WMS Report
VCMRR Number / 013 / VCMRR Title / Clarifications to Verifiable Cost Appeals ProcessDate of Decision / May 4, 2016
Action / Tabled
Timeline / Normal
Proposed Effective Date / To be determined
Priority and Rank Assigned / To be determined
Verifiable Cost Manual Sections Requiring Revision / 12, Appealing Rejected Verifiable Costs
Related Documents Requiring Revision/Revision Requests / Nodal Protocol Revision Request (NPRR) 769, Alignment with VCMRR013, Clarifications to Verifiable Cost Appeals Process
Revision Description / This Verifiable Cost Manual Revision Request (VCMRR) clarifies the process for appeal of an ERCOT denial of submitted Verifiable Costs. The clarifications address appeals timelines and ERCOT representation in the appeals process.
The related accompanying NPRR clarifies Alternative Dispute Resolution (ADR) processes subsequent to a denied appeal of submitted Verifiable Costs.
Reason for Revision / Addresses current operational issues.
Meets Strategic goals (tied to the ERCOT Strategic Plan or directed by the ERCOT Board).
Market efficiencies or enhancements
Administrative
Regulatory requirements
Other: (explain)
(please select all that apply)
Business Case / This VCMRR, along with the accompanying NPRR, adds transparency to the appeals process for Verifiable Costs, and clarifies that an ADR proceeding is the next level of appeal following rejection of a Filing Entity’s Verifiable Costs.
WMS Decision / On 5/4/16, WMS unanimously voted to table VCMRR013. All Market Segments were present for the vote.
Summary of WMS Discussion / On 5/4/16, some participants expressed the concern that VCMRR013 adds more process without any additional value since the current ADR process is already available to Market Participants to resolve Verifiable Cost related disputes. Proponents of VCMRR013 acknowledged that VCMRR013 adds a layer of process to the appeal of Verifiable Cost, but opined that this additional layer may resolve some Settlements disputes early in the dispute process making a full-blown ADR proceeding unnecessary. Participants agreed that a WMS decision regarding VCMRR013 should be postponed until after PRS has reviewed related NPRR769.
Sponsor
Name / Mark Ruane
E-mail Address /
Company / ERCOT
Phone Number / 512-248-6534
Cell Number / Not applicable
Market Segment / Not applicable
Market Rules Staff Contact
Name / Kellly Landry
E-Mail Address /
Phone Number / 512-248-4630
Comments Received
Comment Author / Comment Summary
None
Market Rules Notes
None
Proposed Verifiable Cost Manual Language RevisionSection 12: Appealing Rejected Verifiable Costs
This section of ERCOT’s Verifiable Cost Manual describes the policies and procedures that apply when a Filing Entity wishes to appeal a rejection of their Verifiable Costs.
Appealing Verifiable Cost Rejections
If ERCOT denies a Filing Entity’s Verifiable Cost submission (or a portion thereof) or if ERCOT rescinds its prior approval of a Filing Entity’s Verifiable Cost submission (or a portion thereof), the Filing Entity may appeal ERCOT’s decision.
If any additional costs are approved as a result of the appeal process, the additional costs will only be used going forward. The newly approved costs will not be used to resettle prior Operating Days. If the inclusion of the newly approved costs represents a shift in ERCOT’s Verifiable Cost doctrine, this Manual will be updated and, if necessary, Nodal Protocol Revision Requests will be drafted. These updates will inform Market Participants of the doctrinal shift, will allow similarly situated Filing Entities to submit analogous costs, and, thus, will ensure that ERCOT approves Verifiable Costs without bias.
Verifiable Cost Appeal Process and Timeline
(1)There are [undetermined] levels of review[1] available to Filing Entities wishing to appeal a rejection of their Verifiable Costs. They are as follow:
First Level of Appeal
It is the responsibility of Filing Entities to initiate appeals of rejected Verifiable Costs. This is done by submitting an written appeal to ERCOT via a Service Request. The Service Request is available on the ERCOT Market Information System (MIS). The Service Request must be submitted using the Authorized Representative’s Digital Certificate.
(2)Appeals must be submitted no more than twenty (20) Business Days after ERCOT informs a Filing Entity of its final decision and the rejection of a Filing Entity’s Verifiable Cost submission. If a Filing Entity does not submit an appeal within theis twenty (20) Business Day period, the Filing Entity is deemed to have accepted the rejectionERCOT’s determination of approved Verifiable Costs.
(3)Subsequent to the filing of an appeal, a Filing Entity may request a A Rreview Mmeeting between the appealing Filing Entity and with ERCOT to allow the Filing Entity an opportunity to provide any clarification or information supporting the appeal. The review meeting must be scheduled to occur at a mutually convenient time withinno more than twenty (20) Business Days of aafter the Filing Entity initiating ansubmitted the appeal. Theis Rreview Mmeeting may be held over the phone. When scheduling a Rreview Mmeeting, the Filing Entityies must name a primary and an alternate representative. ERCOT shall designate one or more director-level (or more senior) representatives, who must be external to ERCOT’s Verifiable Cost function, to meet with the Filing Entity at the review meeting.The Filing Entity’s representative will meet with [TBD ERCOT employee(s)], who will represent ERCOT and who is outside of the Settlements and Billing Department.
(4)Both ERCOT and the appealingThe Filing Entity must submit a position paper for review by the ERCOT representative(s) designated in accordance with paragraph (3) above to each otherERCOT twono more than twenty (20) Business Days before the Review Meetingafter submitting the appeal. These papers are toThe position paper must:
(a)Explain why a cost or a portion thereof should or should not be included in the Filing Entity’s Verifiable Costs;
(b)Include copies of documentation that proves the costs were incurred; and
(c)As applicable, Rreference all sections within the Nodal Protocols, this Manual, or oOther Bindingcontrolling dDocuments that supports inclusion or exclusion of the disputed costs.
The goal of this first level of appeal is to reach an agreement and understanding between ERCOT and the Filing Entity as quickly as possible by providing dialog between the Filing Entity and a representative of ERCOT that is external to the Settlements and Billing department.(5) ERCOT will provide Notice of its appeal decision to the Filing Entity, and it shall provide an explanation of the rationale underlying the decision.
(6)
If [TBD ERCOT employee(s)], finds agrees with the Filing Entity’s arguments and position paper to be persuasive, ERCOT will update the Filing Entity’s Verifiable Costs to the extent approved by the representative(s)ERCOT. The inclusion ofAny adjustment to these costs will take effect not more than threefive (35) Business Days after approval by ERCOT’s representative(s). ERCOT shall specify the effective date in the Notice provided pursuant to paragraph (5) above.
(7)If additional costs are approved as a result of the appeal process, the additional costs will only be used prospectively from the date specified in paragraph (6) above and shall not be used to resettle historic Operating Days.
(8)If, as a result of the appeal, ERCOT determines that the Verifiable Cost Manual and/or related Protocols should be revised, ERCOT will draft and submit one or more Verifiable Cost Manual and/or Protocol revision requests, as applicable, through the appropriate revision request process.
(9)ERCOT will make a decision on an appeal no more than forty (
If ERCOT’s representative(s) is unpersuaded by the Filing Entity, the rescission or rejection stands.
If at any time it becomes apparent from discussions between the Filing Entity and ERCOT that no agreement will be reached or that the positions of the Filing Entity and ERCOT are diametrically opposed, this level of review should quickly be terminated to allow the Filing Entity to elevate their appeal to the next level.
Review at this level must terminate within 5 40) Business Days after an appeal is submitted.
(10)If an appeal is rejected, in whole or in part, the Filing Entity may avail itself of the ADR process in accordance with Protocol Section 20, Alternative Dispute Resolution Procedure.
If no agreement is reached or if ERCOT’s representative does not make a decision in this time, the appeal is deemed denied and the rejection/rescission stands.
Second Level of Appeal
This level of appeal is only available to Filing Entities that unsuccessfully appealed ERCOT’s treatment of their Verifiable Costs through the first level of appeal. That is, this level of appeal is only open to Filing Entities that timely appealed Settlements and Billing’s rejection of their costs but were unable to persuade ERCOT’s representative to approve inclusion of a cost (or the extent requested).
A Filing Entity may only appeal the costs or amounts that were rejected by ERCOT’s representative in the first level of appeal. If ERCOT’s representative and a Filing Entity reach an understanding in the first level of appeal, their agreed upon treatment of a cost is not appealable. For example, if a Filing Entity and ERCOT’s representative agree to include 50% of disputed cost “A” but do not agree as to the treatment of disputed cost “B”, a Filing Entity may only appeal for the inclusion of cost “B”. On the other hand, if a Filing Entity never assents to the partial inclusion of cost “A”, the Filing Entity may appeal to have all of cost “A” included.
Filing Entities initiate this second level of appeal by submitting an appeal to ERCOT through MIS.
Appeals must be submitted no more than ten (10) Business Days after the termination of the first level of appeal, as determined by the status shown on the MIS. If a Filing Entity does not submit an appeal within this 10 Business Day period, the Filing Entity loses their right to appeal.
Appeal at this level is determined by [undetermined party—possibly IMM or ERCOT’s unaffiliated members of BoD]. The [undetermined party] will make a decision at [undetermined place/time—next board meeting? a meeting with ERCOT and the Filing Entity within 60 days?].
To aid [undetermined party] in making their decision, they will receive the position papers and meeting notes from the first level of appeal. Additionally, representatives of ERCOT and the Filing Entity must attend the [undetermined place/meeting] to answer any questions that they [undetermined party] may have.
If the [undetermined party] approves the inclusion of any additional costs or amounts, ERCOT will update the Filing Entity’s Verifiable Costs to the extent approved. The inclusion of these costs will take effect not more than three (3) Business Days after approval by the [undetermined party].
If [undetermined party] denies inclusion of the appealed costs or amounts, ERCOT’s the rescission or rejection stands.
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PUBLIC
[1] At this time, it is unknown how many levels of appeal will be available or all parties that will be involved. Specific details in this section that are unknown are represented by a generic description enclosed in brackets. ERCOT is awaiting responses from key parties and is unable to fully detail the appeal process until these are received. ERCOT nevertheless included this incomplete and general framework in the Manual in order to inform Market Participants and to encourage Market Participants to submit feedback and suggestions.