PUC DOCKET NO. ______

PETITION OF THE ELECTRIC RELIABILITY COUNCIL OF TEXAS FOR APPROVAL OF THE ERCOT PROTOCOLS / §
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PUBLIC UTILITY COMMISSION

OF TEXAS

PETITION FOR APPROVAL

COMES NOW the Electric Reliability Council of Texas, Inc. (“ERCOT”), and respectfully requests that the Public Utility Commission of Texas (“the Commission”) approve the ERCOT Protocols (“Protocols”), attached hereto as Exhibit A. For convenience, ERCOT will also post this filing, by noon, November 3, 2000, on its website at http://www.ercot.com (select the “ERCOT Quick Links” drop down menu, then select “Protocols”).

I. Authority and Process

Pursuant to the provisions of the Public Utility Regulatory Act (“PURA”), ERCOT, as the independent organization of the ERCOT “power region,” is required to “establish and enforce procedures, consistent with [PURA] and the commission’s rules, relating to the reliability of the regional electric network and accounting for the production and delivery of electricity among generators and all market participants,” subject to the oversight of the Commission.[1] PURA permits the Commission to “delegate authority to [ERCOT] to enforce operating standards within the ERCOT regional electric network and to establish and oversee transactional settlement procedures.”[2]

In order to fulfill its obligations as the independent organization in developing operational and market procedures and standards in accordance with the PURA requirements and in implementing customer choice, ERCOT sponsored a process open to all interested parties (“stakeholders”) to develop the Protocols and to facilitate an open non-discriminatory market within ERCOT. This process was conducted under the auspices of the ERCOT Technical Advisory Committee (“TAC”). The Retail Users Group (“RUG”), a TAC subcommittee, and its various working groups performed the majority of the work in drafting the Protocols. RUG and its working groups are open to any interested person, regardless of membership in ERCOT. Dozens of organizations, both members and non-members of ERCOT, were represented in meetings of these groups. [3] Initially, the RUG working groups met separately to draft documents that became specific sections of the Protocols (such as Operations, Settlement, Profiling, Metering, Agreements, and Customer Registration). After the Third Informational Filing of the Protocols in August, 2000, (Project 21079) the various work groups and RUG worked together in a series of combined meetings to finalize the Protocols.

Issues not resolved by the stakeholders in these combined meetings were taken to RUG for decisions. RUG decisions were based on a weighted, representative voting structure according to the seven market groups of current ERCOT membership[4] and required a two-thirds favorable vote for approval of any decision. The combined working groups and RUG held 29 meetings during this process from August 15 to October 6, all of which were well attended. Issues not resolved at RUG were taken to TAC for consideration; any outstanding issues were resolved by the ERCOT Board.

The Protocols presented in this petition represent a major endeavor in achieving consensus. Numerous important issues were spiritedly negotiated, with participants coming to agreement through considerable negotiation and compromise. Because of the compromises involved in creating these Protocols, if any material terms are now changed, it is likely that consensus could be lost unless other offsetting changes are made. Accordingly, if the Commission finds a need for a material change to the Protocols, ERCOT respectfully requests that such a finding be made as a direction to ERCOT to initiate the change through the Protocol change process, described in Protocols Section 21.

II. Additional Specific Authority and Findings

ERCOT has been designated by the Commission as “Program Administrator” in PUCT Project 22200 in the Commission’s Order dated May 10, 2000 (“Order Designating Program Administrator for the Renewable Energy Credits Trading Program”). In addition, ERCOT requests the Commission formally designate ERCOT as the “Registration Agent” under proposed § 25.471(d) and as the “designated agent” under proposed § 25.484(a) for management of the “Do Not Call” list[5] in order to make clear ERCOT’s responsibility and authority to implement customer registration requirements. Further, while not expressly identified in the Protocols at this time, ERCOT seeks authority to collect a fee, to be determined by the Commission, from customers requesting inclusion in the “Do Not Call” list, as provided in PURA § 39.1025(c).

The responsibilities of the Program Administrator, Registration Agent, and “designated agent” encompass the registration and renewable energy credits trading requirements for the entire State of Texas, not just within the ERCOT power region. ERCOT requests the Commission issue appropriate findings and orders to authorize ERCOT to perform these functions throughout the state, not just within the ERCOT power region.

In addition, ERCOT notes that the Protocols, as written, require certain entities that are regulated by the Commission (transmission and distribution service providers) to provide important services to the ERCOT system and the electricity market, such as metering services, the costs of which are not directly recoverable on a customer-basis. ERCOT believes these are reasonable costs and are necessary for successful market operations in ERCOT.

III. Supplemental Filing

The hardware and software systems necessary for ERCOT to implement a single control area and customer choice, and the associated registration, scheduling, operations, and settlement systems, are very expansive and complex. In order to meet the June 1, 2001, deadline for implementation of the customer choice pilot, preceded by necessary testing and system integration, ERCOT was required to “finalize” the design of the system in July 2000 (at the time of the Third Informational Filing in Project 21079). However, the stakeholder process for creating the Protocols documents was not complete at that time and the working groups continued their work, in the process described above – developing and changing the market design. Some of these market design changes do not have an impact on the system and will be easily implemented. However, some of the market design changes require changes to the system design. Most of these changes are represented in the Protocols document, in Exhibit A. A few of these changes still require some finalization through the stakeholder process.

These items include:

1. Provider of Last Resort (POLR) / System is designed to automatically send historical usage to POLR when a customer is sent to the POLR. Stakeholders suggest historical usage not be sent to the POLR unless the POLR requests it. (§ 12)
2. Voltage Support Service / System design does not currently include a compensation calculation. (§ 6)
3. QSE Default / The process for selection and designation of default QSE is under development.
(§ 16)
4. Black Start / Current system design uses a simple capacity multiplied by a fee to determine payment. The Protocols has a more complex formula that uses a rolling unit availability factor. (§ 6)
5. Generator Meter Split / Multiple owners of a single unit want to be able to split the generation meter for load (auxiliary power). Current system design does not accommodate split of auxiliary power load based on the allocation percentages for generation meters that are split. (§ 10).
6. Direct Load Control (DLC) / Profile development needed for DLC and the system design cannot currently support the use of this type of profile. (§ 18)
7. Balancing Up Load / Provisions are under development to allow loads acting as resources to bid in the Balancing Up Service ancillary service market. (§ 6)
8. Sub-QSE for Reliability Must Run (RMR) units / RMR units may not be included in a QSE’s resource portfolio for ancillary service bids. Provisions are needed to allow RMR units to have a "sub-QSE" to be able to bid in the ancillary service markets when the RMR is called upon by ERCOT.
9. Uninstructed Deviation Calculation / The calculation of uninstructed deviations needs to be revised to become an ERCOT-wide calculation. (§ 6)
10. DC Tie charges / Evaluation is needed regarding how exports over the Okla Union DC Tie should be treated in terms of ERCOT charges. (§ 4)
11. Ramp Rate for Schedule Control Error (SCE) / Ramp rates of resources should be considered in determining Schedule Control Error SCE for Balancing Energy Service providers. (§ 6)
12. SCE for Load Resources / Appropriate SCE calculation requirements are needed for loads acting as resources. (§ 6)
13. Uninstructed Deviation Renewable resources / Evaluate and address how uninstructed deviations from uncontrollable renewable resources should be treated. (§ 6)
14. Reliability Must Run (RMR) units / Evaluate possible change to current Protocols restriction on an RMR unit owner's use of that unit. (§ 6)
15. Alternative Dispute Resolution / Evaluate whether the default dispute resolution method should be mediation or arbitration. (§ 20)

ERCOT shall file, by early January, a supplement to this petition setting forth (1) the finalized language for the outstanding items listed above where consensus has been reached among the stakeholders and (2) a clear description of how the system will operate on June 1, 2001. This supplemental filing will be the result of the continuing stakeholder process to develop final Protocol language for resolution of outstanding issues and identify the “gaps” between the system design and the Protocols as filed today and as supplemented. The ERCOT Board will have the responsibility of setting priorities and timing for the implementation of Protocols provisions not in the current system design, reviewing the analysis by the stakeholders of the criticality of the features not currently in the design, and considering the cost of implementing those features.

IV. Notice and Expedited Schedule

ERCOT suggests that the appropriate notice for this proceeding is publication of notice in the Texas Register, e-mail notice to the e-mail group supporting RUG (the ISO Network Policy group, ), posting on the ERCOT website (http.//www.ercot.com), and direct notice to parties of record in PUCT Docket 21079 (Certification of Independent Organizations) and PUCT Project 22061 (ERCOT Certification). As indicated above, this filing will be posted on the ERCOT website by noon, November 3, 2000. At the time of this filing, ERCOT will issue electronic notice to the RUG e-mail group.

Final approval of the Protocols is necessary to meet the requirements for registration of market participants, testing of equipment and system integration with market participants, “mock market” system testing in April, and the beginning of single control area operation and the retail competition pilot project on June 1, 2001.[6] ERCOT must begin executing agreements with the market participants no later than March, 2001. In addition, ERCOT and market participants planning to participate as of June 1, 2001 must finalize all of their systems allowing adequate time to integrate and test a very complicated set of systems prior to the mock market system testing in order to achieve success in implementing a single control area operation and customer choice. Therefore, ERCOT requests that the Commission set forth an expedited schedule to allow for a final order regarding the Protocols by February or early March of 2001.

PRAYER

WHEREFORE, PREMISES CONSIDERED, ERCOT respectfully requests that the Commission issue an order and appropriate findings, as requested herein, to approve the ERCOT Protocols.

Respectfully Submitted,

Margaret Uhlig Pemberton

GENERAL COUNSEL

Mark A. Walker

SENIOR CORPORATE COUNSEL

Shari Heino

CORPORATE COUNSEL

By:______

Mark A. Walker Texas Bar No: 20717318

ERCOT

7200 N. Mopac, Suite 250

Austin, TX 78731

Tel. (512) 343-7215

Fax (512) 343-8134

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[1] PURA § 39.151 (d).

[2] PURA § 39.151 (i).

[3] Attendees included the following interested parties: ABB Energy Information Systems, ABB Power, AES, Alcoa Inc., Air Lliquide, Amerex Power Inc., American Electric Power, American Electric Power West (Dallas Center), American National Power, Aquila Power Corporation, Austin Energy, Avista Energy Inc., Big Country Electric Cooperative, Bluebonnet Electric Cooperative Inc., Brazos Electric Cooperative, Brownsville Public Utilities Board, Bryan Texas Utilities, Calpine, Cap Rock Electric Cooperative, Cargill-Alliant LLC, Central South West, Cinergy Services, Citizens Power Sales, City of College Station, City of Denton, City of Garland, City of Gonzales, City of Greenville, City of Weatherford, City Public Service San Antonio, CLECO, CNG Power Services Corporation, Cobisa Corp, Columbia Power Marketing Corp., Competitive Assets, Conoco Power Marketing Inc., Constellation Power Source, Coral Power L.L.C., DeWitt County, Dow, Duke Energy L.L.C., Dynegy, ECCO International, Enron, Entergy Power Marketing Corp., Electric Reliability Council of Texas, Excel, Frontier Assoc., FPL Energy, GreenMountain.com, Guadalupe-Blanco River Authority, ICC Energy Services, Jackson Electric Cooperative, Koch Power Services, Logica, Lower Colorado River Authority, Magic Valley Electric Cooperative, Medina Electric Cooperative, MorAm Energy Services Inc., New Century Energies, New Braunfels Utilities, New Energy Texas, Occidental Chemical, Oxypermian LTD, PacificCorp Power Marketing Inc., PanCanadian Energy Services, PECO Energy Company, Pedernales Electric Cooperative, PG&E, Power Choice Inc., Public Utility Commission, Rayburn Country Electric Cooperative, Reliant Energy, Reliant Retail, Robstown Utility Systems; Schulenburg Utilities, Sempra Energy Trading Inc., Sharyland Utilities L.P., Shell Energy, Shumate & Associates, SkyGen, Sonat Power Marketing Inc., South Texas Electric Cooperative, Southern Company Energy Marketing, Southwestern Electric Service Company, Southwestern Public Service, Sweeny Cogeneration Ltd. Partnership, T&D Co. Inc., Tenaska, Tex-La Electric Cooperative, Texaco Energy Services, Texas Apartment Association, Texas Electric Cooperatives, Texas Ind. Energy, Texas Municipal Power Agency, Texas New Mexico Power, Texas ROSE, Texas Utilities Electric Company (TXU), Tractebel, Vitol Gas & Electric L.L.C., Williams Energy Services Company.

[4] Each market group (investor-owned utilities, cooperative and river authorities, transmission dependent utilities, independent power producers, power marketers, retail marketers, and consumers) were allocated one seventh of the vote. Each group divided their vote according to those individuals in the group participating in that meeting. Non-voting members and non-members of ERCOT were included in the votes.

[5] Both of these provisions are part of the pending rule-making in PUCT Project 22255.

[6] For a fuller description of registration and other requirements, see http//www.texaschoiceprogram.com.