grid.

Donohoo joined ERCOT in 1996 as a senior transmission systems engineer. In that position, he was responsible for analyzing regional transmission planning and conducting available transfer-capability studies and generation interconnection studies. He also calculated transmission system losses, conducted studies to allocate transmission costs and participated in the work of the technical advisory committee subcommittees and its task forces.

He received the BSEE degree from the University of Texas at Arlington in 1982. He is a senior member of IEEE, a member of the IEEE Working Group on Economic and Technical Analysis Methods for Transmission-Only Entities and ERCOT's representative of the North American Electric Reliability Council Operating Committee Transmission Subcommittee. Donohoo is a registered professional engineer.

About ERCOT

ERCOT Control Area Characteristics

  • Single point of control interconnection
  • Generation
    Installed (active) capacity — 74,247 MW
    2002 peak load — 56,223 MW (8/26/02 16:45)
    All time peak — 57,606 (8/31/00 17:00)
  • 514 active generating units
  • 278,226,000 MWh produced in 2001
  • 37,000+ circuit miles of installed transmission 60 kV and above

ERCOT Market Attributes

  • Wholesale transactions
  • Over 95% of energy managed through bilateral arrangements
  • 80% of ancillary services are self arranged
  • 120 registered power generating companies
  • 74 Qualified Scheduling Entities (QSEs)

Completed Major Transmission

  • Limestone-Watermill 345-kV double-circuit line
  • Monticello-Farmersville 345-kV line
  • Farmersville-Valley Junction-Anna Switch 345-kV line
  • Graham-Jacksboro 345-kV line
  • Rio Hondo/Edinburgh 345-kV series capacitor compensation
  • Military Highway & Laredo STATCOM
  • San Miguel-Pawnee 345-kV line and establish Pawnee 345-kV Station
  • Pawnee-Coleto Creek 345-kV line
  • Centerville Switch-McCree Switch 345-kV line
  • White Point 345-kV Switching Station and 138-kV upgrades
  • Cedar Bayou-King-North Belt-TH Wharton 345-kV Corridor upgrades
  • Numerous 138-kV and 69-kV system additions/upgrades including autotransformers

Transmission To-Do List

  • Jacksboro-West Denton 345-kV line
  • Jacksboro-Willow Creek-Parker 345-kV line upgrade
  • West Denton-NW Carrollton 345-kV second circuit
  • Watermill-Cedar Hill 345-kV second circuit
  • Anna Switch-Collin-NW Carrollton 345-kV line upgrade
  • Salem-Bryan/College Station-TNP One 345-kV line and establish new 345/138-kV station
  • Clear Springs-Zorn-Harris Branch-Gabriel-Salado 345-kV line
  • Cuero-Holman 345-kV line and Establish Cuero 345-kV Switch Station
  • Coleto Creek-Cuero 345-kV line
  • San Miguel-Laredo 345-kV line
  • Red Creek-Comanche Switch 345-kV second circuit
  • Comanche Switch-Killeen Switch 345-kV line
  • Whitney-Concorde 345-kV line
  • Twin Oak-Lake Creek 345-kV second circuit
  • Many 138-kV and 69-kV system additions/upgrades including autotransformers