| (a) Purpose. The purpose of this section is to establish
the standards that the commission will apply in monitoring the activities
of entities participating in the wholesale electricity markets, including
markets administered by the Electric Reliability Council of Texas
(ERCOT), and enforcing the Public Utility Regulatory Act (PURA) and
ERCOT procedures relating to wholesale markets. The standards contained
in this rule are necessary to:
(1) protect customers from unfair, misleading, and
deceptive practices in the wholesale markets, including ERCOT-administered
markets;
(2) ensure that ancillary services necessary to facilitate
the reliable transmission of electric energy are available at reasonable
prices;
(3) afford customers safe, reliable, and reasonably
priced electricity;
(4) ensure that all wholesale market participants observe
all scheduling, operating, reliability, and settlement policies, rules,
guidelines, and procedures established in the ERCOT procedures;
(5) clarify prohibited activities in the wholesale
markets, including ERCOT-administered markets;
(6) monitor and mitigate market power as authorized
by the Public Utility Regulatory Act (PURA) §39.157(a) and prevent
market power abuses;
(7) clarify the standards and criteria the commission
will use when reviewing wholesale market activities;
(8) clarify the remedies for non-compliance with the
Protocols relating to wholesale markets; and
(9) prescribe ERCOT's role in enforcing ERCOT procedures
relating to the reliability of the regional electric network and accounting
for the production and delivery among generators and all other market
participants and monitoring and obtaining compliance with operating
standards within the ERCOT regional network.
(b) Application. This section applies to all market
entities, as defined in subsection (c) of this section.
(c) Definitions. The following words and terms when
used in this section have the following meaning, unless the context
indicates otherwise:
(1) Artificial congestion--Congestion created when
multiple foreseeable options exist for scheduling, dispatching, or
operating a resource, and a market participant chooses an option that
is not the most economical, that foreseeably creates or exacerbates
transmission congestion, and that results in the market participant
being paid to relieve the congestion it caused.
(2) Efficient operation of the market--Operation of
the markets administered by ERCOT, consistent with reliability standards,
that is characterized by the fullest use of competitive auctions to
procure ancillary services, minimal cost socialization, and the most
economical utilization of resources, subject to necessary operational
and other constraints.
(3) ERCOT procedures--Documents that contain the scheduling,
operating, planning, reliability, and settlement procedures, standards,
and criteria that are public and in effect in the ERCOT power region,
including the ERCOT Protocols, ERCOT Operating Guides, and Other Binding
Documents as amended from time to time but excluding ERCOT's internal
administrative procedures. The Protocols generally govern when there
are inconsistencies between the Protocols and the Operating Guides,
except when ERCOT staff, consistent with subsection (i) of this section,
determines that a provision contained in the Operating Guides is technically
superior for the efficient and reliable operation of the electric
network.
(4) Excess Revenue--Revenue in excess of the revenue
that would have occurred absent a violation of PURA §39.157 or
this section.
(5) Market entity--Any person or entity participating
in the ERCOT-administered wholesale market, including, but not limited
to, a load serving entity (including a municipally owned utility and
an electric cooperative,) a power marketer, a transmission and distribution
utility, a power generation company, a qualifying facility, an exempt
wholesale generator, ERCOT, and any entity conducting planning, scheduling,
or operating activities on behalf of, or controlling the activities
of, such market entities.
(6) Market participant--A market entity other than
ERCOT.
(7) Reliability Monitor--A person or entity selected
by the commission to monitor compliance with all state reliability-related
laws, rules, and ERCOT procedures including protocols, processes and
any other operating standards applicable to the ERCOT Region.
(8) Resource--Facilities capable of providing electrical
energy or load capable of reducing or increasing the need for electrical
energy or providing short-term reserves into the ERCOT system. This
includes generation and load resources.
(d) Standards and criteria for enforcement of ERCOT
procedures and PURA. The commission will monitor the activities of
market entities to determine if such activities are consistent with
ERCOT procedures; whether they constitute market power abuses or are
unfair, misleading, or deceptive practices affecting customers; and
whether they are consistent with the proper accounting for the production
and delivery of electricity among generators and other market participants.
When reviewing the activities of a market entity, the commission will
consider whether the activity was conducted in a manner that:
(1) adversely affected customers in a material way
through the use of unfair, misleading, or deceptive practices;
(2) materially reduced the competitiveness of the market,
including whether the activity unfairly impacted other market participants
in a way that restricts competition;
(3) disregarded its effect on the reliability of the
ERCOT electric system; or
(4) interfered with the efficient operation of the
market.
(e) Guiding ethical standards. Each market participant
is expected to:
(1) observe all applicable laws and rules;
(2) schedule, bid, and operate its resources in a manner
consistent with ERCOT procedures to support the efficient and reliable
operation of the ERCOT electric system; and
(3) not engage in activities and transactions that
create artificial congestion or artificial supply shortages, artificially
inflate revenues or volumes, or manipulate the market or market prices
in any way.
(f) Duties of market entities.
(1) Each market participant must be knowledgeable about
ERCOT procedures.
(2) A market participant must comply with ERCOT procedures
and any official interpretation of the Protocols issued by ERCOT or
the commission.
(A) If a market participant disagrees with any provision
of the Protocols or any official interpretation of the Protocols,
it may seek an amendment of the Protocols as provided for in the Protocols,
appeal an ERCOT official interpretation to the commission, or both.
(B) A market participant appealing an official interpretation
of the Protocols or seeking an amendment to the Protocols must comply
with the Protocols unless and until the interpretation is officially
changed or the amendment is officially adopted.
(C) A market participant may be excused from compliance
with ERCOT instructions or Protocol requirements only if such non-compliance
is due to communication or equipment failure beyond the reasonable
control of the market participant; if compliance would jeopardize
public health and safety or the reliability of the ERCOT transmission
grid, or create risk of bodily harm or damage to the equipment; if
compliance would be inconsistent with facility licensing, environmental,
or legal requirements; if required by applicable law; or for other
good cause. A market participant is excused under this subparagraph
only for so long as the condition continues.
(3) Whenever the Protocols require that a market participant
make its "best effort" or a "good faith effort" to meet a requirement,
or similar language, the market participant must act in accordance
with the requirement unless:
(A) it is not technically possible to do so;
(B) doing so would jeopardize public health and safety
or the reliability of the ERCOT transmission grid, or would create
a risk of bodily harm or damage to the equipment;
(C) doing so would be inconsistent with facility licensing,
environmental, or legal requirements; or
(D) other good cause exists for excusing the requirement.
(4) When a market participant is not able to comply
with a Protocol requirement or official interpretation of a requirement,
or honor a formal commitment to ERCOT, the market participant has
an obligation to notify ERCOT immediately upon learning of such constraints
and to notify ERCOT when the problem ceases. A market participant
who does not comply with a Protocol requirement or official interpretation
of a requirement, or honor a formal commitment to ERCOT, has the burden
to demonstrate, in any commission proceeding in which the failure
to comply is raised, why it cannot comply with the Protocol requirement
or official interpretation of the requirement, or honor the commitment.
(5) The commission staff may request information from
a market participant concerning a notification of failure to comply
with a Protocol requirement or official interpretation of a requirement,
or honor a formal commitment to ERCOT. The market participant must
provide a response that is detailed and reasonably complete, explaining
the circumstances surrounding the alleged failure, and must provide
documents and other materials relating to such alleged failure to
comply. The response must be submitted to the commission staff within
five business days of a written request for information, unless commission
staff agrees to an extension.
(6) A market participant's bids of energy and ancillary
services must be from resources that are available and capable of
performing, and must be feasible within the limits of the operating
characteristics indicated in the resource plan, as defined in the
Protocols, and consistent with the applicable ramp rate, as specified
in the Protocols.
(7) All statements, data and information provided by
a market participant to market publications and publishers of surveys
and market indices for the computation of an industry price index
must be true, accurate, reasonably complete, and must be consistent
with the market participant's activities, subject to generally accepted
standards of confidentiality and industry standards. Market participants
must exercise due diligence to prevent the release of materially inaccurate
or misleading information.
(8) A market entity has an obligation to provide accurate
and factual information and must not submit false or misleading information,
or omit material information, in any communication with ERCOT or with
the commission. Market entities must exercise due diligence to ensure
adherence to this provision throughout the entity.
(9) A market participant must comply with all reporting
requirements governing the availability and maintenance of a generating
unit or transmission facility, including outage scheduling reporting
requirements. A market participant must immediately notify ERCOT when
capacity changes or resource limitations occur that materially affect
the availability of a unit or facility, the anticipated operation
of its resources, or the ability to comply with ERCOT dispatch instructions.
(10) A market participant must comply with requests
for information or data by ERCOT as specified by the Protocols or
ERCOT instructions within the time specified by ERCOT instructions,
or such other time agreed to by ERCOT and the market participant.
(11) When a Protocol provision or its applicability
is unclear, or when a situation arises that is not contemplated under
the Protocols, a market entity seeking clarification of the Protocols
must use the Nodal Protocol Revision Request (NPRR) process provided
in the Protocols. If the NPRR process is impractical or inappropriate
under the circumstances, the market entity may use the process for
requesting formal Protocol clarifications or interpretations described
in subsection (i) of this section. This provision is not intended
to discourage day to day informal communication between market participants
and ERCOT staff.
(12) A market participant operating in the ERCOT markets
or a member of the ERCOT staff who identifies a provision in the ERCOT
procedures that produces an outcome inconsistent with the efficient
and reliable operation of the ERCOT-administered markets must call
the provision to the attention of ERCOT staff and the appropriate
ERCOT subcommittee. All market participants must cooperate with the
ERCOT subcommittees, ERCOT staff, and the commission staff to develop
Protocols that are clear and consistent.
(13) A market participant must establish and document
internal procedures that instruct its affected personnel on how to
implement ERCOT procedures according to the standards delineated in
this section. Each market participant must establish clear lines of
accountability for its market practices.
(g) Prohibited activities. Any act or practice of a
market participant that materially and adversely affects the reliability
of the regional electric network or the proper accounting for the
production and delivery of electricity among market participants is
considered a "prohibited activity." The term "prohibited activity"
in this subsection excludes acts or practices expressly allowed by
the Protocols or by official interpretations of the Protocols and
acts or practices conducted in compliance with express directions
from ERCOT or commission rule or order or other legal authority. The
term Cont'd... |
