Message-ID: <8579608.1075844240811.JavaMail.evans@thyme> Date: Wed, 16 May 2001 06:36:00 -0700 (PDT) From: thane.twiggs@enron.com To: 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, pochsner@enron.com, bevin.hunter@enron.com, jean.ryall@enron.com, joe.allen@enron.com, patrick.keene@enron.com, doug.gilbert-smith@enron.com, christopher.ahn@enron.com, james.steffes@enron.com, christi.nicolay@enron.com, mike.curry@enron.com, drew.tingleaf@enron.com, larry.jester@enron.com Subject: ERCOT Board Meeting Cc: richard.shapiro@enron.com, dietrich.janet@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: richard.shapiro@enron.com, dietrich.janet@enron.com X-From: Thane Twiggs X-To: Stacey Bolton, Leslie Lawner, Ron McNamara, Gloria Ogenyi, Lance Cunningham, Thane Twiggs, Nancy Hetrick, clandry@enron.com, pochsner@enron.com, bevin.hunter@enron.com, Jean Ryall, Joe Allen, Patrick Keene, Doug Gilbert-Smith, Christopher Ahn, James D Steffes, Christi L Nicolay, Mike Curry, Drew Tingleaf, Larry Jester X-cc: Richard Shapiro, dietrich janet X-bcc: X-Folder: \Richard_Shapiro_June2001\Notes Folders\Discussion threads X-Origin: SHAPIRO-R X-FileName: rshapiro.nsf The ERCOT Board met yesterday in Austin to discuss among other things the implementation of the Texas Choice Pilot and the single control area under the control of the ERCOT ISO. Below are the primary items of interest. 1. ERCOT proposed the following plan to implement the Pilot program and the wholesale: May 25, 2001 ERCOT begins to transfer security analysis to the ESCA system Participants able to start viewing network conditions, preliminary load forecasts, preliminary A/S market requirement analysis, and retail load profiles ERCOT begins to manage and publish participant information and process customer service requests June 1, 2001 ERCOT initiates switch processing from competitive retailers starting with small volumes and to be completed by July 1, 2001 (this is only the switch request, power does not "flow" from the REP until the billing cycle after July 6, 2001). ERCOT begins to process retail meter read information. Participants begin to enter outages in ERCOT systems (this will be parallel to current outage system entry). ERCOT will begin to publish distribution and transmission loss factors to the market. June 8, 2001 ERCOT Begins to complete data aggregation functions and initiates UFE calculations/analysis. ERCOT's A/S market requirements and QSE obligation Calculations are ready for sing control area operations ERCOT begins to execute the production settlement algorithms. The settlement results are not binding. ERCOT begins to transfer grid security decisions to the new systems Data aggregation allows initial calculations of UFE to be made visible to the market providing energy accounting information July 6, 2001 Frequency Control. ERCOT begins single control area operation and controlling frequency. The existing control area replaced with the single control area run by ERCOT. Wholesale Markets. ERCOT administers the regulation, balancing energy, and reserve markets. ERCOT starts clearing prices as part of single control area operations. The wholesale competitive market, as defined by the protocols is initiated with ERCOT settling A/S markets centrally. ERCOT begins to execute financial transfer processes as a result of binding settlement with participants QSEs must have completed qualification activities While the proposal satisfies many of the competing concerns of the Stakeholders and the PUCT, there are a few outstanding issues that remain. ERCOT will begin switching load transfer requests on June 1 2001, but actual settlement and energy flow will not occur until after the wholesale market opens on July 6, 2001. Enron has submitted a proposal that would allow the retail market to decouple from the wholesale market which would allow the wholesale market time to remedy the system limitations and the retail market could begin June 1, 2001. Under the ERCOT timeline if the wholesale market is not ready by July 6, 2001 and the switch requests have already begun, then there is no method to serve a customer full requirements without the ability of the REP to purchase balancing energy and other A/S other than purchasing under current tariff. I can provide a copy of the Enron proposal to those who are interested. Another concern is for reliability of the system. Some parties question the wisdom of opening the wholesale market in the middle of the summer peak, rather than waiting until the summer peak has passed. 2. Credit Standards. The Board also voted on language for the surety bonds. There has been a debate as to whether ERCOT should allow security bonds in light of what has happened in California and the surety bond that was underwritten by AIG. At this point, the PUCT order requires ERCOT to accept a surety bond, however, ERCOT is trying to tighten the payment language. The language that the board approved will be forwarded when I get the correct language. The board approved the addition of BBB- credit to the credit limit matrix. 3. New Power Company made an unsuccessful appeal for corporate membership. New Power argued that they were technically not an affiliate of EPMI who holds the Corporate Membership. EES for example has associate member status. It was pointed out by ERCOT that EPMI listed New Power as a corporate affiliate on their application for corporate membership. Marianne Carroll, represented New Power in the appeal, and stated that EPMI did not ask her advice prior to listing New Power as affiliate. An additional rationale cited by New Power was that in the future Reliant Energy wants to "spin off" their generation company and that when they do, they should be allowed a Corporate membership as well. I am concerned about the appearance of the appeal by New Power, it looked like an attempt by Enron to sway the process in "their" favor by getting additional votes on ERCOT issues. 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