| (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) Schedule of subsequent auctions. (i) The auction in March of a year will auction approximately 30% of the entitlements as the discrete months of May through August of that year. (ii) The auction in July of a year will auction approximately 30% of the entitlements as the discrete months of September through December of that year. (iii) The auction in September of a year will auction: (I) Approximately 50% of the entitlements as the one-year strips for the next year; and (II) Approximately 20% of the entitlements as discrete months for each of the 12 calendar months of the next year. (iv) The auction in November of a year will auction approximately 30% of the entitlements as the discrete months of January through April of the next year. (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) The commission will periodically evaluate the need to sell one-year and two-year strips and make appropriate adjustments to the terms of the auctions. (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 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. (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 in subsection (e)(1) of this section by 25 to determine the number of blocks of each type to be auctioned. (B) Divisibility. If the amount to be auctioned for an affiliated PGC for a particular product is not evenly divisible by 25, any remainder shall be added to the product most highly valued in the immediately preceding auction for products of the same duration 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 pre-qualify by demonstrating compliance with the credit requirements in subsection (e)(7) of this section in advance of submission of a bid. (6) Bidding procedures. For purposes of this section, the term "set of entitlements" shall refer to all of a seller's products of the same type and period. 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 would be a set of baseload-July 2002 entitlements. (A) Method of auction for affiliated PGCs within ERCOT. Each auction shall be a simultaneous, multiple round, auction that includes procedures that allow switching by bidders between affiliated PGCs and product types. (i) Auction duration. Once a product auction commences it will continue through each business day until that auction concludes. (ii) 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 central prevailing time. (iii) Credit calculation. An entitlement bidder's credit limit shall be adjusted during the auction based on the value of the entitlements bid upon, and will be determined by using an assumed fuel price stated by the entitlement seller, and 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: Attached Graphic (B) Mechanism for auction for affiliated PGCs within ERCOT. Each affiliated PGC shall conduct the auction over the Internet on a secure web page and shall assign a password and bidder's number to each entity that has satisfied the credit requirements in this section. (C) Method of auction for affiliated PGCs in non-ERCOT areas. 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 set of entitlements available for purchase at the auction. Each bidder will specify the number of entitlements 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 in any round is more than or equal to the available quantity, the affiliated PGC will adjust the price upward within the range for each specific product type as noticed according to paragraph (2)(B)(ii)(I) of this subsection. Bidders shall then submit bids for the quantities they wish to purchase of each set of entitlements at the new price. Subsequent rounds shall continue until demand is less than 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. (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 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. Attached Graphic Attached Graphic Attached Graphic Attached Graphic (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 central prevailing time. (vi) Credit calculation. An entitlement holder's credit limit shall be adjusted during the auction based on the value of the entitlements awarded to the holder, which will be determined by using an assumed fuel price stated by the entitlement seller, and 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: Attached Graphic Cont'd... |
