Subject: ERCOT Board Meeting
From: [email-masked]
To: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Cc: [email-masked], [email-masked]
Date: Wed, 16 May 2001 06:36:00 -0700 (PDT)

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

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