Message-ID: <9634712.1075844232073.JavaMail.evans@thyme> Date: Mon, 9 Apr 2001 08:28:00 -0700 (PDT) From: thane.twiggs@enron.com To: bruce.sukaly@enron.com, mike.curry@enron.com, jducote@enron.com, drew.tingleaf@enron.com, cahn@enron.com, jason.wiesepape@enron.com, berney.aucoin@enron.com, michelle.parks@enron.com, doug.gilbert-smith@enron.com, larry.jester@enron.com, joe.allen@enron.com, patrick.keene@enron.com, stacey.bolton@enron.com, leslie.lawner@enron.com, ron.mcnamara@enron.com, gloria.ogenyi@enron.com, lance.cunningham@enron.com, thane.twiggs@enron.com, nancy.hetrick@enron.com, clandry@enron.com, bevin.hunter@enron.com, jean.ryall@enron.com, preston.ochsner@enron.com Subject: Capacity Auction Agreement Working Group for ERCOT (CAAWG - ERCOT) and SPP (CAAWG - SPP) Cc: richard.shapiro@enron.com, james.steffes@enron.com, christi.nicolay@enron.com, mike.roan@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable Bcc: richard.shapiro@enron.com, james.steffes@enron.com, christi.nicolay@enron.com, mike.roan@enron.com X-From: Thane Twiggs X-To: bruce.sukaly@enron.com, mike.curry@enron.com, jducote@enron.com, drew.tingleaf@enron.com, cahn@enron.com, Jason R Wiesepape, Berney C Aucoin, Michelle Parks, Doug Gilbert-Smith, Larry Jester, Joe Allen, Patrick Keene, Stacey Bolton, Leslie Lawner, Ron McNamara, Gloria Ogenyi, Lance Cunningham, Thane Twiggs, Nancy Hetrick, clandry@enron.com, Bevin Hunter, Jean Ryall, Preston Ochsner, Paul Radous/Enron@EnronXGate X-cc: Richard Shapiro, James D Steffes, Christi L Nicolay, Mike Roan X-bcc: X-Folder: \Richard_Shapiro_June2001\Notes Folders\Discussion threads X-Origin: SHAPIRO-R X-FileName: rshapiro.nsf The Capacity Auction Agreement Working Group for ERCOT (CAAWG - ERCOT) will= =20 be the forum to work on the implementation of the standard form agreement a= nd=20 resolution of issues related to using capacity auction products in the=20 ancillary services markets of ERCOT. The CAAWG - ERCOT will hold its meetin= gs=20 at the Commission where a member of the Commission's Market Oversight=20 Division will be present. This group will be filing its final work product= =20 in Central Records at 3 pm on Friday, May 4, 2001, for public comment prior= =20 to consideration at the Commission's June 14, 2001 Open Meeting.=20 The SPP Stakeholders will be filing a standard form agreement and resolutio= n=20 of issues related to the use of capacity auction products in the SPP=20 ancillary services markets at the Commission at 3 pm on Friday, May 4, 2001= =20 for public comment prior to consideration at the Commission's June 14, 2001= =20 Open Meeting. Because the structure of the SPP ancillary services market is= =20 still under development, the focus will be on ERCOT and input and assistanc= e=20 from SPP staff will be sought in the coming weeks. The Working Groups are a direct result of the PUCT Capacity Auction Order. = =20 The current time line proposes meeting weekly as Stakeholders to work to=20 resolve the issues, schedules and final products to be included in the=20 auction this fall. Under the current proposal the Capacity Auction Product= s=20 will be Baseline, Gas Intermediate, Gas Cyclic and Gas Peaking. Each of th= e=20 PGCs must auction 15% of the Texas Jurisdictional Installed Generation=20 Capacity. The capacity will be sold as a "slice of the system" of each of= =20 the divesting PGCs and will not be for any specific unit. During the month= s=20 of March, April May, October, and November of each year the available=20 entitlements may be reduced proportionately to the average planned plant=20 outage. With respect to the firmness of the products, the PUCT found that= =20 the products should be 100% financially firm to provide potential buyers of= =20 the entitlements certainty in the products that they are buying. Forced=20 outages are limited to 2.0% of the hours of the entitlement. The Power Generation Companies (PGCs) have recommended using the EEI Maste= r=20 Power Purchase and Sale Agreement and Schedule CA will describe the product= s=20 available for auction. A copy of Schedule CA will be attached below for yo= ur=20 review and comment. Please note that the Schedule CA is not a final docume= nt=20 and is an initial proposal from the PGCs. Your review and comments will be= =20 essential. Also, if you have any questions or comments as to the process o= f=20 the CAAWG or the auction process in general please feel free to call me. T= he=20 working group will meet each Wednesday for the balance of April after which= =20 the working group will meet May 1st and May 2nd in anticipation of the=20 proposed May 4th filing date. After the filing, Enron will have the=20 opportunity to file written comments with the PUCT. The Auction process=20 under the rule must be completed prior to September 1, 2001 for the initial= =20 auction period. The following is an initial list of issues. =20 1. What is the timing of schedules for each of the products from the buyer = of=20 the entitlement to the seller of the entitlement. 2. Are ancillary services available from the Baseload product? TXU has=20 stated that they cannot provide A/S from their Baseload units. As such,= =20 should A/S be removed from all Baseload product offerings from all PGCs so= =20 that there is a standard product or should the Baseload offerings include= =20 ancillary services when and where available. The argument distills to if t= he=20 entitlement is more valuable in the market as a standardized product or a= =20 differentiated product that may or may not include A/S. 3. What is the delivery point for the entitlement and other operational=20 issues? Should it be a single bus, multiple busses or congestion zones. = =20 Congestion zones may change each year, under the current auction schedule,= =20 you would bid for the product before you know the final congestion zone. 4. How (or if possible) can responsibility transfers be used for balancing= =20 energy? 5. Who will receive OOM payments? 6. What about compensation for other A/S payments? 7. Does released capacity exist, should it exist at all? If so, what happe= ns=20 when the capacity is released. The PGC would like the offering to look lik= e =20 a call option. If the option is not exercised by scheduling, then the=20 capacity is deemed released. This is the interpretation of the PGC=01,s an= d=20 not necessarily that of the PUCT or other Stakeholders. 8. How much of a product or entitlement is available in A/S? The order adopting the final rule can be found at =20 http://www.puc.state.tx.us/rules/rulemake/21405/121900adt.pdf the actual = =20 rule starts at page 41 of 65. Please review and comment. Thane Thomas Twiggs Enron Corp 1400 Smith Street Houston, Texas 77002 713-853-3199 Voice 713-408-4463 Mobile 713-646-8272 Fax 877-968-8967 Digital Pager or 8779688967@skytel.com