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QSE and Production Operations

BTU maintains and operates a trading operation that has the primary objective of providing the lowest energy cost to customers by purchasing and selling electric power and ancillary services, or dispatching BTU generation on an economic basis, within the guidelines of the Risk Management Policy. This trading operation is known as the Qualified Scheduling Entity, or QSE. The QSE is manned around the clock by a group of professionals who are tasked with the key responsibility of maintaining the lowest possible rate for the BTU customer. In the QSE, Energy Schedulers develop both day-ahead and real-time load forecasts using historical load and weather data and utilize these forecasts to develop generation plans which optimize BTU’s generation resources with purchase/sale opportunities. The optimization of BTU-owned generation and economic market transactions allow BTU to provide reliable, competitively priced electricity to its customers. In addition to the day-ahead and real-time optimization, BTU’s power marketing personnel constantly look at longer term opportunities that would benefit the rates to BTU customers and market any excess capacity, energy and ancillary services available from BTU-owned resources to other wholesale entities.

An Electric Reliability Council of Texas (ERCOT) certified Qualified Scheduling Entity (QSE) is required by ERCOT to submit, among other things, energy and ancillary service schedules. BTU’s QSE maintains a 24-hour, seven days per week operation with qualified personnel for communicating with ERCOT for scheduling purposes and deployment of energy and ancillary services on a real-time basis. QSE personnel also submit generation plans indicating unit availability and operating status, and provide bids for ancillary services. The QSE is financially responsible to ERCOT for its defined share of energy and ancillary services. In addition to providing QSE services for BTU, BTU’s QSE offers these services to other ERCOT market participants.

BTU owns and operates two natural gas-fired power plants in the Bryan area. The Dansby Power Plant, located north of Bryan, has three units with a total capacity of 207 MW. The Atkins Power Plant, located near downtown Bryan, has one active unit with a total capacity of 20 MW. BTU is also a partner in the Texas Municipal Power Agency’s coal-fired, Gibbons Creek generating station, located east of Bryan near Carlos.

These generating assets, along with purchases from other participants in ERCOT, are economically optimized by the QSE staff to fulfill BTU’s customer power needs. This optimization of BTU-owned generation, certain firm purchase contracts and economic market transactions allow BTU to provide reliable, competitively-priced electricity to its customers.

The QSE staff works continuously with staff at BTU’s power plants to provide direction on individual generating unit operation. The QSE has the crucial responsibility of determining how to best utilize the generating units for greatest economic advantage and for relaying that information to the power plant staff to insure that the generating units are available and dispatched at the appropriate times.

BTU’s Production division has the chief responsibility to build, maintain and operate the Dansby and Atkins generating plants. In the last ten years, the Production division has built two new units at the Dansby facility, Dansby Units #2 and #3. The goal of the Production division is to economically maintain the units in such a manner as to provide high availability of the units while keeping maintenance and operations costs as low as possible. The professional staff at the power plants also actively work in conjunction with the QSE staff to operate the units to the best economic advantage of BTU and its’ customers.

The QSE also houses BTU’s Settlement staff, which is part of BTU’s Fiscal Services area, and is responsible for the financial accounting of all transactions created between the QSE, ERCOT, and other parties involved in wholesale energy transactions for BTU and BTU’s QSE clients. The settlement activities include verifying receivables and payables from wholesale transactions, validating charges and payments from ERCOT, assignment of cost responsibility for ancillary services to customers, and administering contracts with clients. The ERCOT market is settled every 15-minute interval and each operating day has three settlements: initial settlement for the day-ahead market will take place 2 business days after the operational day, initial settlement for the real-time market will take place once per week for all days of the prior week. Final settlement for the real-time market will take place 30 days after the initial statement, and the market true-up will be six months after the operational day. Ultimately, this means that the Settlement staff is working on several days of settlement statements at any given time. The Settlement Division provides timely reporting to management and customers in accordance with the Risk Management Policy.