(a) Scope. This section applies to the budget of and
all fees and rates levied or charged by the Electric Reliability Council
of Texas (ERCOT) in its role as an independent organization under
PURA §39.151.
(1) A fee or rate that was in effect on the effective
date of this section shall remain in effect and shall not be changed,
except as provided in this section.
(2) ERCOT shall not implement any new or modified budget,
rate or fee without commission approval, except as otherwise provided
by this section.
(3) ERCOT shall not incur expenses or capital outlays
in any year that exceed the amounts approved by the commission, except
in the case of an emergency that impairs its ability to conduct is
functions.
(4) ERCOT shall not incur debt, defer scheduled principal
repayments of debt, or refinance existing debt without commission
approval. ERCOT shall seek approval of any loan or agreement to provide
a line of credit from a bank or other institution, the issuance of
bonds or notes, and any arrangements that would permit it to issue
bonds or permit the issuance of bonds on its behalf at a later date.
The commission may approve, disapprove, or modify a proposal made
pursuant to this paragraph. This paragraph does not require approval
of a contract to lease equipment or other property used in normal
operations, approval of a loan or draw on an existing line of credit
or other credit arrangement that has been approved by the commission,
or renewal of an existing working capital line of credit that has
been approved by the commission.
(b) System of accounts and reporting. For the purpose
of accounting and reporting to the commission, ERCOT shall maintain
its books and records in accordance with Generally Accepted Accounting
Principles. ERCOT shall establish a standard chart of accounts and
employ it consistently from year to year. The standard chart of accounts
shall be used for the purpose of reporting to the commission and shall
be consistent with the long-term operations plan prescribed by §25.362
of this title (relating to Electric Reliability Council of Texas (ERCOT)
Governance). The accounts shall show all revenues resulting from the
various fees charged by ERCOT and reflect all expenses in a manner
that allows the commission to determine the sources of the costs incurred
for each major activity conducted by ERCOT.
(c) Allowable expenses. Expenses and capital outlays
in the budget shall be based upon ERCOT's expected cost of performing
its required functions as described in PURA §39.151(a) and this
chapter. To determine whether the costs are reasonable and necessary,
the commission may consider the budget justification provided by ERCOT,
the ERCOT long-term operations plan, costs incurred by market participants
and other independent system operators for similar activities, costs
incurred in prior years, capital projects identified in the budget,
and to any other information and data considered appropriate by the
commission.
(1) Only those expenses that are reasonable and necessary
to carry out the functions described in PURA §39.151 and this
chapter shall be included in allowable expenses.
(2) Allowable expenses, to the extent they are reasonable
and necessary, may include, but are not limited to, the following
general categories:
(A) Operating expenses, which include salaries and
related benefits, direct advertising for the specific purpose of recruiting
employees, legal and consulting services, hardware and software maintenance
and licensing, insurance, employee training and travel, and depreciation;
(B) Facility and equipment costs, and other long-lived
investments;
(C) Debt service (interest plus principal reduction)
and other reasonable and necessary costs of capital to fund investments
in property and facilities, and other capital expenditures that are
used and useful in performing the functions of an independent organization;
(D) Expenses associated with fees and dues charged
by organizations setting electric or energy business practices and
communications standards (e.g., North American Electric Reliability
Council, North American Energy Standards Board, and ISO/RTO Council)
of which ERCOT is a member; and
(E) Actual expenditures for public service announcements
and community education efforts.
(3) The following are not allowable as a component
of expenses:
(A) Legislative advocacy expenses, whether made directly
or indirectly;
(B) Funds expended in support of political candidates,
movements or causes;
(C) Funds expended promoting religious causes;
(D) Funds expended in support of or in acquiring membership
in social, recreational, or fraternal clubs or organizations;
(E) Funds expended for advertising, marketing, or other
promotions, which includes, but is not limited to:
(i) promotional goods;
(ii) efforts to increase name recognition;
(iii) radio, television, newspaper or other media advertising;
except as otherwise expressly authorized; and
(F) Any expenditure found by the commission to be unreasonable,
unnecessary, not in the public interest, or not sufficiently supported
by the fee-filing package and accompanying evidence.
(d) Budget Submission. ERCOT shall submit its proposed
budget for commission review as specified in the commission order
approving its previous budget. As part of its application for approval
of its proposed budget, ERCOT shall include all information necessary
for the commission to evaluate the proposed budget, including all
information required under this section. The commission shall provide
public notice of ERCOT's proposed budget and allow a reasonable opportunity
for the public to comment on the ERCOT's proposed budget. The review
and approval of a proposed budget or a proceeding to authorize and
set the range for the amount of the fee under this section is not
a contested case for purposes of Chapter 2001 of the Texas Government
Code.
(e) Commission review and action. The ERCOT annual
budget and any change in the system administration fee are subject
to review by the commission either annually or biennially, at the
commission's discretion. Prior to the submission of a proposed budget
or change in the system administration fee to the governing board
for its approval, ERCOT shall consult with commission staff designated
by the executive director in connection with the development of the
budget and shall provide to the staff information concerning budget
strategies, staffing requirements, categories of expenses, capital
outlays, exceptional expenses and capital items, and proposals to
incur additional debt. ERCOT shall file with the commission its board-approved
budget, budget strategies, and staffing needs, with a justification
for all expenses, capital outlays, additional debt, and staffing requirements.
The commission may approve, disapprove, or modify any item included
in the proposed budget and budget strategies. After approving ERCOT's
budget, the commission shall authorize ERCOT to charge a system administration
fee, within a range determined by the commission, that is reasonable
and competitively neutral to fund ERCOT's budget. ERCOT shall closely
match actual revenues generated by the system administration fee and
other sources of revenue with revenue necessary to fund the budget,
taking into account the effect of a fee change on market participants
and consumers, to ensure that the budget year does not end with a
surplus or insufficient funds. Any change to the fee approved by the
commission or made during the course of an annual or biennial budget
cycle will be noticed through standard market processes at least 45
days before implementation. ERCOT shall file with the commission,
upon request, a report comparing actual expenditures with budgeted
expenditures. Such reports shall be filed at least once per year.
(f) Performance measures. ERCOT shall develop proposed
performance measures to track its operations. Such measures shall
be submitted for commission review and approval at the time ERCOT
submits its proposed budget. ERCOT shall provide an explanation for
any performance measure whose value for any of the preceding three
calendar years was not within 5% of the commission-approved target.
The commission will review ERCOT's performance as part of the budget
review process. The commission shall prepare a report evaluating ERCOT's
performance at the time the commission approves ERCOT's budget and
shall submit the report to the Lieutenant Governor, the Speaker of
the House of Representatives, and each house and senate standing committee
that has jurisdiction over electric utility issues.
(g) User Fees. ERCOT may charge reasonable user fees
for services provided by ERCOT to any market participant or other
entity. User fees do not include the system administration fee and
the ERCOT nodal implementation surcharge. A new or revised user fee
may be approved by the ERCOT governing board. Any affected entity,
including the commission staff and the public counsel, may file an
appeal of the establishment or revision of a user fee, in accordance
with §22.251 of this title (relating to Review of Electric Reliability
Council of Texas (ERCOT) Conduct), except that the provisions of §22.251(c)
of this title (which requires the use of Section 20 of the ERCOT Protocols
(Alternative Dispute Resolution Procedures), or Section 21 of the
Protocols (Process for Protocol Revision), or other Applicable ERCOT
Procedures) shall not apply.
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