| (a) Application. This section applies to all generation
entities in the Electric Reliability Council of Texas (ERCOT). This
section defines the term "market power," as that term is used in §25.503
of this title (relating to Oversight of Wholesale Market Participants).
(b) Definitions. The following terms, when used in
this section, shall have the following meanings, unless the context
or specific language of a section indicates otherwise:
(1) Generation entity--An entity that controls a generation
resource. An entity affiliated with a generation entity shall be considered
part of that generation entity.
(2) Market power--The ability to control prices or
exclude competition in a relevant market.
(3) Market power abuse--Practices by persons possessing
market power that are unreasonably discriminatory or tend to unreasonably
restrict, impair, or reduce the level of competition, including practices
that tie unregulated products or services to regulated products or
services or unreasonably discriminate in the provision of regulated
services. Market power abuses include predatory pricing, withholding
of production, precluding entry, and collusion.
(c) Exemption based on installed generation capacity.
A single generation entity that controls less than 5% of the installed
generation capacity in ERCOT, as the term "installed generation capacity"
is defined in §25.5 of this title (relating to Definitions),
excluding uncontrollable renewable resources, is deemed not to have
ERCOT-wide market power. Controlling 5% or more of the installed generation
capacity in ERCOT does not, of itself, mean that a generating entity
has market power.
(d) Withholding of production. Prices offered by a
generation entity with market power may be a factor in determining
whether the entity has withheld production. A generation entity with
market power that prices its services substantially above its marginal
cost may be found to be withholding production; offering prices that
are not substantially above marginal cost does not constitute withholding
of production.
(e) Voluntary mitigation plan. Any generation entity
may submit to the commission a voluntary mitigation plan relating
to compliance with §25.503(g)(7) of this title or with the Public
Utility Regulatory Act (PURA) §39.157(a). Adherence to a commission-approved
voluntary mitigation plan must be considered in a proceeding to determine
whether the generation entity violated PURA §39.157 or §25.503(g)(7)
of this title and, if so, the amount of the administrative penalty
to be assessed for the violation.
(1) The commission will approve the voluntary mitigation
plan only if it finds that the plan is in the public interest.
(2) A generation entity or commission staff may apply
to amend a voluntary mitigation plan that applies to the generation
entity.
(3) The parties to a proceeding related to the approval
or amendment of a voluntary mitigation plan are limited to the generation
entity applying for the mitigation plan, commission staff, and the
independent market monitor.
(4) Termination of voluntary mitigation plan.
(A) The commission, on its own motion, may terminate,
in whole or in part, a voluntary mitigation plan approved under this
subsection. The executive director or the executive director's designee
may also terminate a voluntary mitigation plan, in whole or in part,
under the following conditions:
(i) The executive director or the executive director's
designee must determine that continuation of the plan is no longer
in the public interest.
(ii) The executive director or the executive director's
designee must provide notice of the termination to the applicable
generation entity and file a notice of termination in the same control
number in which the plan was approved at least three working days
prior to the effective date of the termination. The executive director
or the executive director's designee may withdraw the notice of termination
at any point prior to the effective date of the termination.
(iii) The commission must affirm or set aside the executive
director or the executive director's designee's termination of a voluntary
mitigation plan as soon as practicable after the effective date of
the termination.
(B) A generation entity with a commission-approved
voluntary mitigation plan may terminate the plan. The generation entity
must provide the executive director or executive director's designee
notice of the termination and file a notice of termination in the
same control number in which the plan was approved at least three
working days prior to the effective date of the termination. The generation
entity may withdraw its notice of termination at any point prior to
the effective date of the termination.
(f) Review of voluntary mitigation plans.
(1) The commission will review each effective voluntary
mitigation plan adopted under subsection (e) of this section to determine
whether the plan remains in the public interest at least once every
two years and not later than 90 days after the implementation date
of a wholesale market design change. Commission staff, in consultation
with the independent market monitor, will determine when a wholesale
market design change requiring the review of voluntary mitigation
plans has occurred.
(A) In determining whether a change in a commission
or ERCOT regulation constitutes a wholesale market design change for
purposes of this subsection, commission staff and the independent
market monitor must consider whether the change could materially increase
the ability of a generation entity with an existing voluntary mitigation
plan to exercise market power.
(B) If, at the time a proposed change in a commission
or ERCOT regulation is being considered for approval by the commission,
commission staff has determined that the proposed change would, if
implemented, constitute a wholesale market design change, commission
staff may include its determination in a filing addressing the proposed
change (e.g. as part of a staff memo recommending commission approval
of a change in the ERCOT protocols).
(C) Commission staff must provide notice, using a reasonable
method of notice, to a generation entity with an existing voluntary
mitigation plan when its voluntary mitigation plan is under review.
This notice must be provided no later than the date commission staff
files its recommendation under paragraph (2) of this subsection.
(D) Nothing in this paragraph prevents the commission,
on its own motion, from determining that a change in a commission
or ERCOT regulation constitutes a wholesale market design change for
purposes of this subsection and directing commission staff, in consultation
with the independent market monitor, to provide a recommendation on
whether each existing voluntary mitigation plan remains in the public
interest.
(2) At least 40 days prior to a deadline established
by paragraph (1) of this subsection, commission staff must file a
recommendation and draft order addressing whether each voluntary mitigation
plan remains in the public interest. Commission staff's recommendation
must include the date of the deadline established by paragraph (1)
of this subsection and, if applicable, the details and implementation
date of the applicable wholesale market design change. As part of
its recommendation, for each voluntary mitigation plan adopted prior
to September 1, 2023, commission staff must also address whether the
plan complies with PURA §15.023(f) and this section.
(3) If the commission determines that all or a part
of the plan is no longer in the public interest, the commission will
terminate any part of the plan that it determines is no longer in
the public interest. The generation entity may propose an amended
plan for the commission's consideration.
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