Message-ID: <33032850.1075862455727.JavaMail.evans@thyme> Date: Fri, 2 Nov 2001 10:55:13 -0800 (PST) From: j.kaminski@enron.com To: vkaminski@aol.com Subject: FW: ERCOT TCR votes Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable X-From: Kaminski, Vince J X-To: 'vkaminski@aol.com' X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst -----Original Message----- From: =09Lin, Martin =20 Sent:=09Wednesday, October 31, 2001 1:15 PM To:=09Shanbhogue, Vasant Cc:=09Kaminski, Vince J Subject:=09ERCOT TCR votes Lance and I participated in the Wholesale Market Subcommittee (WMS) meeting= at ERCOT yesterday. WMS was meeting to vote on various aspects of the pro= posed TCR design. I'm happy to report that most votes went our way and the= vote we lost does not matter significantly to Enron. The following is a brief summary of issues and the votes. 1. Derating We oppose derating. I presented a few PowerPoint slides to advocate our po= sition. Amorng the proposals were: a) issue 100% of the commercially significant constraint (CSC) limit with = non-deratable TCRs b) issue 100% of the CSC limit, but with deratable TCRs c) issue < 100% of the CSC limit with non-deratable TCRs d) issue X% of the CSC limit as non-deratable and 100-X % as deratable. WMS selected option (a), where 60% of the total would be made available in = the annual auction and the remainder would be auctioned off monthly. All T= CRs would be non-deratable. 2. Closely Related Elements The CSC is a single line. The proposition is to introduce closely related = elements (CREs) to create a flowgate equivalent for the CSC. There were se= veral votes on how to develop the CREs, if allowed, and what to do about ce= rtain units that would complicate congestion management with CREs. We were= satisfied with the decision to allow CREs, have them determined in advance= of the year (as is done with the CSCs), and to prohibit certain units from= participating in the balancing energy market when they fall between the CS= C and a CRE. 3. TCR Primary Auction single party quantity limit Should a single entity be allowed to acquire the entire lot of TCRs availab= le in an auction? We think so. If a party is willing to pay more than any= body else for the TCRs, that party should be allowed to have them. Since T= CRs have no value beyond the realized congestion, there is always the alter= native to simply pay the congestion. If all TCRs are held by one party who= wishes to charge excessive prices for them, everybody would opt to pay con= gestion. The only game potential is that a party with market power in bala= ncing energy can manipulate price spreads and gain from the TCR position. = This is a result of TCRs being financial and can be done whether the party = with market power holds all TCRs or not. Furthermore, there is no way to e= nforce limited ownership in the secondary market, so a party wishing to con= trol all TCRs can buy them in the secondary market or gain effective financ= ial control. We lost to vote to allow for complete ownership, but this pro= vision has little effect on the market anyway.