Part 2.
PUBLIC UTILITY COMMISSION OF TEXAS
Chapter 25.
SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS
Subchapter O. UNBUNDLING AND MARKET POWER
3.
CAPACITY AUCTION
16 TAC §25.381
The Public Utility Commission of Texas (commission) proposes
an amendment to §25.381 relating to Capacity Auctions. The proposed amendment
will reflect previous good cause exceptions and modify the existing rule to
reflect the experience gained from the initial capacity auctions, in regards
to the procedures by which affected affiliated power generation companies
(PGCs) will auction entitlements to 15% of their Texas jurisdictional installed
generation capacity. Project Number 24492 is assigned to this proceeding.
As part of the drafting process, commission staff conducted workshops in
Austin, Texas to receive input from potentially affected persons on November
7, 2001, November 14, 2001, and November 28, 2001. Informal comments were
solicited at those workshops.
Matthew Troxle, Senior Rate Analyst, Electric Division, has determined
that for each year of the first five-year period the proposed section is in
effect there will be no fiscal implications for state or local government
as a result of enforcing or administering the section.
Mr. Troxle has also determined that for each year of the first five years
the proposed section is in effect the public benefit anticipated as a result
of enforcing the section will be increased competition and liquidity in the
wholesale generation market, readily available generation supplies to purchasers,
and a variety of products to assist both wholesale market participants and
retail electric providers in servicing retail customers, thus ultimately resulting
in lower electric energy prices for those customers. Furthermore, there will
be no adverse economic effect on small businesses or micro-businesses as a
result of enforcing this section. There may be economic costs to affected
PGCs and parties interested in participating in the auctions through the preparation
and evaluation of bids and in the compliance with applicable credit requirements.
These costs are likely to vary from business to business, and are difficult
to ascertain. However, it is believed that the benefits accruing from implementation
of the proposed section will outweigh these costs. Winners of the auctions
will be required to make payments to the affected PGCs for the capacity and
energy as directed by the rule.
Mr. Troxle has also determined that for each year of the first five years
the proposed section is in effect there should be no effect on a local economy,
and therefore no local employment impact statement is required under Administrative
Procedure Act §2001.022.
The commission seeks comments on the proposed amendment from interested
persons. Comments should be organized in a manner consistent with the organization
of the proposed rule. When commenting on specific subsections of the proposed
rule, parties are encouraged to describe "best practice" examples of regulatory
policies, and their rationale, that have been proposed or implemented successfully
in other states already undergoing electric industry restructuring, if the
parties believe that Texas would benefit from application of the same policies.
The commission is only interested in receiving "leading edge" examples which
are specifically related and directly applicable to the Texas statute, rather
than broad citations to other state restructuring efforts.
In addition to comments on specific subsections of the proposed rule, the
commission requests that parties specifically address the following issues:
1. In regards to ongoing creditworthiness:
a. Should a seller be allowed to require additional security from a purchaser,
if the creditworthiness or financial responsibility of the purchaser becomes
unsatisfactory, in the reasonable judgement of the seller, at any time during
which the entitlement is in effect?
b. What are the positives and negatives associated with allowing additional
security to be required from the purchaser?
c. Should an additional security provision be in place for the seller as
well as the purchaser?
2. In regards to auction mechanics:
a. Should non-Electric Reliability Council of Texas, Inc. (ERCOT) and non-stranded
cost companies be allowed to have different auction processes or mechanics
from other companies?
b. What are the potential gains to allowing differing processes or mechanics
and what potential detriments exist in regards to efficiency and loss of standardization?
3. Should the PGCs involved in the capacity auction use a common auction
platform?
4. Should the Capacity Auction include a switching rule to minimize price
differences across PGCs?
Comments on the proposed amendment (16 copies) may be submitted to the
Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue,
P.O. Box 13326, Austin, Texas 78711-3326, within 30 days after publication.
Reply comments may be submitted within 45 days after publication. The commission
invites specific comments regarding the costs associated with, and benefits
that will be gained by, implementation of the proposed section. The commission
will consider the costs and benefits in deciding whether to adopt this section
as proposed. All comments should refer to Project Number 24492.
The commission staff will conduct a public hearing on this rulemaking,
if requested under Government Code §2001.029, in the Commissioners' Hearing
Room located on the 7th floor of the William B. Travis Building, 1701 North
Congress Avenue, Austin, Texas 78701, on Tuesday, February 26, 2002, at 9:30
a.m. The request for public hearing must be made within 30 days after publication.
This amendment is proposed under the Public Utility Regulatory
Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement
2002) (PURA), which provides the Public Utility Commission with the authority
to make and enforce rules reasonably required in the exercise of its powers
and jurisdiction. The commission also proposes this rule pursuant to PURA §39.153,
which grants the commission authority to establish rules that define the scope
of the capacity entitlements to be auctioned, and the procedures for the auctions.
Cross Reference to Statutes: Public Utility Regulatory Act §§14.002,
31.002, 39.153, 39.201, and 39.262.
§25.381.Capacity Auctions.
(a) - (b)
(No change.)
(c)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context indicates
otherwise:
(1)
Affiliated power generation company (PGC)--
Any
[
(2)
Assigned units--The PGC-specific generating
units that form the block of capacity from which an entitlement is sold.
(3)
[
(4)
[
(5)
Capacity auction product--One of the following:
"baseload", "gas-intermediate", "gas-cyclic", or "gas-peaking". Each capacity
auction product is further described in subsections (f) and (g) of this section.
(6)
[
(7)
[
(8)
Credit rating--A credit rating on an entity's
senior unsecured debt, the entity's corporate credit rating, or the entity's
issuer rating.
(9)
[
(10)
[
(11)
Entitlement or capacity entitlement--The
right to purchase and receive, under the applicable capacity auction master
agreement, a block of 25 megawatts (MW) of electrical capacity and energy
from the assigned units for a specific capacity auction product for one calendar
month.
(12)
Forced outage--An unplanned component
failure (immediate, delayed, postponed, startup failure) or other condition
that requires the unit be removed from service immediately, within six hours,
or before the end of the next weekend.
(13)
Holder--A person or entity that has acquired
ownership of an entitlement under the terms of the applicable capacity auction
master agreement.
(14)
[
(A)
Generating
[
(B)
Generating
[
(C)
Generating
[
[(9)
Power generation company (PGC)--As defined
in §25.5 of this title.]
(15)
[
(16)
[
(d)
General requirements. Subject to the qualifications for
auction entitlements and the auction process described in subsections (e)
and
(h)
[
(e)
Product types and characteristics.
(1)
Available entitlements and amounts. The following [
[(A)
Baseload.]
[(i)
Description. For each baseload capacity entitlement, the
scheduled power shall be provided to the purchaser during the month of the
entitlement seven days per week and 24 hours per day, in accordance with the
scheduling requirements and limitations provided in paragraph (5)(C)(i) of
this subsection.]
[(ii)
Block size. Each baseload capacity entitlement shall
be 25 MW in size.]
[(iii)
Fuel price. The fuel cost owed to the affiliated PGC
by the entitlement purchaser for the dispatched baseload power will be the
average cost of coal, lignite, and nuclear fuel (in dollars per MWh) based
on the company's final excess cost over market (ECOM) model as determined
in the proceeding pursuant to PURA §39.201 as projected for the relevant
time period. Electric utilities without an ECOM determination in their proceeding
conducted pursuant to PURA §39.201 shall propose, for commission review,
an average cost of fuel in a similar manner.]
[(iv)
Starts per month. The purchaser of a baseload capacity
entitlement must take power from the entitlement seven days per week and 24
hours per day and is therefore not permitted to direct the affiliated PGC
to make any starts per month of baseload capacity entitlements.]
[(B)
Gas - intermediate.]
[(i)
Description. For each gas-intermediate capacity entitlement,
30% of the entitlement shall be provided to the purchaser during the month
of the entitlement seven days per week and 24 hours per day with the remainder
of the block scheduled as day-ahead shaped power, or hour ahead for ancillary
services, in accordance with the scheduling requirements and limitations provided
in paragraph (5)(C)(ii) of this subsection.]
[(ii)
Block size. Each gas-intermediate capacity entitlement
shall be 25 MW in size. ]
[(iii)
Fuel price. The fuel cost owed to the affiliated PGC
by the capacity purchaser for the gas-intermediate capacity dispatched will
be 9,900 British thermal units per kilowatt-hour (BTU/kWh) heat rate times
the minimum kilowatt-hours (kWh) that must be taken for gas-intermediate capacity
as required in paragraph (5)(C)(ii) of this subsection times the first-of-the-month
index posted in the publication "Inside FERC" for the Houston Ship Channel
for the month of the entitlement. For power dispatched above the minimum kWh
required, the additional fuel price owed to the affiliated PGC will be 9,900
BTU/kWh times the kWh of gas-intermediate power dispatched pursuant to the
entitlement above the minimum requirement times the daily gas price. ]
[(iv)
Starts per month. The purchaser of gas-intermediate capacity
must take a minimum of 30% of the power from the entitlement and is therefore
not permitted to direct the affiliated PGC to make any starts per month of
gas-intermediate capacity entitlements.]
[(C)
Gas - cyclic.]
[(i)
Description. The gas-cyclic entitlement shall be flexible
day-ahead shaped power and ancillary services.]
[(ii)
Block size. Each gas-cyclic capacity entitlement shall
be 25 MW in size.]
[(iii)
Fuel price. The fuel price owed to the affiliated PGC
by the capacity purchaser for gas-cyclic capacity dispatched will be 12,100
BTU/kWh times the kWh of the gas-cyclic power dispatched under the entitlement
times the daily gas price.]
[(iv)
Starts per month and associated costs. The purchaser
of gas-cyclic capacity shall be entitled to direct the selling affiliated
PGC to make up to the amount of starts per month of each entitlement of gas-cyclic
capacity allowed by the scheduling procedures adopted by the commission.]
[(D)
Gas - peaking.]
[(i)
Description. The gas-peaking entitlement shall be intra-day
power and ancillary services.]
[(ii)
Block size. Each gas-peaking capacity entitlement shall
be 25 MW in size. ]
[(iii)
Fuel price. The fuel price owed to the affiliated PGC
by the purchaser for gas-peaking capacity dispatched will be 14,100 BTU/kWh
times the kWh of the gas-peaking power dispatched under the entitlement times
the daily gas price.]
[(iv)
Starts per month and associated costs. The purchaser
of gas-peaking capacity shall be entitled to direct the selling affiliated
PGC to make unlimited starts per month of each entitlement of gas-peaking
capacity. ]
[(E)
Ancillary services. The owner of a capacity
entitlement may use it to meet ancillary services needs, if the needs may
be met in a manner that is consistent with procedures developed by the commission.
The amount of ancillary services available will be in proportion to the ancillary
services capabilities of the units that are used to define the capacity offered
in the different entitlement products. ]
[(F)
Other products. Upon showing of good
cause by the affiliated PGC and approval by the commission, an affiliated
PGC may propose to auction entitlements different from those described in
this subsection, including unit specific capacity.]
(2)
Forced outages.
(A)
For all entitlements except those described
in subparagraph (B) of this paragraph, if
[
(B)
For entitlements that are supported by
two or less generating units, the available reduction due to a forced outage
or emergency condition shall be the most recent three-year rolling average
of the forced outage rate for the unit(s) supporting the entitlement instead
of 2.0%. For example, if the most recent three-year average forced outage
rate for the unit(s) supporting an entitlement is 6.5%, then the firmness
of the product will become 93.5% instead of 98%.
(C)
Notification of any such reductions will take
place prior to the next scheduling period.
(3)
Planned outage. The average MW of monthly
planned outage for each product is determined over the past three years, then
times 12, to determine the total planned annual outage MW entitlements by
which the affiliated PGC can reduce its required commitment (this number shall
be rounded down to the nearest whole number). These "outage entitlements"
can then be removed from any of the five specified outage months (March, April,
May, October, and November) in any combination.
(4)
[
(5)
[
(6)
[
(A)
No possessory interest. The entitlements sold at auction
shall include no possessory interest in the unit or units from which the power
is produced.
(B)
No possessory obligations. The entitlements sold at auction
shall include no obligation of a possessory owner of an interest in the unit
or units from which the power is produced.
(C)
Scheduling. The purchaser shall have the right to designate
the dispatch of the entitlement, subject to paragraph (2) of this subsection
and the scheduling limitations provided for in the applicable Agreement
.
[
[(i)
Baseload. Baseload capacity entitlements
must be scheduled at a minimum of 80% of the block size. A baseload entitlement
purchaser may vary the amount of energy scheduled between 80% and 100% of
the block size on a day-ahead basis. Such schedule changes must be in hourly
increments of no more than +/- 10% of the block size per hour. Baseload capacity
entitlements can be scheduled only on a day-ahead basis. Nothing in this paragraph
affects the right or obligation of the owner of a baseload entitlement to
schedule the delivery of power from the entitlement through the independent
organization.]
[(ii)
Gas - intermediate. Gas-intermediate
entitlements can be scheduled on a day-ahead basis. Gas-intermediate ancillary
services can be scheduled on a day-ahead or hour-ahead basis. An entitlement
must be scheduled at a minimum of 30% of the block size, with a maximum allowable
hourly swing of +/- 25% of the block size. Other than for ancillary services,
there shall be no hour-ahead scheduling for intermediate capacity entitlements.]
[(iii)
Gas - cyclic. Gas-cyclic entitlements
shall be scheduled consistent with the scheduling procedures developed by
the commission.]
[(iv)
Gas - peaking. Gas-peaking entitlements
shall be scheduled consistent with the scheduling procedures developed by
the commission.]
(7)
[
(A)
[
(i)
[
(ii)
[
(iii)
[
(iv)
[
(v)
[
(B)
Unsecured credit.
(i)
For bidders with an investment grade credit rating. The
amount of credit available to a bidder relying on an investment grade credit
rating of itself or its guarantor will be determined according to procedures
set out below. If the bidding entity or its guarantor has an investment grade
credit rating and minimum equity of $100 million, the amount of credit available
will be determined using the lesser of $125 million, or a percentage of the
bidder's stockholder equity set out in the following table, except that the
amount of credit will be reduced to the extent appropriate to take into account
any outstanding commitments that a bidder has for existing capacity auction
entitlements.
Figure: 16 TAC §25.381(e)(7)(B)(i)
(ii)
If the bidder is a municipality or cooperative not publicly
rated. If the bidder is a municipality or electric cooperative that is not
publicly rated but has a minimum equity (patronage capital) of $25 million,
a minimum times-interest-earned ratio (TIER) of 1.05, a minimum debt service
coverage (DSC) ratio of 1.00, and a minimum equity-to-assets ratio of 0.15,
then the amount of credit will be the lesser of $125 million or 5.0% of the
bidder's unencumbered assets, except that the amount of credit will be reduced
to the extent appropriate to take into account any outstanding commitments
that a bidder has for existing capacity auction entitlements.
(iii)
If the bidder is a privately-held entity not publicly
rated. If the bidder is a privately-held entity that is not publicly rated,
but has a minimum equity of $100 million, a minimum tangible net worth of
$100 million, a minimum current ratio of 1.0, a maximum debt-to-capital ratio
of 0.60, and a minimum earnings before interest taxes depreciation and amortization
(EBITDA) to interest and current maturities of long term debt (CMLTD) of 2.0,
then the amount of credit will be the lesser of $125 million or 1.80% of the
bidder's stockholder equity, except that the amount of credit will be reduced
to the extent appropriate to take into account any outstanding commitments
that a bidder has for existing capacity auction entitlements.
(C)
[
(D)
If a bidder chooses to use a surety bond
to satisfy its credit requirements, then the form of such surety bond will
be negotiated in good faith between the bidder and the affiliated PGC and
reasonably acceptable by an issuer of surety bonds.
(E)
[
(F)
[
(G)
[
(f)
Product descriptions for capacity auctions
in ERCOT. The provisions in this subsection apply to capacity auctions in
ERCOT. Subsection (g) of this section contains provisions applicable to capacity
auctions in non-ERCOT areas.
(1)
Definitions.
(A)
The following words and terms, when used in this subsection
shall have the following meanings, unless the context indicates otherwise.
(i)
Balancing energy service down deployed--The number of megawatt-hours
(MWh) of balancing energy service down deployed from an entitlement.
(ii)
Balancing energy service up deployed--The number of MWh
of balancing energy service up deployed from an entitlement.
(iii)
Daily capacity commitment--The amount of capacity scheduled
by an entitlement owner that an affiliated PGC must make available from an
entitlement for the provision of energy or permitted ancillary services for
an operating day from an entitlement.
(iv)
Day-ahead schedule--A schedule submitted by an entitlement
owner to an affiliated PGC of the entitlement owner's scheduled usage of the
entitlement for the following operating day.
(v)
Default qualifying scheduling entity (QSE)--The QSE that
is designated by the entitlement owner to ERCOT as its default QSE.
(vi)
Energy scheduled--The final schedule for energy, for each
settlement interval, that an entitlement owner submits to an affiliated PGC,
subject to the limits on timing and amounts of schedules contained in the
capacity auction product descriptions.
(vii)
Energy deployed down--The sum of regulation energy down
energy deployed and balancing energy service down energy deployed.
(viii)
Energy deployed up--The sum of regulation energy up
energy deployed, responsive energy deployed, non-spinning energy deployed,
and balancing energy service up energy deployed.
(ix)
Grouped entitlements--All of the entitlements from an
affiliated PGC that an entitlement owner holds for a particular entitlement
month.
(x)
Grouped ancillary services--The amount of each type of
ancillary service available from each entitlement grouped by:
(I)
Type of ancillary service;
(II)
Type of capacity auction product; and
(III)
Congestion zone for those ancillary services that are,
or may be, dispatched by congestion zone.
(xi)
Hour-ahead schedule--A schedule other than a day-ahead
schedule submitted by an entitlement owner to an affiliated PGC no later than
one hour before the end of an adjustment period of the entitlement owner's
scheduled use of the entitlement for the operating hour for that adjustment
period.
(xii)
Non-spinning energy deployed--Energy deployed from the
non-spinning reserve service as determined under the procedures in paragraph
(2)(B) of this subsection.
(xiii)
Product--Electric capacity, energy, capacity auction
products or other product(s) related thereto as specified in a transaction
by reference to a product listed in the Agreement or as otherwise specified
by the parties in a transaction.
(xiv)
Regulation energy down deployed--Energy deployed down
from the regulation energy service as determined under the procedures of paragraph
(2)(B) of this subsection.
(xv)
Regulation energy up deployed--Energy deployed up from
the regulation service as determined under the procedures of paragraph (2)(B)
of this subsection.
(xvi)
Responsive energy deployed--Energy deployed from the
responsive reserve service as determined under the procedures of paragraph
(2)(B) of this subsection.
(xvii)
Two-day-ahead schedule--A schedule submitted by the
entitlement owner to the affiliated PGC of the entitlement owner's scheduled
usage of the entitlement for the operating day two days in the future.
(B)
The following terms have the respective meanings
given to them in the ERCOT protocols as amended from time to time:
(i)
Ancillary services;
(ii)
Balancing energy service;
(iii)
Congestion zone;
(iv)
Non-spinning reserve service;
(v)
Operating day;
(vi)
Operating hour;
(vii)
Regulation service;
(viii)
Responsive reserve service;
(ix)
Settlement interval; and
(x)
Zonal market clearing price.
(2)
General provisions.
(A)
Responsibility transfers.
(i)
The entitlement owner may not use an entitlement for the
provision of balancing energy service until a responsibility transfer (RT)
between the entitlement owner's and the affiliated PGC's respective QSEs is
established and operated in accordance with the ERCOT protocols for the deployment
of balancing energy service. The entitlement owner shall establish a separate
RT with the affiliated PGC for each congestion zone from which the entitlement
owner desires to provide balancing energy service.
(ii)
When ERCOT has developed the details and specifications
of RTs between QSEs, including without limitation, mechanics, settlement,
and communication, then, at the request of the entitlement owner, the parties
shall negotiate in good faith to establish the capability to use RTs between
their respective QSEs to:
(I)
Allow the entitlement owner to provide balancing energy
service from the entitlement; and
(II)
Allocate the cost of establishing that capability.
(iii)
The entitlement owner's QSE shall act as the controller
of RTs used for balancing energy service from an entitlement. The entitlement
owner's QSE shall use RTs to provide instructions regarding balancing energy
service to the affiliated PGC's QSE. These instructions shall comply with
all the limitations in the applicable capacity auction product description.
(iv)
Both the entitlement owner's QSE and the affiliated PGC's
QSE shall enter an inter-QSE trade in accordance with the ERCOT protocols
to represent an RT before any operating hour in which the entitlement owner
may wish to deploy balancing energy service from an entitlement.
(v)
The affiliated PGC's QSE is only responsible for complying
with RTs sent by the entitlement owner's QSE and is not responsible for ERCOT
instructions sent to the entitlement owner.
(vi)
The affiliated PGC and the entitlement owner shall rely
upon any integration of the RT over each settlement interval performed by
ERCOT. If ERCOT does not perform that integration, then the integration shall
be performed in a manner mutually agreed to by both parties.
(vii)
The entitlement owner is deemed not to have provided
any balancing energy service from an entitlement if the affiliated PGC loses
or does not receive the balancing energy service signal from ERCOT. The affiliated
PGC will promptly notify the entitlement owner if it does not receive or loses
the balancing energy service signal from ERCOT.
(B)
Deployment of energy from ancillary services. Subject to
the limitations and conditions set out in this subsection, and except when
the affiliated PGC is excused from hierarchical dispatch of ancillary services
under clause (i) or (v) of this subparagraph, the entitlement owner shall
be deemed to have dispatched ancillary services from the entitlements in the
entitlement group in a hierarchical order according to the requirements of
this subsection. Otherwise, ancillary services shall be dispatched for each
entitlement in an entitlement group independently.
(i)
Notice of grouped entitlements. Not later than five days
before the beginning of an entitlement month, the entitlement owner shall
give the affiliated PGC a written list of all entitlements from the affiliated
PGC that are held by the entitlement owner for that entitlement month. The
list shall contain sufficient detail for the affiliated PGC to identify the
entitlements held by the entitlement owner for that month, including without
limitation any unique entitlement number assigned by the affiliated PGC to
the entitlement and listed on the letter confirmation for the entitlement.
If the affiliated PGC does not timely receive this notice, then the affiliated
PGC is excused from its obligation to dispatch ancillary services on a hierarchical
basis under this section.
(ii)
Amount of ancillary services scheduled from entitlements.
(I)
The affiliated PGC shall track the amount of each ancillary
service for each operating hour and the amount of each ancillary service scheduled
by the entitlement owner for each operating hour, both for individual entitlements
and for each grouped ancillary service.
(II)
For ancillary services other than the balancing energy
service, which is determined by an RT, the amount of ancillary service scheduled
from each entitlement and for each grouped ancillary service for an operating
hour is the amount stated in the final timely schedule submitted by the entitlement
owner to the affiliated PGC for that operating hour for each entitlement in
the entitlement group.
(iii)
Deployed ancillary services.
(I)
For balancing energy service, the amount of energy deployed
is determined by the integration described in subparagraph (A) of this paragraph.
(II)
For all ancillary services other than balancing energy
service, the affiliated PGC shall track the deployment of ancillary services
from the entitlement group by each grouped ancillary service for each hour
in the entitlement month, except for hours in which the affiliated PGC is
excused from dispatching ancillary services on a hierarchical basis under
clause (i) or (v) of this subparagraph. The total amount of each grouped ancillary
service deployed in an hour shall be calculated by the product of:
(-a-)
The ratio of the amount of the grouped ancillary service
scheduled by the entitlement owner from its grouped entitlements to the total
amount of that specific ancillary service scheduled from resources in the
affiliated PGC's QSE;
(-b-)
Times the amount of energy deployed out of that grouped
ancillary service in a particular congestion zone or in ERCOT as a whole,
whichever is applicable.
(III)
For all ancillary services other than balancing energy
service, the amount of each ancillary service that ERCOT is deemed to have
deployed from each entitlement, for hours in which the affiliated PGC is excused
from dispatching ancillary services on a hierarchical basis under clause (i)
or (v) of this subparagraph, shall be calculated by the product of:
(-a-)
The ratio of the amount of that ancillary service scheduled
by the entitlement owner from the entitlement to the total amount of that
specific ancillary service scheduled from resources in the affiliated PGC's
QSE;
(-b-)
Times the amount of energy deployed out of that ancillary
service in a particular congestion zone or in ERCOT as a whole, whichever
is applicable.
(iv)
Hierarchical deployment of grouped ancillary services.
(I)
For determination of the contract price for each entitlement
in a grouped entitlement, ERCOT is deemed to have first deployed grouped ancillary
services that are deployed by congestion zone pursuant to subclause (III)
of this clause with the amount for each entitlement spread proportionally
among the owner's entitlements of that type in that congestion zone.
(II)
After deploying grouped ancillary services by congestion
zone pursuant to subclause (I) of this clause, ERCOT is deemed to have deployed
the remainder of each grouped ancillary service pursuant to subclause (III)
of this clause, with the amount for each type of entitlement spread proportionally
among the owner's entitlements of that type in ERCOT.
(III)
Deployed energy shall be assigned to the entitlement
owner's entitlements that scheduled those ancillary services on a hierarchical
basis as follows:
(-a-)
For incremental deployments:
(-1-)
First: Baseload entitlements;
(-2-)
Second: Gas-intermediate entitlements;
(-3-)
Third: Gas-cyclic entitlements; and
(-4-)
Fourth: Gas-peaking entitlements.
(-b-)
For decremental deployments:
(-1-)
First: Gas-peaking entitlements;
(-2-)
Second: Gas-cyclic entitlements;
(-3-)
Third: Gas-intermediate entitlements; and
(-4-)
Fourth: Baseload entitlements.
(v)
Exception to dispatching on hierarchical basis. The affiliated
PGC is not required to dispatch ancillary services from the entitlement group
on a hierarchical basis if the affiliated PGC does not have the information
necessary to dispatch ancillary services from the entitlement group in a hierarchical
fashion. Necessary information includes, but is not limited to, the signal
from ERCOT deploying balancing energy service or the signal from ERCOT deploying
other ancillary services.
(3)
Baseload product.
(A)
Baseload scheduling.
(i)
Schedule types. The entitlement owner shall submit a day-ahead
schedule for the entitlement. The entitlement owner shall submit a two-day-ahead
schedule for the entitlement if notified to do so by ERCOT.
(ii)
Timing of scheduling.
(I)
The entitlement owner shall submit day-ahead or two-day-ahead
schedules for the entitlement to the affiliated PGC no later than 8:00 a.m.
The entitlement owner shall submit hour-ahead schedules for ancillary services
from the entitlement to the affiliated PGC no later than one hour before the
deadline for the affiliated PGC's QSE to submit hour-ahead schedules to ERCOT.
(II)
On days that ERCOT allows QSEs to change their day-ahead
or two-day-ahead schedules to ERCOT by 1:00 p.m. for congestion or capacity
insufficiency, the entitlement owner may submit a revised day-ahead or two-day-ahead
schedule for energy from the entitlement to the affiliated PGC no later than
noon.
(III)
The entitlement owner may submit to the affiliated PGC
a revised day-ahead or two-day-ahead schedule for the non-spinning reserve
ancillary services from the entitlement no later than 1:45 p.m. The entitlement
owner cannot change the amount of energy scheduled in a revised schedule for
the non-spinning reserve ancillary services.
(IV)
No hour-ahead schedules are permitted for energy from
baseload entitlements. Hour-ahead schedules are permitted for ancillary services
from baseload entitlements.
(iii)
Schedule content. Each schedule shall specify, for each
settlement interval, the MW of energy scheduled to be delivered to the entitlement
owner from the entitlement and the MW of each permitted ancillary service
to be scheduled from the entitlement, subject to the scheduling limits in
clause (iv) of this subparagraph.
(iv)
Scheduling limits.
(I)
Minimum energy. The entitlement owner may not schedule
energy at less than 20 MW from the entitlement at any time during the month.
(II)
Ancillary services. The entitlement owner may use a baseload
entitlement to provide either responsive reserve service at a level of one
MW, and/or non-spinning reserve service, up to a combined total of three MWs.
The baseload entitlement may not be used for any other ancillary service.
Non-spinning reserve service may be provided from the entitlement in 30 minutes,
and responsive reserve service may be provided from the entitlement in ten
minutes.
(III)
Maximum changes. Subject to the minimum energy rate specified
in subclause (I) of this clause, the rate at which the entitlement owner schedules
energy in each hour generally cannot change more than plus or minus two MWs.
The following additional restrictions apply.
(-a-)
If the entitlement owner schedules or reserves any ancillary
services in an hour, then the level of energy scheduled shall be the same
in each settlement interval of the hour.
(-b-)
The maximum change in energy scheduled from the first
settlement interval in one hour to the first settlement interval in the next
hour is plus or minus two MWs.
(-c-)
The maximum change in energy scheduled from one settlement
interval to the next is plus or minus one MW.
(-d-)
The maximum change in ancillary services scheduled from
the first settlement interval in one hour to the first settlement interval
of the next hour is plus or minus three MWs.
(IV)
Starts. Because the entitlement owner shall schedule energy
from a baseload entitlement for every settlement interval, the entitlement
owner may not direct any starts of the entitlement.
(V)
Default schedule. If the entitlement owner does not submit
a timely day-ahead or two-day ahead schedule, as applicable, then the schedule
for the applicable operating day is deemed to be 20 MWs of energy and zero
MW of ancillary services to be delivered to the entitlement owner's designated
default QSE in every settlement interval of the applicable operating day.
(B)
Contract price for baseload. The items included in the
contract price between the entitlement owner and the affiliated PGC for the
entitlement shall include:
(i)
Capacity payment. The capacity payment from the entitlement
owner to the affiliated PGC is the capacity price in dollars per MW specified
in the letter confirmation for the entitlement times 25 MWs.
(ii)
Energy payment. The fuel cost owed to the affiliated PGC
by the entitlement purchaser for the dispatched baseload power will be the
average cost of coal, lignite, and nuclear fuel (in dollars per MWh) based
on the affiliated PGC's final excess cost over market (ECOM) model as determined
pursuant to PURA §39.201. Affiliated PGCs of the electric utilities without
an ECOM determination in their proceeding conducted pursuant to PURA §39.201
shall propose, for commission review, an average cost of fuel in a similar
manner. The energy payment from the entitlement owner to the affiliated PGC
is the fuel cost in dollars per MWh for the entitlement times the greater
of:
(I)
The sum of the total energy scheduled from the entitlement
during the entitlement month plus energy deployed up from the entitlement
during the entitlement month; or
(II)
An amount of MWhs equal to 20 MWs times the number of
hours in the entitlement month.
(iii)
Ancillary services payment. For baseload entitlements,
the ancillary services payment to be paid by the entitlement owner to the
affiliated PGC is zero.
(iv)
Energy deployed up reimbursement payment. For energy deployed
up, for all settlement intervals in the entitlement month, the affiliated
PGC shall pay the entitlement owner the sum of the zonal market clearing price
of energy (MCPE) in dollars per MWh paid by ERCOT for that settlement interval
times the energy deployed up in that settlement interval.
(v)
Energy deployed down reimbursement payment. For energy
deployed down for all settlement intervals in the entitlement month, the entitlement
owner shall pay the affiliated PGC the sum of the MCPE in dollars per MWh
paid to ERCOT for that settlement interval times the energy deployed down
in that settlement interval.
(C)
Timing of payment of contract price. The entitlement owner
shall pay the affiliated PGC the capacity payment portion of the contract
price not less than five days before the beginning of the entitlement month
or 20 days after receiving an invoice for the capacity payment from the affiliated
PGC, whichever is later. The entitlement owner shall pay the remainder of
the contract price to the affiliated PGC after receiving an invoice for that
amount in accordance with the other terms of the applicable Agreement. If
the affiliated PGC owes the entitlement owner any net amount under the contract
price calculation, it will pay that amount to the entitlement owner in accordance
with the other terms of the Agreement.
(4)
Gas-intermediate product.
(A)
Gas-intermediate scheduling.
(i)
Schedule types. The entitlement owner shall submit a day-ahead
schedule for the entitlement and may submit hour-ahead schedules. The entitlement
owner shall submit a two-day-ahead schedule for the entitlement if notified
to do so by ERCOT.
(ii)
Timing of scheduling.
(I)
The entitlement owner shall submit day-ahead or two-day-ahead
schedules for the entitlement to the affiliated PGC no later than 8:00 a.m.
The daily capacity commitment is determined for a gas-intermediate entitlement
by the 8:00 a.m. schedule. The entitlement owner shall submit hour-ahead schedules
for ancillary services for the entitlement to the affiliated PGC no later
than one hour before the deadline for the affiliated PGC's QSE to submit hour-ahead
schedules to ERCOT.
(II)
The entitlement owner may submit to the affiliated PGC
a revised day-ahead or two-day-ahead schedule for energy from the entitlement
no later than 10:00 a.m., subject to the limit on maximum energy in clause
(iv)(I)(-b-) of this subparagraph.
(III)
On days that ERCOT allows QSEs to change their day-ahead
or two-day-ahead schedules to ERCOT by 1:00 p.m. for congestion or capacity
insufficiency, the entitlement owner may submit a revised day-ahead or two-day-ahead
schedule for energy from the entitlement to the affiliated PGC no later than
noon, subject to the limit on maximum energy in clause (iv)(I)(-b-) of this
subparagraph.
(IV)
The entitlement owner may submit to the affiliated PGC
a revised day-ahead or two-day-ahead schedule for ancillary services from
the entitlement no later than 1:45 p.m. The entitlement owner cannot change
the amount of energy scheduled in a revised schedule for ancillary services.
(V)
No hour-ahead schedules are permitted for energy from gas-intermediate
entitlements. Hour-ahead schedules are permitted for ancillary services from
gas-intermediate entitlements.
(iii)
Schedule content. Each schedule shall specify:
(I)
For each settlement interval, the MW of energy scheduled
to be delivered to the entitlement owner from the entitlement; and
(II)
For each hour, the MW scheduled to be reserved for the
entitlement owner's use of each ancillary service from the entitlement. The
entitlement owner shall include any MW bid (but not pricing) for the balancing
energy up and balancing energy down ancillary services on the schedule.
(iv)
Scheduling limits.
(I)
Total. Generally, the rate at which energy is scheduled
cannot change more than plus or minus six MWs and the rate at which ancillary
services is reserved or scheduled by the entitlement owner in each hour cannot
change more than plus or minus six MWs. The restrictions in items (-a-) and
(-b-) of this subclause apply.
(-a-)
Minimum energy. The entitlement owner may not schedule
energy at less than eight MWs from the entitlement at any time during the
month, unless the entitlement owner has elected the gas-intermediate Start
Option, in which case the entitlement owner may reduce energy below eight
MWs as specified in subclause (IV)(-a-) of this clause.
(-b-)
Maximum energy. The entitlement owner may not schedule
energy at any level greater than the daily capacity commitment in any settlement
interval.
(II)
Maximum changes. Subject to the limitations specified
in subclause (I) of this clause:
(-a-)
Total. Generally, the rate at which energy is scheduled
by the entitlement owner in each hour cannot change more than plus or minus
six MWs and the rate at which ancillary services are scheduled or reserved
by the entitlement owner in each hour cannot change more than plus or minus
six MWs. The restrictions in items (-b-) and (-c-) apply.
(-b-)
Energy. Subject to the maximum change specified in item
(-a-) of this subclause:
(-1-)
The maximum change in energy scheduled from the first
settlement interval in one hour to the first settlement interval of the next
hour is plus or minus six MWs.
(-2-)
Subject to the limitation in subitem (-1-) of this item,
the maximum change in energy scheduled from one settlement interval to the
next is plus or minus two MWs.
(-c-)
Ancillary services. Subject to the maximum change specified
in item (-a-) of this subclause, the maximum change in ancillary services
scheduled from the first settlement interval in one hour to the first settlement
interval of the next hour is plus or minus six MWs.
(III)
Ancillary services. Subject to the limitations in subclauses
(I) and (II) of this clause:
(-a-)
The total MW of non-spinning reserve service, regulation
service up, regulation service down, responsive reserve service, and balancing
energy service up and balancing energy service down from the entitlement in
one hour shall not exceed ten MWs;
(-b-)
Subject to the limitations in item (-a-) of this subclause,
the total MW of regulation service up, regulation service down, responsive
reserve service, and bids for balancing energy service up and balancing energy
service down from the entitlement in one hour shall not exceed:
(-1-)
Four MWs if the entitlement owner schedules any two MW
changes in the levels of energy between settlement intervals during the hour;
(-2-)
Five MWs if the entitlement owner schedules any one MW,
but not two MW, changes in the levels of energy between settlement intervals
during the hour; or
(-3-)
Six MWs if the entitlement owner does not schedule any
changes in the levels of energy between settlement intervals during the hour.
(-c-)
In addition to the limitations in items (-a-) and (-b-)
of this subclause, the total MWs of non-spinning reserve service, regulation
service up, responsive reserve service, and balancing energy service up from
the entitlement in a settlement interval shall not exceed an amount of MWs
equal to the difference between the daily capacity commitment for the settlement
interval minus the energy scheduled for that settlement interval.
(-d-)
In addition to the limitations in items (-a-), (-b-),
and (-c-) of this subclause, the total MW of regulation service down and balancing
energy service down from the entitlement in a settlement interval shall not
exceed an amount of MWs equal to the difference between the energy scheduled
for that settlement interval minus eight MWs.
(-e-)
In addition to the limitations in items (-a-), (-b-),
and (-c-) of this subclause, if the energy schedule is at zero as permitted
under subclause (IV)(-a-) of this clause, then the entitlement owner may not
schedule any ancillary services from the gas-intermediate entitlement.
(-f-)
Non-spinning reserve service may be provided from the
entitlement in 30 minutes, and other permitted ancillary services may be provided
from the entitlement in ten minutes.
(IV)
Starts, minimum off time, and minimum run time.
(-a-)
The entitlement owner may reduce the energy schedule
from the gas-intermediate entitlement to zero MW two times during the entitlement
month.
(-b-)
Once the energy schedule is reduced to zero, it shall
remain at zero for not less than 48 hours.
(-c-)
If the entitlement owner increases the energy schedule
from zero, then energy shall be scheduled at a minimum of eight MW, and the
energy schedule may not be reduced to zero again for at least 72 hours after
the energy schedule increased from zero.
(v)
Default schedule. If the entitlement owner does not submit
a timely day-ahead or two-day ahead schedule, as applicable, then the schedule,
for the applicable operating day is deemed to be, in every settlement interval
of the applicable operating day, eight MWs for the daily capacity commitment,
eight MWs of energy to be delivered to the entitlement owner's designated
default QSE, and zero MW of ancillary services, and that deemed schedule may
not be changed in any hour-ahead schedule.
(B)
Gas-intermediate ancillary services. Subject to the scheduling
limits in subparagraph (A) of this paragraph, the entitlement owner may use
the entitlement in any one hour for one or more of these ancillary services:
regulation service up, regulation service down, responsive reserve service,
non-spinning reserve service, balancing energy service up, and balancing energy
service down. When ERCOT requires mandatory balancing energy down bids, then
the affiliated PGC shall so notify the entitlement owner, and the entitlement
owner shall then submit a balancing energy down bid to ERCOT in the same percentage
that ERCOT requires of the affiliated PGC, subject to the MW limits for gas-intermediate
in the applicable Schedule CA of the applicable Agreement.
(C)
Contract price for gas-intermediate. The items included
in the contract price between the entitlement owner and the affiliated PGC
for the entitlement shall include:
(i)
Capacity payment. The capacity payment from the entitlement
owner to the affiliated PGC is the capacity price in dollars per MW specified
in the letter confirmation for the entitlement times 25 MWs.
(ii)
Energy payment.
(I)
The energy payment from the entitlement owner to the affiliated
PGC for each settlement interval in the entitlement month, is the sum of the
minimum energy payment and the excess energy payment.
(-a-)
The minimum energy payment is the product of the number
of hours in the entitlement month at which the energy level is not zero as
permitted under subparagraph (A)(iv)(IV)(-a-) of this paragraph, times eight
MWh, times the minimum fuel price.
(-b-)
The excess energy payment for each settlement interval
is the product of (the excess fuel price defined in subclause (II)(-b-) of
this clause,) times (energy scheduled minus two MWhs plus energy deployed
up minus energy deployed down).
(II)
Fuel price.
(-a-)
The minimum fuel price is the product of a heat rate
equal to 9.9 Million British Thermal Units (MMBTUs) per MWh times the daily
gas price.
(-b-)
The excess fuel price is the product of a heat rate equal
to 9.9 MMBTUs per MWh times the daily gas price.
(iii)
Ancillary services payment.
(I)
The ancillary services cost adjustment payment to be paid
by the entitlement owner to the affiliated PGC is the product of the ancillary
services cost defined in subclause (II) of this clause times the difference,
for each settlement interval of the entitlement, between the daily capacity
commitment and energy scheduled.
(II)
The ancillary services cost is the product of a heat rate
adjustment equal to 1.015 MMBTUs per MW times the daily gas price.
(iv)
Energy deployed up reimbursement payment. For energy deployed
up for all settlement intervals in the entitlement month, the affiliated PGC
shall pay the entitlement owner the sum of the MCPE in dollars per MWh paid
by ERCOT for that settlement interval times the energy deployed up in that
settlement interval.
(v)
Energy deployed down reimbursement payment. For energy
deployed down for all settlement intervals in the entitlement month, the entitlement
owner shall pay the affiliated PGC the sum of the MCPE in dollars per MWh
paid to ERCOT for that settlement interval times the energy deployed down
in that settlement interval.
(D)
Timing of payment of contract price. The entitlement owner
shall pay the affiliated PGC the capacity payment portion of the contract
price not less than five days before the beginning of the entitlement month
or 20 days after receiving an invoice for the capacity payment from the affiliated
PGC, whichever is later. The entitlement owner shall pay the remainder of
the contract price after receiving an invoice for that amount in accordance
with the other terms of the Agreement. If the affiliated PGC owes the entitlement
owner any net amount under the contract price calculation, it will pay that
amount to the entitlement owner in accordance with the other terms of the
Agreement.
(5)
Gas-cyclic.
(A)
Gas-cyclic scheduling.
(i)
Schedule types. The entitlement owner shall submit a day-ahead
schedule for the entitlement and may submit hour-ahead schedules for both
energy and ancillary services. The entitlement owner shall submit a two-day-ahead
schedule for the entitlement if notified to do so by ERCOT.
(ii)
Timing of scheduling.
(I)
The entitlement owner shall submit day-ahead or two-day-ahead
schedules for the entitlement to the affiliated PGC no later than 8:00 a.m.
The daily capacity commitment is determined for a gas-cyclic entitlement by
the 8:00 a.m. schedule, unless the entitlement owner notifies the affiliated
PGC, in the schedule, that it is exercising its option to set the daily capacity
commitment in the last schedule submitted before the gas-cyclic start deadline
defined in subclause (V) of this clause. The entitlement owner shall submit
hour-ahead schedules for the entitlement to the affiliated PGC no later than
one hour before the deadline for the affiliated PGC's QSE to submit hour-ahead
schedules to ERCOT.
(II)
The entitlement owner may submit to the affiliated PGC
a revised day-ahead or two-day-ahead schedule for energy from the entitlement
no later than 10:00 a.m.
(III)
On days that ERCOT allows QSEs to change their day-ahead
or two-day ahead schedules to ERCOT by 1:00 p.m. for congestion or capacity
insufficiency, the entitlement owner may submit a revised day-ahead or two-day-ahead
schedule for energy from the entitlement to the affiliated PGC no later than
noon.
(IV)
The entitlement owner may submit to the affiliated PGC
a revised day-ahead or two-day-ahead schedule for ancillary services from
the entitlement no later than 1:45 p.m.
(V)
The gas-cyclic start deadline for declaring the daily capacity
commitment for each settlement interval in an operating hour is 14 hours before
the end of the adjustment period for that operating hour.
(iii)
Schedule content. Each schedule shall specify:
(I)
For each settlement interval, the MW of energy scheduled
to be delivered to the entitlement owner from the entitlement; and
(II)
For each hour, the MW scheduled to be reserved for the
entitlement owner's use of each ancillary service from the entitlement. The
entitlement owner shall include any MW bid (but not pricing) for the balancing
energy up and balancing energy down ancillary services on the schedule.
(iv)
Scheduling limits.
(I)
Total. Generally, the rate at which energy is scheduled
cannot change more than plus or minus six MWs and the rate at which ancillary
services is reserved or scheduled by the entitlement owner in each hour cannot
change more than plus or minus six MWs. The restrictions in items (-a-) and
(-b-) of this subclause apply.
(-a-)
Minimum energy. The entitlement owner may not schedule
energy at any level between zero MW and five MWs from the entitlement at any
time during the month.
(-b-)
Maximum energy. The entitlement owner may not schedule
energy at any level greater than the daily capacity commitment in any settlement
interval after the entitlement owner designates its daily capacity commitment.
(II)
Maximum changes. Subject to the limits specified in subclause
(I) of this clause:
(-a-)
The maximum change in the rate at which energy is scheduled
from the first settlement interval in one hour to the first settlement interval
in the next hour is plus or minus six MWs;
(-b-)
Subject to the limitation in item (-a-) of this subclause,
the maximum change in the rate at which energy is scheduled from one settlement
interval to the next is plus or minus two MWs; and
(-c-)
Subject to the limitation specified in item (-a-) of
this subclause, the maximum change in ancillary services scheduled from the
first settlement interval in one hour to the first settlement interval of
the next hour is plus or minus six MWs.
(III)
Ancillary services. Subject to the limitations in subclauses
(I) and (II) of this clause:
(-a-)
The total MWs of non-spinning reserve service, regulation
service up, regulation service down, responsive reserve service, and balancing
energy service up and balancing energy service down from the entitlement in
one hour shall not exceed ten MWs;
(-b-)
Subject to the limitations in item (-a-) of this subclause,
the total MWs of regulation service up, regulation service down, responsive
reserve service, and bids for balancing energy service up and balancing energy
service down from the entitlement in one hour shall not exceed:
(-1-)
Four MWs if the entitlement owner schedules any two MW
changes in the levels of energy between settlement intervals during the hour;
(-2-)
Five MWs if the entitlement owner schedules any one MW,
but not two MW changes in the levels of energy between settlement intervals
during the hour; or
(-3-)
Six MWs if the entitlement owner does not schedule any
changes in the levels of energy between settlement intervals during the hour.
(-c-)
In addition to the limitations in items (-a-) and (-b-)
of this subclause, the total MWs of non-spinning reserve service, regulation
service up, responsive reserve service, and balancing energy service up from
the entitlement in a settlement interval shall not exceed an amount of MWs
equal to the difference between the daily capacity commitment for the settlement
interval minus the energy scheduled for that settlement interval.
(-d-)
In addition to the limitations in items (- a-), (-b-),
and (-c-) of this subclause, the total MWs of regulation service down and
balancing energy service down from the entitlement in a settlement interval
shall not exceed an amount of MWs equal to the difference between the energy
scheduled for that settlement interval minus five MWs.
(-e-)
Non-spinning reserve service may be provided from the
entitlement in 30 minutes, and other permitted ancillary services may be provided
from the entitlement in ten minutes.
(IV)
Starts. Subject to the limits specified in subclause (I)
- (III) of this clause, the entitlement owner may not direct more than 20
starts during the month of the entitlement, and the entitlement owner may
not direct more than one start per day. A start occurs every time a schedule
increases the MWs of energy from zero MW. Once 20 starts have occurred during
the entitlement, the energy scheduled by the entitlement owner may not be
lower than a rate of five MWs unless that level is lowered to zero MW, at
which time the level may not be raised above zero MW for the remainder of
the entitlement.
(v)
Default schedule. If the entitlement owner does not submit
a timely day-ahead or two-day ahead schedule, as applicable, then the schedule
for the applicable operating day is deemed to be, in every settlement interval
of the applicable operating day, zero MW for the daily capacity commitment,
zero MW of energy, and zero MW of ancillary services. This deemed schedule
may not be changed in any hour-ahead schedule.
(B)
Gas-cyclic ancillary services. Subject to the scheduling
limits in subparagraph (A) of this paragraph, the entitlement owner may use
the entitlement in any one hour for one or more of these ancillary services:
regulation service up, regulation service down, responsive reserve service,
non-spinning reserve service, balancing energy service up, and balancing energy
service down. When ERCOT requires mandatory balancing energy service down
bids, then the affiliated PGC shall so notify the entitlement owner, and the
entitlement owner shall then submit a balancing energy service down bid in
the same percentage that ERCOT requires of the affiliated PGC, subject to
the MW limits for gas-cyclic in this paragraph.
(C)
Contract price for gas-cyclic. The items to
be included in the contract price between the entitlement owner and the affiliated
PGC for the entitlement shall include:
(i)
Capacity payment. The capacity payment from the entitlement
owner to the affiliated PGC is the capacity price in dollars per MW specified
in the letter confirmation for the entitlement times 25 MWs.
(ii)
Energy payment.
(I)
The energy payment for each settlement interval from the
entitlement owner to the affiliated PGC is the product of the fuel price defined
in subclause (II) of this clause times (energy scheduled plus energy deployed
up minus energy deployed down.)
(II)
Fuel price.
(-a-)
The fuel price, for the portion of the daily capacity
commitment that is designated by the entitlement owner by 8:00 a.m. in the
day-ahead or two-day-ahead schedule, is the product of a heat rate equal to
12.1 MMBTUs per MWh times the daily gas price.
(-b-)
The fuel price, for the portion of the daily capacity
commitment that is not released or committed at 8:00 a.m., but is committed
before the gas-cyclic start deadline, is the product of a heat rate equal
to 12.1 MMBTUs per MWh times (the sum of the daily gas price plus $ .25.)
(iii)
Ancillary services payment.
(I)
The ancillary services payment to be paid by the entitlement
owner to the affiliated PGC is the product of the ancillary services cost
defined in subclause (II) of this clause times the difference, for each settlement
interval of the entitlement, between the daily capacity commitment and energy
scheduled.
(II)
The ancillary services cost is the product of a heat rate
adjustment equal to 1.622 MMBTUs per MW times the daily gas price.
(iv)
Energy deployed up reimbursement payment. For energy deployed
up, for all settlement intervals in the entitlement month, the affiliated
PGC shall pay the entitlement owner the sum of the MCPE in dollars per MWh
paid by ERCOT for that settlement interval times the energy deployed up in
that settlement interval.
(v)
Energy deployed down reimbursement payment. For energy
deployed down for all settlement intervals in the entitlement month, the entitlement
owner shall pay the affiliated PGC the sum of the MCPE in dollars per MWh
paid to ERCOT for that settlement interval times the energy deployed down
in that settlement interval.
(D)
Timing of payment of contract price. The entitlement owner
shall pay the affiliated PGC the capacity payment portion of the contract
price not less than five days before the beginning of the entitlement month
or 20 days after receiving an invoice for the capacity payment from the affiliated
PGC, whichever is later. The entitlement owner shall pay the remainder of
the contract price after receiving an invoice for that amount in accordance
with the other terms of the Agreement. If the affiliated PGC owes the entitlement
owner any net amount under the contract price calculation, it will pay that
amount to the entitlement owner in accordance with the other terms of the
Agreement.
(6)
Gas-peaking.
(A)
Gas-peaking scheduling.
(i)
Schedule types. The entitlement owner shall submit a day-ahead
schedule for the entitlement and may submit hour-ahead schedules. The entitlement
owner shall submit a two-day-ahead schedule for the entitlement if notified
to do so by ERCOT.
(ii)
Timing of scheduling.
(I)
The entitlement owner shall submit day-ahead or two-day-ahead
schedules for the entitlement to the affiliated PGC no later than 8:00 a.m.
The daily capacity commitment is determined for a gas-peaking entitlement
by the 8:00 a.m. schedule, unless the entitlement owner notifies the affiliated
PGC, in the schedule, that it is exercising its option to set the daily capacity
commitment in the last schedule submitted before the gas-peaking start deadline
defined in subclause (V) of this clause. The entitlement owner shall submit
hour-ahead schedules for the entitlement to the affiliated PGC no later than
one hour before the deadline for the affiliated PGC's QSE to submit hour-ahead
schedules to ERCOT.
(II)
The entitlement owner may submit to the affiliated PGC
a revised day-ahead or two-day-ahead schedule for energy from the entitlement
no later than 10:00 a.m.
(III)
On days that ERCOT allows QSEs to change their day-ahead
or two-day ahead schedules to ERCOT by 1:00 p.m. for congestion or capacity
insufficiency, the entitlement owner may submit a revised day-ahead or two-day-ahead
schedule for energy from the entitlement to the affiliated PGC no later than
noon.
(IV)
The entitlement owner may submit to the affiliated PGC
a revised day-ahead or two-day-ahead schedule for the non-spinning reserve
service from the entitlement no later than 1:45 p.m.
(V)
The gas-peaking start deadline for declaring the daily
capacity commitment for each settlement interval in an operating hour is one
hour before the end of the adjustment period for that operating hour.
(iii)
Schedule content. Each schedule shall specify:
(I)
For each settlement interval, the MWs of energy scheduled
to be delivered to the entitlement owner from the entitlement; and
(II)
For each hour, the MWs scheduled to be reserved for the
entitlement owner's use of the non-spinning reserve service from the entitlement.
(iv)
Scheduling limits.
(I)
Total.
(-a-)
The rate at which energy is scheduled or ancillary services
reserved or scheduled by the entitlement owner in each settlement interval
during an hour shall be either zero MW or 25 MWs and cannot change during
the hour.
(-b-)
Subject to the requirement of item (-a-) of this subclause,
if the entitlement owner schedules any energy from the entitlement in an hour,
the rate at which energy is scheduled shall continue uninterrupted at a level
of 25 MWs for not less than four hours.
(-c-)
Subject to the requirements of items (-a-) and (-b-)
of this subclause, when the entitlement owner decreases a schedule for energy
to zero MW from the entitlement in an hour, the rate at which energy is scheduled
or at which ancillary services is scheduled or reserved shall continue uninterrupted
at a level of zero MW for not less than two hours.
(II)
Starts. The number of starts of the entitlement is not
limited.
(v)
Default schedule. If the entitlement owner does not submit
a timely day-ahead or two-day ahead schedule, as applicable, then the schedule,
for the applicable operating day is deemed to be, in every settlement interval
of the applicable operating day, zero MW for the daily capacity commitment,
zero MW of energy, and zero MW of the non-spinning reserve service. This deemed
schedule may not be changed in any revised day-ahead or two-day ahead schedule,
or in any hour-ahead schedule.
(B)
Gas-peaking ancillary services. The entitlement owner may
not use the entitlement for any ancillary service except the non-spinning
reserve service.
(C)
Contract price for gas-peaking. The items to be included
in the contract price between the entitlement owner and the affiliated PGC
for the entitlement shall include:
(i)
Capacity payment. The capacity payment from the entitlement
owner to the affiliated PGC is the capacity price in dollars per MW specified
in the letter confirmation for the entitlement times 25 MWs.
(ii)
Energy payment.
(I)
The energy payment for each settlement interval, from the
entitlement owner to the affiliated PGC is the product of the fuel price defined
in subclause (II) of this clause times (energy scheduled plus non-spinning
energy deployed plus non-spinning energy instructed deviation.)
(II)
Fuel price.
(-a-)
The fuel price, for operating days for which the entitlement
owner designated its daily capacity commitment by 8:00 a.m. in the day-ahead
or two-day ahead schedule, is the product of a heat rate equal to 14.1 MMBTUs
per MWh times the daily gas price.
(-b-)
The fuel price, for operating days for which the entitlement
owner exercised its option to designate its daily capacity commitment after
8:00 a.m. and before the gas-peaking start deadline, is the product of a heat
rate equal to 14.1 MMBTUs per MWh times the sum of the daily gas price plus
$ .25.
(iii)
Ancillary services payment. The ancillary services payment
to be paid by the entitlement owner to the affiliated PGC is the product of
$1.00 per MW times the total number of MWs of non-spinning reserve service
scheduled during each hour of the entitlement month.
(iv)
Ancillary services reimbursement payment. The ancillary
services reimbursement payment from the affiliated PGC to the entitlement
owner is the sum of the MCPE for energy in dollars per MWh paid by ERCOT for
each MWh of non-spinning energy deployed and the price that ERCOT pays for
uninstructed deviations for each MWh of non-spinning energy uninstructed deviation.
(D)
Timing of payment of contract price. The entitlement owner
shall pay the affiliated PGC the capacity payment portion of the contract
price not less than five days before the beginning of the entitlement month
or 20 days after receiving an invoice for the capacity payment from the affiliated
PGC, whichever is later. The entitlement owner shall pay the remainder of
the contract price after receiving an invoice for that amount in accordance
with the other terms of the Agreement. If the affiliated PGC owes the entitlement
owner any net amount under the contract price calculation, it will pay that
amount to the entitlement owner in accordance with the other terms of the
Agreement.
(g)
Product descriptions for capacity in non-ERCOT
areas. The provisions in this subsection apply to capacity auctions in non-ERCOT
areas. Subsection (f) of this section contains provisions applicable to capacity
auctions in ERCOT.
(1)
Definitions. The following words and terms when used in
this subsection shall have the following meanings unless the context indicates
otherwise:
(A)
Daily capacity commitment--The amount of capacity scheduled
by purchaser that seller shall make available for the provision of energy
from an entitlement.
(B)
Day ahead schedule--A schedule submitted by purchaser to
seller of the purchaser's scheduled usage of the entitlement for the following
operating day.
(C)
Energy scheduled--For each settlement interval, the final
schedule for energy that the purchaser submits to seller, subject to the limits
on timing and amounts of schedules contained in this subsection.
(D)
Grouped entitlements--All of the entitlements from seller
that purchaser holds for a particular entitlement month.
(E)
Hour-ahead schedule--A schedule other than a day-ahead
schedule submitted by purchaser to seller of purchaser's scheduled usage of
the entitlement for the following operating hour.
(2)
Baseload product.
(A)
Description. For each baseload capacity entitlement, the
scheduled power shall be provided to the purchaser during the month of the
entitlement seven days per week and 24 hours per day, in accordance with the
scheduling requirements and limitations provided in subparagraph (E) of this
paragraph.
(B)
Block size. Each baseload capacity entitlement shall be
25 MWs in size.
(C)
Fuel price. The fuel cost owed to the affiliated PGC by
the entitlement purchaser for the dispatched baseload power will be the average
cost of coal, lignite, and nuclear fuel, in dollars per MWh, based on the
company's final ECOM model as determined in the proceeding pursuant to PURA §39.201
as projected for the relevant time period. Electric utilities without an ECOM
determination in their proceeding conducted pursuant to PURA §39.201
shall propose for commission review an average cost of fuel in a similar manner.
(D)
Starts per month. The purchaser of a baseload capacity
entitlement shall take power from the entitlement seven days per week and
24 hours per day and is therefore not permitted to direct the affiliated PGC
to make any starts per month of baseload capacity entitlements.
(E)
Baseload scheduling.
(i)
Schedule types. Purchaser shall submit a day-ahead schedule
for the entitlement.
(ii)
Timing of scheduling.
(I)
Purchaser shall submit day-ahead schedules for the entitlement
to seller no later than 8:00 a.m. The daily capacity commitment is determined
for a baseload entitlement by the 8:00 a.m. schedule.
(II)
Purchaser may submit to seller a revised day-ahead schedule
for energy from the entitlement no later than noon, subject to the limit on
maximum energy in clause (iv)(II) of this subparagraph.
(III)
No hour-ahead schedules are permitted for energy from
baseload entitlements.
(iii)
Schedule content. Each schedule shall specify, for each
scheduling interval, subject to the scheduling limits in clause (iv) of this
subparagraph, the energy scheduled to be delivered to purchaser from the entitlement.
(iv)
Scheduling limits.
(I)
Minimum energy. Purchaser may not schedule energy at less
than 20 MWs from the entitlement at any time during the month.
(II)
Maximum energy. Purchaser may not schedule energy at any
level greater than the daily capacity commitment in any scheduling interval.
(III)
Maximum changes. Subject to the minimum energy rate specified
in subclause (I) of this clause:
(-a-)
Total. Generally, the rate at which energy is scheduled
by purchaser in each hour cannot change more than plus or minus two MWs.
(-b-)
Energy. Subject to the maximum change specified in item
(-a-) of this subclause, the maximum change in energy scheduled from one scheduling
interval to the next scheduling interval cannot exceed plus or minus two MWs.
(v)
Default schedule. If purchaser does not submit a timely
day-ahead schedule, as applicable, then the schedule for the applicable operating
day shall be deemed to be, in every settlement interval of the applicable
operating day, a total of 20 MWs for the daily capacity commitment.
(F)
Contract price for baseload. The items to be included in
the contract price between the entitlement owner and the affiliated PGC for
the entitlement shall include:
(i)
Capacity payment. The capacity payment from the entitlement
owner to the affiliated PGC is the capacity price in dollars per MW specified
in the letter confirmation for the entitlement times 25 MWs.
(ii)
Energy payment. The fuel price is as specified on the
letter confirmation for the entitlement. The energy payment from the entitlement
owner to the affiliated PGC is the fuel price in dollars per MWh specified
in the letter confirmation for the entitlement times the greater of:
(I)
The total energy scheduled from the entitlement during
the entitlement month; or
(II)
An amount of MWh equal to 20 MW times the number of hours
in the entitlement month.
(G)
Timing of payment of contract price. The entitlement owner
shall pay the affiliated PGC the capacity payment portion of the contract
price not less than five days before the beginning of the entitlement month
or 20 days after receiving an invoice for the capacity payment from the affiliated
PGC, whichever is later. The entitlement owner shall pay the remainder of
the contract price to the affiliated PGC after receiving an invoice for that
amount in accordance with the other terms of the Agreement. If the affiliated
PGC owes the entitlement owner any net amount under the contract price calculation,
it will pay that amount to the entitlement owner in accordance with the other
terms of the Agreement.
(3)
Gas-intermediate product.
(A)
Description. For each gas-intermediate capacity entitlement,
30% of the entitlement shall be provided to the purchaser at any time when
any of the entitlement is being dispatched by the purchaser, with the remainder
of the block scheduled as day-ahead shaped power in accordance with the scheduling
requirements and limitations provided in subparagraph (E) of this paragraph.
(B)
Block size. Each gas-intermediate capacity entitlement
shall be 25 MWs in size.
(C)
Fuel price.
(i)
Except as specified otherwise in clause (ii) of this subparagraph,
the fuel cost owed to the affiliated PGC by the entitlement purchaser for
the gas-intermediate capacity dispatched will be 10,850 BTUs per kilowatt
hour (kWh) heat rate times the minimum kWhs that shall be taken for gas-intermediate
capacity as required in subparagraph (A) of this paragraph times the first-of-the-month
index posted in the publication "Inside FERC" for the Houston Ship Channel
for the month of the entitlement. For power dispatched above the minimum kWhs
required, the additional fuel price owed to the affiliated PGC will be 10,850
BTUs per kWh times the kWhs of gas-intermediate power dispatched pursuant
to the entitlement above the minimum requirement times the daily gas price.
(ii)
EGSI.
(I)
For EGSI gas-intermediate capacity in the eastern congestion
zone, the fuel cost owed to its affiliated PGC by the capacity purchaser for
the gas-intermediate capacity dispatched will be 10,850 BTUs per kWh heat
rate times the minimum kWhs that shall be taken for gas-intermediate capacity
as required in subparagraph (A) of this paragraph times the first-of-the-month
index posted in the publication "Inside FERC" for Henry Hub for the month
of the entitlement. For power dispatched above the minimum kWhs required,
the additional fuel price owed to the affiliated PGC will be 10,850 BTUs per
kWh times the kWhs of gas-intermediate power dispatched pursuant to the entitlement
above the minimum requirement times the Henry Hub daily gas price.
(II)
For EGSI gas-intermediate capacity in the western congestion
zone, the fuel cost owed to its affiliated PGC by the capacity purchaser for
the gas-intermediate capacity dispatched will be 10,850 BTUs per kWh heat
rate times the minimum kWhs that shall be taken for gas-intermediate capacity
as required in subparagraph (A) of this paragraph times the weighted average
of the first-of-the-month index posted in the publication "Inside FERC" for
Henry Hub for the month of the entitlement and the first-of-the-month index
posted in the publication "Inside FERC" for the Houston Ship Channel for the
month of the entitlement. For power dispatched above the minimum kWhs required,
the additional fuel price owed to the affiliated PGC will be 10,850 BTUs per
kWh times the kWhs of gas-intermediate power dispatched pursuant to the entitlement
above the minimum requirement times the weighted average of the Henry Hub
daily gas price and the Houston Ship Channel daily gas price.
(D)
Starts per month. The purchaser of gas-intermediate capacity
shall take a minimum of 30% of the power from the entitlement and is therefore
not permitted to direct the affiliated PGC to make any starts per month of
gas intermediate capacity entitlements.
(E)
Gas-intermediate scheduling.
(i)
Schedule types. Purchaser shall submit a day-ahead schedule
for the entitlement.
(ii)
Timing of scheduling.
(I)
Purchaser shall submit day-ahead schedules for the entitlement
to seller no later than 8:00 a.m. The daily capacity commitment is determined
for a gas-intermediate entitlement by the 8:00 a.m. schedule.
(II)
Purchaser may submit to seller a revised day-ahead schedule
for energy from the entitlement no later than noon, subject to the limit on
maximum energy in clause (iv)(II) of this subparagraph.
(III)
No hour-ahead schedules are permitted for energy from
gas-intermediate entitlements.
(iii)
Schedule content. Each schedule shall specify, for each
scheduling interval, the energy scheduled to be delivered to purchaser from
the entitlement.
(iv)
Scheduling limits.
(I)
Minimum energy. Purchaser may not schedule energy at less
than eight MWs from the entitlement at any time during the month.
(II)
Maximum energy. Purchaser may not schedule energy at a
level greater than the daily capacity commitment in any scheduling interval.
(III)
Maximum changes. Subject to the minimum energy rate specified
in subclause (I) of this clause and the maximum energy rate specified in subclause
(II) of this clause, the sum of the rate energy is scheduled by purchaser
in each hour cannot change more than plus or minus six MWs.
(v)
Default schedule. If purchaser does not submit a timely
day-ahead schedule, as applicable, then the schedule for the applicable operating
day shall be deemed to be, in every settlement interval of the applicable
operating day, a total of eight MWs for the daily capacity commitment. This
deemed schedule may not be changed in any hour-ahead schedule.
(F)
Contract price for gas-intermediate. The items to be included
in the contract price between the entitlement owner and the affiliated PGC
for the entitlement shall include:
(i)
Capacity payment. The capacity payment from the entitlement
owner to the affiliated PGC is the capacity price in dollars per MW specified
in the letter confirmation for the entitlement times 25 MWs.
(ii)
Energy payment.
(I)
The energy payment from the entitlement owner to the affiliated
PGC is the sum, for each settlement interval in the entitlement month, of
the minimum energy payment and the excess energy payment.
(-a-)
The minimum energy payment is the product of eight MWhs
times the minimum fuel price.
(-b-)
The excess energy payment is the product, for each settlement
interval, of the excess fuel price defined in subclause (II)(-b-) of this
clause times energy scheduled.
(II)
Fuel price.
(-a-)
The minimum fuel price is the product of a heat rate
equal to 10.85 MMBTUs per MWh times the daily gas price.
(-b-)
The excess fuel price is the product of a heat rate equal
to 10.85 MMBTUs per MWh times the daily gas price.
(G)
Timing of payment of contract price. The entitlement owner
shall pay the affiliated PGC the capacity payment portion of the contract
price not less than five days before the beginning of the entitlement month
or 20 days after receiving an invoice for the capacity payment from the affiliated
PGC, whichever is later. The entitlement owner shall pay the remainder of
the contract price after receiving an invoice for that amount in accordance
with the other terms of the Agreement. If the affiliated PGC owes the entitlement
owner any net amount under the contract price calculation, it will pay that
amount to the entitlement owner in accordance with the other terms of the
Agreement.
(4)
Gas-cyclic product.
(A)
Description. The gas-cyclic entitlement shall be flexible
day-ahead shaped power.
(B)
Block size. Each gas-cyclic capacity entitlement shall
be 25 MWs in size.
(C)
Fuel price.
(i)
Except as specified otherwise in clause (ii) of this subparagraph,
the fuel price owed to the affiliated PGC by the capacity purchaser for gas-cyclic
capacity dispatched will be 12,100 BTUs per kWh times the kWhs of the gas-cyclic
power dispatched under the entitlement times the daily gas price.
(ii)
EGSI.
(I)
For EGSI gas-cyclic capacity in the eastern congestion
zone, the fuel cost owed to its affiliated PGC by the capacity purchaser for
the gas-cyclic capacity dispatched will be 12,100 BTUs per kWh times the kWhs
of gas-cyclic power dispatched under the entitlement times the Henry Hub daily
gas price.
(II)
For EGSI gas-cyclic capacity in the western congestion
zone, the fuel cost owed to its affiliated PGC by the capacity purchaser for
the gas-cyclic capacity dispatched will be 12,100 BTUs per kWh times the kWhs
of gas-cyclic power dispatched under the entitlement times the weighted average
of the Henry Hub daily gas price and the Houston Ship Channel daily gas price.
(D)
Starts per month and associated costs. The purchaser of
gas-cyclic capacity shall be entitled to direct the selling affiliated PGC
to make up to the amount of starts per month of each entitlement of gas-cyclic
capacity allowed pursuant to subparagraph (E)(v) of this paragraph.
(E)
Gas-cyclic scheduling.
(i)
Schedule types. Purchaser shall submit a day-ahead schedule
for the entitlement.
(ii)
Timing of scheduling.
(I)
Purchaser shall submit day-ahead schedules for the entitlement
to seller no later than 8:00 a.m. The daily capacity commitment is determined
for a gas-cyclic entitlement by the 8:00 a.m. schedule, unless purchaser notifies
seller, in the schedule, that it is exercising its option to set the daily
capacity commitment in the last schedule submitted before the gas-cyclic start
deadline pursuant to subclause (IV) of this clause.
(II)
Purchaser may submit to seller a revised day-ahead schedule
for energy from the entitlement no later than noon, subject to the limit on
maximum energy in clause (iv)(II) of this subparagraph.
(III)
No hour-ahead schedules are permitted for energy from
gas-cyclic entitlements.
(IV)
The gas-cyclic start deadline for declaring the daily
capacity commitment for each settlement interval in an operating hour is 15
hours before the start of the operating hour.
(iii)
Schedule content. Each schedule shall specify, for each
scheduling interval, the energy scheduled to be delivered to purchaser from
the entitlement.
(iv)
Scheduling limits.
(I)
Minimum energy. Purchaser may not schedule energy at any
level between zero MW and five MWs from the entitlement at any time during
the month.
(II)
Maximum energy. Purchaser may not schedule energy at any
level greater than the daily capacity commitment in any scheduling interval.
(III)
Maximum changes. Subject to the minimum energy rate specified
in subclause (I) of this clause and the maximum energy rate specified in subclause
(II) of this clause, the sum of the rate energy is scheduled by purchaser
in each hour cannot change more than plus or minus six MWs.
(v)
Starts. Purchaser shall not direct more than 20 starts
during the month of the entitlement, and the purchaser shall not direct more
than one start per day. A start occurs every time a schedule increases the
MWs of energy from zero MW. Once the maximum number of starts have occurred
during the entitlement, the energy scheduled by purchaser may not be lower
than a rate of five MWs unless that level is lowered to zero MW, at which
time the level may not be raised above zero MW for the remainder of the month.
(vi)
Default schedule. If purchaser does not submit a timely
day-ahead schedule as applicable, then the schedule for the applicable operating
day is deemed to be, in every settlement interval of the applicable operating
day, zero MW for the daily capacity commitment and zero MW of energy. This
deemed schedule may not be changed.
(F)
Contract price for gas-cyclic. The items to be included
in the contract price between the entitlement owner and the affiliated PGC
for the entitlement shall include:
(i)
Capacity payment. The capacity payment from the entitlement
owner to the affiliated PGC is the capacity price in dollars per MW specified
in the letter confirmation for the entitlement times 25 MWs.
(ii)
Energy payment.
(I)
The energy payment for each settlement interval from the
entitlement owner to the affiliated PGC is the product, of the fuel price
defined in subclause (II) of this clause times energy scheduled.
(II)
Fuel price.
(-a-)
The fuel price, for the portion of the daily capacity
commitment that is designated by the entitlement owner by 8:00 a.m. in the
day-ahead schedule, is the product of a heat rate equal to 12.1 MMBTUs per
MWh times the daily gas price.
(-b-)
The fuel price for the portion of the daily capacity
commitment that is not released or committed at 8:00 a.m., but committed before
the gas-cyclic start deadline, is the product of a heat rate equal to 12.1
MMBTUs per MWh times (the sum of the daily gas price plus $ .25.)
(G)
Timing of payment of contract price. The entitlement owner
shall pay the affiliated PGC the capacity payment portion of the contract
price not less than five days before the beginning of the entitlement month
or 20 days after receiving an invoice for the capacity payment from the affiliated
PGC, whichever is later. The entitlement owner shall pay the remainder of
the contract price after receiving an invoice for that amount in accordance
with the other terms of the Agreement. If the affiliated PGC owes the entitlement
owner any net amount under the contract price calculation, it will pay that
amount to the entitlement owner in accordance with the other terms of the
Agreement.
(5)
Gas-peaking product.
(A)
Description. The gas-peaking entitlement shall be intra-day
power.
(B)
Block size. Each gas-peaking capacity entitlement shall
be 25 MWs in size.
(C)
Fuel price.
(i)
Except as specified in clause (ii) of this subparagraph,
the fuel price owed to the affiliated PGC by the purchaser for gas-peaking
capacity dispatched will be 14,100 BTUs per kWh times the kWhs of the gas-peaking
power dispatched under the entitlement times the daily gas price.
(ii)
EGSI.
(I)
For EGSI gas-peaking capacity in the eastern congestion
zone, the fuel cost owed to its affiliated PGC by the capacity purchaser for
the gas-peaking capacity dispatched will be 14,100 BTUs per kWh times the
kWhs of gas-peaking power dispatched under the entitlement times the Henry
Hub daily gas price.
(II)
For EGSI gas-peaking capacity in the western congestion
zone, the fuel cost owed to its affiliated PGC by the capacity purchaser for
the gas-peaking capacity dispatched will be 14,100 BTUs per kWh times the
kWhs of gas-peaking power dispatched under the entitlement times the weighted
average of the Henry Hub daily gas price and the Houston Ship Channel daily
gas price.
(D)
Starts per month and associated costs. The purchaser of
gas-peaking capacity shall be entitled to direct the selling affiliated PGC
to make unlimited starts per month of each entitlement of gas-peaking capacity.
(E)
Gas-peaking scheduling.
(i)
Schedule types. Purchaser shall submit a day-ahead schedule
for the entitlement and may submit hour-ahead schedules.
(ii)
Timing of scheduling.
(I)
Purchaser shall submit day-ahead schedules for the entitlement
to seller no later than 8:00 a.m. The daily capacity commitment is determined
for a gas-peaking entitlement by the 8:00 a.m. schedule, unless purchaser
notifies seller, in the schedule, that it is exercising its option to set
the daily capacity commitment in the last schedule submitted before the gas-peaking
start deadline defined in subclause (III) of this clause. Purchaser shall
submit hour-ahead schedules for the entitlement to seller no later than one
hour before the start of the operating hour.
(II)
Purchaser may submit to seller a revised day-ahead schedule
for energy from the entitlement no later than noon.
(III)
The gas-peaking start deadline for declaring the daily
capacity commitment for each operating hour is two hours before the beginning
of the operating hour.
(iii)
Schedule content. Each schedule shall specify, for each
scheduling interval, the energy scheduled to be delivered to purchaser from
the entitlement.
(iv)
Scheduling limits.
(I)
The rate at which energy is scheduled by purchaser in each
scheduling interval during one hour shall be either zero MW or 25 MWs and
cannot change during the hour.
(II)
Subject to the requirement of subclause (I) of this clause,
if purchaser schedules any energy from the entitlement in one hour, the rate
at which energy is scheduled shall continue uninterrupted at a level of 25
MWs for not less than four hours.
(III)
Subject to the requirements of subclause (I) and (II)
of this clause, when the purchaser decreases a schedule for energy to zero
MW from the entitlement in one hour, the rate at which energy is scheduled
shall continue uninterrupted at a level of zero MW for not less than two hours.
(v)
Default Schedule. If purchaser does not submit a timely
day-ahead schedule then the schedule for the applicable operating day shall
be deemed to be, in every settlement interval of the applicable operating
day, zero MW for the daily capacity commitment and zero MW of energy. This
deemed schedule may not be changed in any revised day-ahead schedule, or in
any hour-ahead schedule.
(F)
Contract price for gas-peaking. The items to be included
in the contract price between the entitlement owner and the affiliated PGC
for the entitlement shall include:
(i)
Capacity payment. The capacity payment from the entitlement
owner to the affiliated PGC is the capacity price in dollars per MW specified
in the letter confirmation for the entitlement times 25 MWs.
(ii)
Energy payment.
(I)
The energy payment for each settlement interval from the
entitlement owner to the affiliated PGC is the product of the fuel price defined
in subclause (II) of this clause times energy scheduled.
(II)
Fuel price.
(-a-)
The fuel price, for operating days for which the entitlement
owner designated its daily capacity commitment by 8:00 a.m. in the day-ahead
schedule, is the product of a heat rate equal to 14.1 MMBTUs per MWh times
the daily gas price.
(-b-)
The fuel price, for operating days for which the entitlement
owner exercised its option to designate its daily capacity commitment after
8:00 a.m. and before the gas-peaking start deadline, is the product of a heat
rate equal to 14.1 MMBTUs per MWh times (the sum of the daily gas price plus
$ .25).
(G)
Timing of payment of contract price. The entitlement owner
shall pay the affiliated PGC the capacity payment portion of the contract
price not less than five days before the beginning of the entitlement month
or 20 days after receiving an invoice for the capacity payment from the affiliated
PGC, whichever is later. The entitlement owner shall pay the remainder of
the contract price after receiving an invoice for that amount in accordance
with the other terms of the Agreement. If the affiliated PGC owes the entitlement
owner any net amount under the contract price calculation, it will pay that
amount to the entitlement owner in accordance with the other terms of the
Agreement.
(6)
Scheduling discrepancies. If purchaser submits a schedule
to seller for an entitlement that violates any of the scheduling requirements
for that capacity auction product type, the schedule shall be deemed a non-conforming
schedule for a scheduled hour. The schedule for that non-conforming scheduled
hour shall then be deemed to be the same as the schedule for the hour most
closely preceding that scheduled hour that was not a non-conforming schedule.
Seller shall promptly notify purchaser of a non-conforming schedule.
(7)
Ancillary services. Until such time that all ancillary
services issues are addressed and resolved within the context of a Federal
Energy Regulatory Commission (FERC) approved regional transmission organization,
entitlements will include rights only to energy and capacity as described
in this subsection and specifically exclude any ancillary services rights.
Such exclusion is consistent with subsection (e)(1) of this section, which
allows products other than those described in this subsection to be offered
with good cause. In the interim, the affiliated PGC shall provide the required
ancillary services to all parties at the current FERC-approved rates.
(h)
[
(1)
Timing issues.
(A)
Frequency of auctions.
(i)
Auction dates. Capacity auctions shall begin on March
10, July 10, September 10, and November 10 of each year. If the date for an
auction start falls on a weekend or banking holiday, then that auction shall
begin on the first business day after the weekend or banking holiday.
[
(ii)
Simultaneous auctions. Auctions for a product will
be held simultaneously by all affiliated PGCs of entitlements within the respective
North American Electric Reliability Council (NERC) regions in Texas. For example,
ERCOT and non-ERCOT auctions can be held at different times and dates.
[
(iii)
Termination of the capacity auction process. The obligation
of an affiliated PGC to auction entitlements shall continue until the earlier
of 60 months after the date customer choice is introduced or the date the
commission determines that 40% or more of the electric power consumed by residential
and small commercial customers within the affiliated transmission and distribution
utility's certificated service area before the onset of customer choice is
provided by nonaffiliated retail electric providers. The determination of
the 40% threshold shall be as prescribed by the commission's rule relating
to the price to beat.
(B)
Auction conclusion.
(i)
Receipt of bids. In order for an affiliated PGC that is
auctioning capacity to consider a bid, the bid must be received by that affiliated
PGC by close of the round for which the bid is to be submitted.
(ii)
Concluding each individual auction. The affiliated PGC
shall provide notice of the winning bid(s) to auction participants and the
commission by the close of business on the
first day after the auction
closes that is not a weekend or banking holiday.
[
(iii)
Confidentiality and posting of bids. The affiliated PGC
shall only provide the quantities requested by bidders during the auction.
The affiliated PGC shall designate non-marketing personnel to evaluate the
bids and persons reviewing the bids shall not disclose the bids to any person(s)
engaged in marketing activities for the affiliated PGC or use any competitively
sensitive information received in the bidding process. Upon announcement of
the winning bids, the affiliated PGC shall provide the commission and all
auction participants with all of the bids, but shall not divulge the identity
of any particular bidders. Upon specific request by the commission, and under
standard protective order procedures, the utility shall provide the identity
of the bidders to the commission.
(iv)
The affiliated PGC shall be deemed to
have met the 15% requirement if it offered products in a product category
(for example, gas-intermediate) and successfully sold, at least, all of the
entitlements offered in one particular month, in that product category. If
no products in a product category are sold, the affiliated PGC shall comply
with the provisions of paragraph (7)(C) of this subsection.
(2)
Auction administration.
(A)
Each auction shall be administered by the affiliated PGC
selling the entitlement. An affiliated PGC or group of affiliated PGCs may
retain the services of a qualified third-party to perform the auction administration
functions.
(B)
Notice of capacity available for auction.
(i)
Method of notice. At least 60 days before each auction
start
[
(ii)
Contents of notice.
(I)
Such notice shall include the auction
start
[
(-a-)
Baseload--$ .05 to $ .75;
(-b-)
Gas-intermediate--$ .02 to $ .30;
(-c-)
Gas-cyclic--$ .02 to $ .30;
(-d-)
Gas-peaking--$ .02 to $ .30.
(II)
The affiliated PGC shall also specify which
power generation units will be used to meet the entitlement for each type
of entitlement to be auctioned. If baseload entitlements are being auctioned,
the utility shall also specify the fuel cost described in
subsections
(f)(3)(B)(ii) and (g)(2)(F)(ii)
[
(iii)
The affiliated PGCs shall publish their
respective notices on their web sites no later than 30 calendar days before
the start of each auction. Each entity that wants to bid in an affiliated
PGC's auction shall download the appropriate forms from the affiliated PGC's
web site. The completed forms, which include the first page of the cover sheet
to the Agreement, shall be submitted to the affiliated PGC at least 15 business
days before the auction starts to allow enough time for evaluation and approval
of credit. Potential bidders may submit the required documents after that
time, but at the risk of not having credit and document approval in time for
them to participate in the auction.
(iv)
Credit approval for entities bidding
on capacity auction products in ERCOT or in non-ERCOT areas of Texas will
be performed pursuant to subsection (e)(7) of this section.
(v)
The affiliated PGC shall notify an approved
bidder of its available credit and send the approved bidder a completed capacity
auction-specific version of the applicable Agreement, executed by the affiliated
PGC, within ten business days after the bidder has submitted the required
information. The approved bidder should attempt to execute and return the
executed Agreement to the affiliated PGC no later than five business days
before the auction starts. The executed Agreement shall be received by the
affiliated PGC no later than two business days before the auction starts.
The affiliated PGC shall provide a password or passwords to the approved bidder
to allow access to the auction web site and to allow it to bid no later than
one business day before the auction starts. An approved bidder may not request
or receive additional credit after the auction starts.
(vi)
Specific information on how to place
bids and navigate the auction sites will be provided by the affiliated PGCs
to their qualified bidders prior to the beginning of the capacity auction.
(3)
Term of auctioned capacity.
(A)
Initial auction. For the initial auction
in
[
(i)
Approximately 20% of the entitlements auctioned as two
one-year strips with the strips auctioned jointly (the 12 months of 2002 and
2003),
(ii)
Approximately 30% of the entitlements as one-year strips
(the 12 months of 2002), and
(iii)
Approximately 20% of the entitlements as discrete months
for each of the 12 months of 2002 (January through December of 2002)
(iv)
Approximately 30% of the entitlements as discrete months
for the first four months of 2002 (January through April of 2002).
(v)
Reductions in the amounts of entitlements available during
the months of March, April, May, October, and November of each calendar year
shall be accounted for in the entitlements offered as discrete months.
(B)
Subsequent auctions.
(i)
The auction
in
[
(ii)
The auction
in
[
(iii)
The auction
in
[
(I)
Approximately 30% of the entitlements as the one-year strips
for the next year
;
[
(II)
Approximately 20% of the entitlements as discrete months
for each of the 12 calendar months of the next year.
(iv)
The auction
in
[
(v)
Reductions in the amounts of entitlements available during
the months of March, April, May, October, and November of each calendar year
shall be accounted for in the entitlements offered as discrete months.
(vi)
In June of 2003, an evaluation will be made by the commission
as to the need for another set of two-year strips (the 24 months of 2004 through
2005). If such term is deemed to be necessary, the next set of two-year strips
will be auctioned on September 1 of 2003. If such term is not deemed to be
necessary, then subsequent auctions will auction 50% of entitlements over
one-year strips and 50% of the entitlements as discrete months.
(C)
Modification of term. If the auction is for a one-year
or two-year strip term and the affiliated retail electric provider (REP) expects
to reach the 40% load loss threshold in paragraph (1)(A)(iii) of this subsection,
the affiliated PGC may request a shorter term strip by providing evidence
of the loss of customer load. Similarly, prior to an auction for the next
four available months, an affiliated PGC may request to not auction months
in which it projects reaching the 40% threshold. Such filings shall be made
90 days before the auction
start
[
(4)
Quantity to be auctioned.
(A)
Block size and number of blocks. The block size of the
auctioned capacity entitlement is 25 MW. The affiliated PGC shall divide the
amount determined for each product
referenced
[
(B)
Divisibility. For purposes of the initial auction, if the
amount to be auctioned for an affiliated PGC for a particular product is not
evenly divisible by 25, the remainder shall be added to the next highest heat-rate
product available (in the order of baseload, gas-intermediate, gas cyclic,
and gas peaking). The remainder for the highest heat-rate product available
shall then be rounded up to 25. For subsequent auctions, a remainder shall
be added to the product most highly valued in the immediately preceding auction
and shall increase by one the number of entitlements of that product.
(C)
Total amount. The sum of the blocks of capacity auctioned
shall total no less than 15% of the affiliated PGC's Texas jurisdictional
installed generation capacity.
(5)
Bidders. For each auction, potential bidders
shall
[
(6)
Bidding procedures. For purposes of this section, the term
"set of entitlements" shall refer to the pairing of a particular product with
a term. For example, a quantity of baseload products sold as a one-year strip
for 2002 would be a set of baseload-annual 2002 entitlements, while a quantity
of baseload products sold as the discrete month of July 2002 in a quantity
of ten would be a set of baseload-July 2002 entitlements.
(A)
Method of auction. Each auction shall be a simultaneous,
multiple round, open bid auction. [
(i)
First round. For the first round of the auction, the affiliated
PGC will post the opening bid price determined in accordance with paragraph
(7) of this subsection for each of set of entitlements available for purchase
at the auction. Each bidder will specify the number it wishes to purchase
of each set of entitlements at the opening bid price(s). If the total demand
for a set of entitlements is less than the available quantity of the set of
entitlements, the price for each of the entitlements in the set will be the
opening bid price and each bidder in the round will receive all of the entitlements
in the set they demanded. Any remaining entitlements of the set will be held
for future auction as noticed by the affiliated PGC in accordance with its
notice given pursuant to paragraph (7) of this subsection.
(ii)
Subsequent rounds. If the total demand for a set of entitlements
is more than
or equal to
the available quantity, the affiliated
PGC will adjust the price upward. Bidders shall then submit bids for the quantities
they wish to purchase of each set of entitlements at the new price(s). Subsequent
rounds shall continue until demand is less than [
(iii)
Pro-rata entitlement allocation.
The pro-rata allocation of entitlements will be implemented by determining
a bid differential between the next-to-last round bid and the number of awarded
entitlements based on the last round and awarding the remaining entitlement(s)
to the bidder with the largest differential. The awarded entitlement will
then be subtracted from that bidder's differential and the process will iterate
until all entitlements have been awarded. In the event that the differential
between two or more bidders is the same, the tie will be broken based on the
timestamp of each bidder's last bid submitted in the next-to-last round. For
example, 14 baseload one-year strip entitlements are available and bidders
A, B, C, and D are bidding. In the last round, demand was only 11 entitlements
and bidder D did not bid.
Figure 1: 16 TAC §25.381(h)(6)(A)(iii)
Figure 2: 16 TAC §25.381(h)(6)(A)(iii)
Figure 3: 16 TAC §25.381(h)(6)(A)(iii)
Figure 4: 16 TAC §25.381(h)(6)(A)(iii)
(iv)
Auction duration. Once a product auction
commences it will continue through each business day until that auction concludes.
(v)
Round duration. Each auction's first round
will begin promptly at 8:00 a.m. and each round will last for 30 minutes with
30 minutes between rounds. For example, the first round of bidding will start
at 8:00 a.m. and end at 8:30 a.m., the second round will start at 9:00 a.m.
and end at 9:30 a.m., etc. No round may start later than 4:00 p.m. All times
are in local Austin, Texas time.
(vi)
Credit calculation. A purchaser's credit
limit shall be adjusted during the auction based on entitlement value of entitlements
awarded to the purchaser, which will be determined by using the capacity price
for the lesser of three months or the duration of the entitlement plus the
amount that would be paid to exercise the entitlement for the lesser of three
months or the duration of the entitlement at the assumed dispatch for each
product as follows:
Figure: 16 TAC §25.381(h)(6)(A)(vi)
(B)
Activity rules.
(i)
A bidder must bid in the first round for a particular entitlement
to participate in subsequent rounds.
(ii)
A bidder may not bid a greater quantity than it bid in
a previous round for a particular entitlement.
(C)
Mechanism for auction. Each affiliated PGC shall conduct
the auction over the
Internet
[
(7)
Establishment of opening bid price.
(A)
If an affiliated PGC intends to change
the minimum opening bid prices that would otherwise be applicable under subparagraph
(B) of this paragraph, then it shall
[
(B)
Minimum opening bids for entitlements
shall be the same as the minimum opening bids used in the most recent auction
that included those entitlements, except that sellers with plants that have
been affected by congestion zone changes since the most recent auction may
use minimum opening bids that are different than the minimum opening bids
in the most recent auction, provided that the seller maintains the same weighted-average,
by MW, of the most recent auction's minimum bids, for all of its plants of
the same product type in a congestion zone, to compute the new minimum opening
bids for each product type. Nothing in this subparagraph shall prevent the
commission from ordering a different methodology for a seller, if the seller
proves that good cause exists for the change.
(C)
In the notice provided pursuant to paragraph
(2)(B)(i) of this subsection, the affiliated PGC may make available an opening
bid price calculated pursuant to the commission-approved methodology for each
type of entitlement to be offered for sale at auction. The affiliated PGC
shall not be obligated to accept any bid for a product less than the opening
bid price, but shall notify the commission that the opening bid price was
not met.
The affiliated PGC shall be deemed to have met the 15% requirement
if it offered products in a product category (for example, gas-intermediate)
and successfully sold, at least, all of the entitlements offered in one particular
month, in that product category. If there is an auction where no month awards
all of the entitlements of a particular product, then the affiliated PGC shall,
in its notice pursuant to paragraph (2)(B)(i) of this subsection, make a proposal
to the commission
[
(8)
Results of the auction. The results of the auction shall
be simultaneously announced to all bidders by posting on the affiliated PGC's
auction web site with posting of the market clearing price for each set of
entitlements.
(i)
[
(1)
Compliance with provisions. An entitlement
acquired by a bidder may be assigned, sold or transferred by the entitlement
owner, or by any subsequent holder, only by following the provisions of this
section. Any purported assignment, sale, or transfer of an entitlement that
does not follow the provisions of this section is void and ineffective against
the affiliated PGC.
(2)
Eligible entities. An entitlement owner
may assign, sell, or transfer an entitlement to any person or entity other
than an affiliated REP, but the entitlement owner may dispatch the output
of the entitlement to an affiliated REP.
(3)
Obligations. An entitlement that is assigned,
sold, or transferred under this section remains subject to the provisions
of the Agreement under which it originated, and the assignee of that entitlement
succeeds to all of the rights and obligations of the assignor with respect
to that entitlement.
(4)
Liability. Neither the assignor nor any
previous entitlement owner that has remained liable for payments due to the
affiliated PGC in connection with the entitlement as a result of a previous
assignment, sale, or transfer is released from liability to the affiliated
PGC for payments due in connection with the entitlement unless:
(A)
At least 14 days before the effective date of the assignment,
sale, or transfer, assignee has provided security to the affiliated PGC that
is equal to or greater than the security originally given to the affiliated
PGC for the entitlement; and
(B)
At least ten days before the effective date of the assignment,
sale, or transfer, the affiliated PGC has notified both assignor and assignee
in writing that the security has been approved and accepted by the affiliated
PGC.
(5)
Requests to approve security. The affiliated
PGC shall respond to written requests to approve security to be offered by
a prospective assignee within 14 days after receipt of that request.
(6)
Effective date. No assignment, transfer,
or sale of the entitlement by a party is binding on the non-assigning party
until the non-assigning party receives written notice of the assignment, sale,
or transfer and a copy of the executed assignment, sale, or transfer document.
An assignment, sale, or transfer of an entitlement is not effective unless
the non-assigning party receives notice of the assignment, sale, or transfer
at least three days before the beginning of the entitlement month.
(j)
[
(1)
Process. For 2002 and 2003,
[
(2)
PGCs without stranded costs.
An affiliated PGC
that does not have stranded costs described by PURA §39.254 is not required
to comply with paragraph (1) of this subsection.
(k)
[
(l)
[
(m)
[
(1)
Standard agreement. Parties shall utilize
the Agreement in the form prepared by the Edison Electric Institute (Version
2.1). The Cover Sheet to the Agreement shall provide for bilateral credit
terms that are applicable to both the buying and selling parties, based upon
objective credit standards determined by the commission. There may be different
versions of the Agreement applicable to sales of capacity auction products
in different regions in Texas. For example, ERCOT and the non-ERCOT EGSI area
may have different versions of the Agreement.
(2)
Applicability. The terms and conditions
set forth in any Agreement apply only to the entitlements obtained in the
capacity auctions under this section.
(3)
Electronic scheduling. The Agreement shall
require that, if the affiliated PGC provides an electronic scheduling interface
for the dispatch of entitlements, then the entitlement owner shall schedule
the dispatch of its entitlements using that electronic interface.
(4)
Scheduling discrepancies. If an entitlement
owner submits a non-conforming schedule to the affiliated PGC for an entitlement
that violates any of the scheduling requirements for that capacity auction
product type for a scheduled hour, then the schedule for that hour is deemed
to be the same as the schedule for the hour most closely preceding that scheduled
hour that was not a non-conforming schedule. The affiliated PGC shall promptly
notify the entitlement owner of a non-conforming schedule.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State, on January 3, 2002.
TRD-200200032
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: February 17, 2002
For further information, please call: (512) 936-7308
Chapter 311.
OTHER LICENSES
Subchapter B. SPECIFIC LICENSES
For purposes of this section, an "affiliated PGC" refers to any
]
affiliated power generation company that is unbundled from the electric utility
in accordance with PURA §39.051.
It is recognized that certain commission
orders issued during 2001 have effectively delayed competition in the service
territories of Southwestern Electric Power Company (SWEPCO) and Entergy Gulf
States, Inc. (EGSI). This section shall apply to auctions conducted after
2001 by SWEPCO and/or EGSI only when competition is implemented in their respective
service territories.
[
Until January 1, 2002, the term also includes
an electric utility as defined in §25.5 of this title (relating to Definitions)
that owns or operates for compensation in this state equipment or facilities
to generate more than 400 megawatts (MW) of electricity in this state until
the electric utility has unbundled, but does not include river authorities.
]
(2)
] Auction
start
[
conclusion
] date--The date on which [
the bids are due to be received
and the winning bids in
] an auction
begins
[
are announced
].
(3)
] Business day--Any day on which
the affiliated PGC's corporate offices are open for business and that is not
a banking holiday
.
(4)
] Close of business--5:00 p.m.,
local Austin, Texas
[
central standard or daylight savings
]
time.
(5)
] Congestion zone--An area of
the transmission network that is bounded by commercially significant transmission
constraints or otherwise identified as a zone that is subject to transmission
constraints, as defined by an independent organization.
(6)
] Daily gas price--The index
posting for the date of flow in the Financial Times
energy
[
Energy
] publication "Gas Daily" under the heading "Daily Price Survey"
for East-Houston-Katy, Houston Ship Channel.
For EGSI gas entitlements
in the eastern congestion zone, the daily gas price will utilize the "Gas
Daily" index posting for Henry Hub. For EGSI gas entitlements in the western
congestion zone, the daily gas price will be a weighted average of the "Gas
Daily" index posting for East-Houston-Katy, Houston Ship Channel.
(7)
] Day-ahead--The day preceding
the operating day.
(8)
] Installed generation capacity--All
potentially marketable electric generation capacity owned by an affiliated
power generation company, including the capacity of:
generating
] facilities
that are connected with a transmission or distribution system;
generating
] facilities
used to generate electricity for consumption by the person owning or controlling
the facility; and
generating
] facilities
that will be connected with a transmission or distribution system and operating
within 12 months.
(10)
] Starts--Direction by the
owner of an entitlement to dispatch a previously idle entitlement.
(11)
] Texas jurisdictional installed
generation capacity--The amount of an affiliated PGC's installed generation
capacity properly allocable to the Texas jurisdiction. Such allocation shall
be calculated pursuant to an existing commission-approved allocation study,
or other such commission-approved methodology, and may be adjusted as approved
by the commission to reflect the effects of divestiture or the installation
of new generation facilities.
(f)
] of this section, each affiliated PGC subject
to this section shall sell at auction capacity entitlements equal to at least
15% of the affiliated PGC's Texas jurisdictional installed generation capacity.
Divestiture of a portion of an affiliated PGC's Texas jurisdictional installed
generation capacity will be counted toward satisfaction of the affiliated
PGC's capacity auction requirement if and only if the divestiture is made
pursuant to a commission order in a business combination proceeding pursuant
to PURA §14.101, and after the transfer of the assets and operations
to a third party.
four
] products
, defined separately in subsection (f) for Electric
Reliability Council of Texas, Inc. (ERCOT) and in subsection (g) for Non-ERCOT
areas,
shall be auctioned as capacity entitlements under subsection
(d) of this section.
Upon showing of good cause by the affiliated PGC
and approval by the commission, an affiliated PGC may propose to auction entitlements
different from those described in this section, including unit-specific capacity.
Each affiliated PGC shall auction an amount of each
applicable
product in proportion to the amount of Texas jurisdictional installed
generating capacity on the affiliated PGC's system that are the respective
type of generating units. An affiliated PGC that owns generation in multiple
congestion zones shall auction entitlements for delivery in each congestion
zone. The amount of each product auctioned in each zone shall be in proportion
to the amount of the respective type of generating units located in that zone,
but the total shall not be less than 15% of the affiliated PGC's Texas jurisdictional
installed generation capacity. The available entitlements for the months of
March, April, May, October, and November of each year may be reduced in proportion
to the average annual planned outage rate for the group of generating units
associated with each type of entitlement. Entitlements shall be for system
capacity.
If
] all units
providing capacity to an entitlement product experience a forced outage or
an emergency condition prevents or restricts the ability of an affiliated
PGC to dispatch a particular entitlement product, the entitlements of that
product may be reduced in proportion to the percentage reduction to the grouping
of units assigned to that entitlement; provided that such reductions in availability
of any single entitlement do not exceed 2.0% of the total monthly energy available
from the entitlement.
(3)
] Generation units offered.
If an affiliated PGC changes the assignment of its power generation units
to one of the four available product entitlements (baseload, gas-intermediate,
gas-cyclic, or gas-peaking) then
[
Within 60 days after the effective
date of this section,
] the affiliated PGC shall file with the commission
the
[
its
] proposed
changes in its
assignment of
each of the affiliated PGC's power generation units to one of the four available
product entitlements [
identified in paragraph (1) of this subsection,
] and the resulting amount of each type of entitlement to be auctioned.
As part of this filing, the affiliated PGC shall provide planned outage histories
for the years 1998, 1999, and 2000 for each generating unit to be used to
calculate the average annual planned outage rate for each group of generating
units. Interested parties shall have 30 days in which to provide comments
on the
affiliated PGC's
[
utility's
] proposed
changed
assignments. If no comments are received, the
affiliated PGC's
proposed
[
utility's
] assignment shall be deemed appropriate.
If any party objects to the
affiliated PGC's
[
utility's
]
proposed assignments,
then
the commission shall determine the appropriate
assignment considering the manner in which the affiliated PGC expects to use
such generation units.
(4)
] Obligations of affiliated PGC.
The affiliated PGC shall dispatch entitlements only as directed by the holder
of the entitlement in accordance with
the applicable product description
[
paragraph (5)(C) of this subsection
]. The affiliated PGC
may not refuse to dispatch the entitlement and may not curtail the dispatch
of an entitlement unless expressly authorized by this section or
by the
applicable Capacity Auction EEI/NEMA Master Power Purchase & Sale Agreement
(the "Agreement"), or unless
directed to do so by the independent organization
in order to alleviate a system emergency. The affiliated PGC shall specify
in its notice provided pursuant to subsection
(h)(2)(B)
[
(f)(2)(A)
] of this section the point on the transmission system where
energy from each entitlement is delivered to the
entitlement owner
[
buyer
].
(5)
]
Purchaser receives no
possessory interest or obligations
[
Purchaser's rights and duties
].
In addition, the following scheduling limitations apply based upon the
type of capacity entitlement being scheduled.
]
(D)
] Credit requirements.
(i)
] Standards. Entities submitting
bids
shall
[
must
] satisfy one of the following credit
standards:
(I)
] The entity holds an investment
grade credit rating (BBB- or Baa3 from Standard and Poor's or Moody's respectively
or an equivalent);
(II)
] The entity provides an escrowed
deposit equal to the
capacity price for the shorter of the duration of
the entitlement or three months
[
bid amount
] plus the amount
that would be paid to exercise the entitlement for the shorter of the duration
of the entitlement or three months at the
assumed dispatch provided in
subsection (h)(6)(A)(vi) of this section
[
minimum required dispatch
];
(III)
] The entity provides a letter
of credit or surety bond equal to the
capacity price for the shorter
of the duration of the entitlement or three months
[
bid amount
] plus the amount that would be paid to exercise the entitlement for
the shorter of the duration of the entitlement or a rolling three-month period
at the
assumed
[
minimum
] dispatch
provided in subsection
(h)(6)(A)(vi) of this section
[
required
], irrevocable for
the duration of the entitlement;
(IV)
] The entity provides a guaranty
from another entity with an investment grade credit rating; or
(V)
] The entity makes other suitable
arrangements with the affiliated PGC, provided that the affiliated PGC makes
such arrangements available on a non-discriminatory basis.
(ii)
] All cash and other instruments
used as credit security shall be unencumbered by pledges for collateral.
(iii)
] In the event the holder of
the entitlement initially relied on its investment grade credit rating but
subsequently loses it during the entitlement period, the holder of the entitlement
shall
[
must
] provide alternative financial evidence within
three business
[
ten
] days.
(iv)
] The holder of the entitlement
shall
[
must
] notify the affiliated PGC of any material changes
that impact the financial requirement contained in the credit standards.
(v)
] In the event the holder of
the entitlement fails to meet or continue to meet its security requirement,
the entitlement shall revert to the affiliated PGC and shall be auctioned
in the next auction for which notice can be provided of the sale of the entitlement
pursuant to subsection
(h)(2)(B)
[
(f)(2)(A)
] of this
section.
(f)
] Auction process.
Initial auction. The initial capacity auction shall be concluded on
or before September 1, 2001.
]
Subsequent auctions. Capacity auctions subsequent to the initial auction
shall be concluded on March 15, 2002, July 15, 2002, September 1, 2002, and
November 15, 2002. Auctions conducted in the years following 2002 will be
concluded in the same months and day of the month, as the auctions conducted
in 2002 (or in the event that date falls on a weekend or banking holiday,
on the first business day before the weekend or banking holiday).
]
auction conclusion
date.
]
conclusion
] date, each affiliated PGC offering capacity
entitlements at auction shall file with the commission notice of the pending
auction.
Within 20 days of the filing of the notice, the commission shall
review the notice for compliance with clause (ii) of this subparagraph. The
commission may administratively approve, reject, or approve the notice with
modifications.
The commission shall provide on its Internet site a continually
updated list of pending auctions for each affiliated PGC subject to this section.
conclusion
] date, the date and time by which bids
must be received for the first round, and the types, quantity (number of blocks),
congestion zone, and term of each entitlement available in that auction. The
notice shall also include the formula that will be used to adjust the price
of entitlements between rounds of the auction.
This formula shall require
that all affiliated PGCs use the following range of bid increments for each
product type:
subsection (e)(1)(A)(iii)
]
of this section at the time of the auction. [
If gas intermediate, gas
cyclic, or gas peaking entitlements are being auctioned, the utility shall
specify the fuel service cost.
]
on
] September [
1,
] 2001, each entitlement
was
[
will be
] one month in duration, with:
on
] March [
15
] of a year will auction approximately 30% of the entitlements as
the discrete months of May through August of that year.
on
] July [
15
] of a year will auction approximately 30% of the entitlements as
the discrete months of September through December of that year.
on
] September [
1
] of a year will auction:
,
] and
on
] November [
15
] of a year will auction approximately 30% of the entitlements as
the discrete months of January through April of the next year.
conclusion
] date.
An affiliated PGC that will satisfy its auction requirements through divestiture,
as described in subsection (d) of this section may petition the commission
to set an appropriate term for entitlements. The affiliated PGC may not adjust
the amount or length of an entitlement to be auctioned except as authorized
by the commission.
described
]
in subsection (e)(1) of this section by 25 to determine the number of blocks
of each type to be auctioned.
must
] pre-qualify by demonstrating compliance with the
credit requirements in subsection
(e)(7)
[
(e)(5)(D)(i)
]
of this section in advance of submission of a bid.
Rounds shall be held open for a reasonable
amount of time to allow bidders to submit bids while still allowing efficient
conclusion of the auction.
]
or equal to
] supply
for each set of entitlements. The auction then closes and the market clearing
price for each set of entitlements is set at the last price for which demand
equaled or
exceeded supply. Bidders shall then be awarded the entitlements
they demanded in the final round, plus a pro-rata share of any entitlements
they demanded in the next to last round
as described in clause (iii)
of this paragraph
.
internet
] on a secure
web page(s) and shall assign a password and bidder's number to each entity
that has satisfied the credit requirements in this section.
Within 60 days of the effective
date of this section, the affiliated PGC may
] file with the commission
, not less than 90 days before the auction start date on which the change
is proposed to be applicable,
a methodology for determining an opening
bid price for each type of entitlement, if needed, based on the
affiliated
PGC's
[
utility's
] expected variable cost of operation, but
excluding any return on equity. The opening price may not include any cost
included in the fuel price to be paid by entitlement winners, nor any cost
being recovered by its affiliated transmission and distribution utility through
non-bypassable delivery charges, but may recover variable costs not included
in the fuel prices, such as fuel service costs and
start up
[
start-up
] fees. Parties shall have 30 days after filing to challenge
the methodology.
If no challenges are received, the affiliated PGC's
proposed methodology shall be deemed appropriate. If any party objects to
the affiliated PGC's proposed methodology, then the commission shall determine
the appropriate methodology.
The affiliated PGC shall, in its notice propose
an auction of additional entitlements of the products for which the minimum
bid was met
] in order to comply with the 15% requirement.
The affiliated
PGC's proposal may include revisions to the product category, product price,
or offer alternative products for auction.
(g)
] Resale of entitlement. [
The winners of an entitlement may resell the entitlement (or portions thereof)
to any eligible purchaser except the affiliated REP of the affiliated PGC
that originally auctioned the entitlement. The third party must meet the same
credit requirements that had been required of the initial bid winner. Alternatively,
a winner may assign the entitlement to a third party that does not meet the
associated credit requirements provided that the original winner retains all
payment and other related obligations. Owners of entitlements may direct the
dispatch of those entitlements to any lawful purchaser of electricity, including
the affiliated REP.
]
(h)
] True-up process.
For each month
beginning on February 1, 2002 to the month following the date a final order
is issued in the PURA §39.262 proceeding,
] the affiliated PGC shall
reconcile, and either credit or bill to the transmission and distribution
utility, any difference between the price of power obtained through the capacity
auctions under this section and the power cost projections that were employed
for the same time period in the
ECOM
[
Excess Cost over Market
(ECOM)
] model to estimate stranded costs for the affiliated PGC in the
PURA §39.201 proceeding.
(i)
] True-up process for electric
utilities with divestiture. If an affiliated PGC meets its capacity auction
requirements through a divestiture as allowed by subsection (d) of this section,
the proceeds of the divestiture shall be used for purposes of the true-up
calculation.
(j)
] Modification of auction procedures
or products. Upon a finding by the commission that the auction procedures
or products require modification to better value the products or to better
suit the needs of the competitive market, the commission may, by order, modify
the procedures or products detailed in this
section
[
rule
].
(k)
] Contract terms. [
Parties
shall utilize a standard agreement adopted by the commission in detailing
the terms, conditions, and obligations of the selling and buying parties.
]
Part 8.
TEXAS RACING COMMISSION