Note: This is the second of two ERCOT at a Glance issues this week due to the number of major meetings and events.

PUC Chair Highlights Growth at PUC, ERCOT

Public Utility Commission Chairman Paul Hudson presented a big-picture overview Tuesday of PUC’s progress from a “sleepy entity” in the ‘70s and ‘80s to today’s role as overseers of the nation’s largest retail market with more than 11 million transactions completed.

In a presentation at ERCOT’s 34th annual meeting to an audience consisting primarily of ERCOT market participants, Hudson reviewed his first year and a half on the commission with a fast-paced presentation containing several humorous cartoons and anecdotes.  He also traced several milestones achieved since the retail market opened three years ago, including the Commission’s steadily improving track record in resolving consumer complaints.

Hudson briefly highlighted some tasks ahead for ERCOT regarding audit implementation activities, physical and cyber security improvements, communication and public openness enhancements, and “credibility recovery” based on public trust, fiscal responsibility, and organizational efficiency.

”You now have a CEO and a board in place who are committed to working with the issues raised in the audits,” he said.

Hudson also noted that ERCOT is developing an audit implementation work plan and has agreed to do future audits to evaluate implementation success and asset inventory.

Commission Approves Interim ERCOT Fee Settlement

The Public Utility Commission on Thursday unanimously approved the ERCOT administration fee agreement which lowers the fee to $.42 per megawatt-hour, essentially trimming ERCOT’s budget by $6 million.  The commission’s interim order allows the new fee to take effect Jan. 1, with final approval expected later in January after the required public comment period.  The fee settlement agreement was reached through a process organized by PUC staff and including a broad group of stakeholders.

ERCOT Board Meeting Action

ERCOT Board of Directors’ action in Tuesday’s meeting included:

• Approved the 2005 budget Tuesday and an administrative fee of $.042 per megawatt hour, in accordance with the settlement.
• Amended ERCOT’s debt policy to provide that ERCOT’s unhedged, variable rate debt outstanding will not exceed 40% of its total debt outstanding.
• Endorsed the need for the proposed Clear Springs – Salado double-circuit 345-kV project that will reach from the Clear Springs/Zorn stations in Central Texas to a new switching station at Salado, south of Temple (approximately 100 miles). The line will also include two new 345/138-kV substations in Travis and Williamson counties. The estimated capital cost of the project is approximately $140 million.  It should yield $50 million per year in savings.
• Heard a report from Sean Barry of PricewaterhouseCoopers on the preliminary results of ERCOT’s SAS 70 audit, conducted May 1 to August 31.  The SAS 70 audit, which Barry estimated would be completed by Dec. 20, evaluates ERCOT’s internal controls affecting market transaction and settlement data.   ERCOT is scheduling a Dec. 21 conference call for market participants to learn details and ask questions.
• Voted to approve several changes to some previously approved Texas Nodal market design elements.  The Texas Nodal Team recommended the changes based on input from economists who met with TNT members earlier this year.
• Voted for Mike Greene and Bob Manning to continue their roles as chairman and vice-chairman.  PUC Chairman Hudson commended Greene for his diligence and leadership over the last several years. Commissioners Julie Parsley and Barry Smitherman echoed Chairman Hudson’s comments.
• Confirmed Technical Advisory Council representatives for 2005

Management Action Plan Presented to Commissioners

CEO Tom Schrader presented a Management Action Plan (MAP) to the Public Utility Commission Thursday.  The plan, based on input and guidelines from the audits and fee settlement, includes three main areas: internal control environment, management activities and audit response (specific projects and process design).

In addition, Director of Security Chander Ahuja presented details of five strategic initiatives on asset clarification, secure information, access control, physical security and security vision.

Internal Audit Manager Ed Ettorre reported on the audit tracking system software program which has been put into place.  The tracking tool provides a comprehensive and consistent method to track audit recommendations and help ensure completion dates are met.

Chief of Market Operations Ray Giuliani reviewed a budget action plan to operate within the approved $.42/MWh administrative fee without impairing core responsibilities.  Plans call for an assessment of core processes to identify efficiencies and analyze workforce requirements and an assessment of administrative processes to identify additional efficiencies.

ERCOT Meeting Dates

• 12/17/04 -- TNT Protocols, 0900-1500, ERCOT Austin 206B
• 12/17/04 -- PWG, 0900-1500, ERCOT Austin 168
• 12/23-24/04 -- ERCOT Administrative Office Holiday
• 12/31/04 -- ERCOT Administrative Office Holiday

If you have a submission for ERCOT at a Glance, please contact Dottie Roark, 512-225-7024 or droark@ercot.com