RE: FERC Looking at ERCOT

The conventional wisdom around ERCOT is once direct assignment of the CSC congestion costs takes place, then flowing across the CSC does have a cost and those who schedule across will be more judicious. The second assumption is that the stakeholders chose the wrong limiting element to be the monitored constraint. 90% of the congestion charges can be attributed to that wrong "element". If direct assignmnet of the congestion and/or designating the correct limiting element are not feasible and ERCOT continues to see very large congestion it will move to an LMP model. John Meyer, Shmuel Oren and most parties would agree with that. This year will be very telling.

It would be worthwhile the coordinate with John prior to RTO week.

-----Original Message-----
From: Steffes, James D.
Sent: Mon 10/8/2001 10:06 AM
To: Twiggs, Thane; Nicolay, Christi L.; Novosel, Sarah; Shapiro, Richard
Cc: Robertson, Linda; Ryall, Jean
Subject: RE: FERC Looking at ERCOT

Thanks for the info. Please stay closely linked with the RTO Week activities to try and read Wood's questions.

Also, John Meyer from Reliant is testifying. What will be his position? Should we talk with him this week to coordinate and try and move him the right way? Wasn't he the head of Congestion Management in ERCOT originally? I think this is Wood trying to ask him how ERCOT works. What will he say?

Thanks,

Jim

-----Original Message-----
From: Twiggs, Thane
Sent: Monday, October 08, 2001 9:27 AM
To: Steffes, James D.; Nicolay, Christi L.; Novosel, Sarah; Shapiro, Richard
Cc: Robertson, Linda; Ryall, Jean
Subject: RE: FERC Looking at ERCOT

Here are a couple of clarifying points:

The congestion charges that have been incurred are 55.6 million or 137 million depending on the methodology used to calculate the charge. If you look purely at the scheduled MWs then it is 137 MM based upong the ERCOT protocols. The actual cost to redispach and clear congestion as of Sept. 22, 2001 was 55.6 MM. Both obviously are very high considering it is for one month of operation.
When the 20 MM trigger was hit August 14, 2001, ERCOT has 6 month by Protocol and reaffirmed in the commission order to implement the full zonal model. This means that there will no longer be an uplift of interzonal congestion, rather a direct assignment of the charge. The charge may be partially offset by the TCR that will be auctioned. The PUCT has indicated an interest to move to direct assignment prior to the development and implementation of a TCR instrument as a hedge. I am chairing the congestion management working group that is deciding the TCR issue and will be dealing with the local congestion issues when that trigger has been hit.
It would be difficult to know if Pat Wood will try to push the ERCOT congestion management model as the model of choice. The staff and Brett Pearman have been in favor of a movement to an LMP model as a fall back position initially, but have been more concerned with retail acess as of late rather than the ERCOT congestion.

-----Original Message-----
From: Steffes, James D.
Sent: Sun 10/7/2001 12:53 PM
To: Nicolay, Christi L.; Novosel, Sarah; Shapiro, Richard; Twiggs, Thane
Cc: Robertson, Linda
Subject: RE: FERC Looking at ERCOT

Thane --

Based on Wood's statements while at the PUCT, what issues will most likely drive his choice of a congestion management model? My understanding is that Shumel Oren is on the panel at FERC, has he said anything recently that would argue that ERCOT may not be effective?

Finally, what are the minor changes to the ERCOT protocols to overcome the current obstacles so that if adopted we could use across the country?

Jim

Jim

-----Original Message-----
From: Nicolay, Christi L.
Sent: Fri 10/5/2001 12:22 PM
To: Steffes, James D.; Novosel, Sarah; Shapiro, Richard; Twiggs, Thane
Cc: Robertson, Linda
Subject: RE: FERC Looking at ERCOT

Pat Profeta of Northridge Assoc. (Entergy's congestion management consultants) told me this too and said that Michael Schnitzer of Northridge has been asked to be on the congestion management panel for RTO week. Michael is a strong advocate of the "SPP cornerstones" that are largely the basis of the "LMP/financial congestion hedge" model (initial model!) advocated in the SE RTO mediation report. They are going to contact Thane to get more information about ERCOT -- they recognize that ERCOT has some problems.

-----Original Message-----
From: Steffes, James D.
Sent: Friday, October 05, 2001 10:38 AM
To: Novosel, Sarah; Shapiro, Richard
Cc: Nicolay, Christi L.; Robertson, Linda
Subject: RE: FERC Looking at ERCOT

Agreed. In fact, my understanding is that the ERCOT protocols state that if congestion is greater than $20 MM / year the model would change. The market has reached $100 MM.

Jim

-----Original Message-----
From: Novosel, Sarah
Sent: Friday, October 05, 2001 10:27 AM
To: Shapiro, Richard; Steffes, James D.
Cc: Nicolay, Christi L.; Robertson, Linda
Subject: FERC Looking at ERCOT

This is just a rumor we're hearing, but we heard that FERC wants someone who knows ERCOT congestion management on the congestion management panel for RTO Week because FERC (presumably Pat Wood) wants to use the ERCOT congestion management system as the standard CMS throughout the country. From what I know about ERCOT (which isn't much and I have a call in to Thane to get an update), this wouldn't be a good thing for us. We'll keep you posted.