Topics:

• ERCOT Receives ‘Full Compliance’ Report From National Reliability Council
• New Independent Board Memeber Selected
• Former General Counsel Recognized By Board
• Fixed Asset Accountant Hired
• Short Payment Funds Related To Enron Bankruptcy To Be Distributed
• Legislation Update
• ERCOT Meeting Calendar

ERCOT Receives ‘Full Compliance’ Report From National Reliability Council

ERCOT has been notified that it is in “full compliance” on all 2004 planning standards directly monitored by the North American Electric Reliability Council (NERC), Chief Operations Officer Sam Jones announced this week.

“A full compliance finding is wonderful to receive,” Jones said. “A lot of effort goes into maintaining these activities, and the results are worth it.”

The activities required and monitored as part of NERC’s Compliance Enforcement Program include development and maintenance of:

• Regional and interregional reliability assessments
• A library of solved steady state models
• Initialized dynamics systems models
• Regional under-frequency load-shedding programs
• A regional blackstart capability plan.

NERC’s announcement of the compliance assessment results states, “This truly reflects well on the ERCOT region, its members, and customers working to preserve the reliability of the North American bulk electric system.”

New Independent Board Member Selected

Austin businessperson Carolyn Lewis Gallagher has been selected to serve on the ERCOT Board of Directors as an unaffiliated member, Chairman Mike Greene announced last week at the ERCOT board meeting.

Gallagher was appointed by President George W. Bush to the Board of Governors of the United States Postal Service, where she has served since 2004. She was president and CEO of Texwood Furniture Corporation, Austin, 1988-2000, and manager, business development for the Coca-Cola Company, Atlanta. Prior to that, she was vice president of strategic planning for Distribution Systems, Inc., Houston. She is also a trustee and past chair of St. Edward’s University Board of Trustees and the Employees Retirement System (ERS) of Texas. She was appointed to the ERS board by then-Governor Bush in 1996 and reappointed in 2000 to a term ending in 2006. ERS manages the $20 billion retirement fund and administers the health benefit plans for all state employees.

Gallagher has a bachelor’s degree from Duke University and an MBA from Harvard Graduate School of Business.

“Carolyn has an extremely impressive background,” Greene said. “We believe she will be a great addition to the board.”

Gallagher replaces David Baggett, who was serving a one-year term on the board. The unaffiliated directors serve staggered three-year terms. ERCOT’s 14-member “hybrid” board includes three unaffiliated (or independent) members; six representatives from each of the industry segments (investor-owned utilities, municipally-owned utilities, cooperatives, generators, power marketers and retail electric providers); three consumer segment representatives (industrial, commercial and residential); and the ERCOT CEO and Public Utility Commission chair. The three unaffiliated members were recruited for their expertise in specific areas: information technology, finance and risk management.

Gallager was recruited by an executive search firm and screened by a nominating committee made up of sitting ERCOT Board members. Gallagher was approved unanimously by the ERCOT membership.

Outgoing General Counsel Recognized by Board

Also at the board meeting, Chairman Mike Greene and board members recognized the contributions of General Counsel Margaret Pemberton, whose departure was effective April 19 following the announcement of her resignation in February. Board members presented Pemberton with a gift and commended her on her efforts over her last eight years with ERCOT. Greene and several board members expressed their appreciation of her professionalism and dedication.

Deputy General Counsel Mark Walker was approved by the board to serve as Interim General Counsel while a search for Pemberton’s permanent successor is underway.

Fixed Asset Accountant Hired

Joe Naizer has been hired to fill the new position of fixed asset accountant. Naizer has more than 25 years experience, primarily in the telecommunications industry, with heavy emphasis on fixed asset management and business process improvement. The position was created partly in response to recommendations from the recent Deloitte & Touche internal controls assessment.

Short Payment Funds Related To Enron Bankruptcy To Be Distributed

A settlement agreement was reached last week in a dispute related to the bankruptcy filing by Enron Power Marketing, Inc. (EPMI), a former ERCOT qualified scheduling entity (QSE). ERCOT will distribute the funds it was holding pending the outcome of the bankruptcy, to QSEs that are due payment as a result of the payment default by EPMI, as required by the protocols. ERCOT will release funds this week for all amounts that have been previously short-paid related to the EPMI bankruptcy (a total of $494,766).

Legislation Update

The Texas Senate has moved several key bills related to ERCOT and the Texas electric market.

• SB 743 (Fraser), which clarifies the PUC’s oversight role over ERCOT, passed the Senate unanimously on April 14, and is scheduled for a hearing at the House Regulated Industries Committee next Tuesday, May 3.
• SB 408 (Nelson), which contains similar ERCOT oversight language and also reauthorizes the Public Utility Commission for six years, passed the Senate Government Organization Committee unanimously on April 20 and is awaiting floor action.
• SB 533 (Fraser), which sets a new statewide renewable energy standard of 5,880 MW by 2015, and a target for 10,880 MW by 2025, passed the Senate unanimously on April 22.
• SB 711 (Carona), which would abolish competitive metering for small commercial and residential customers and would allow utilities to recover costs for meter upgrades, passed the Senate Business & Commerce Committee unanimously on April 19 and is awaiting floor action.

Meanwhile, the House Regulated Industries Committee has passed HB 1777 (electricity policy including ERCOT oversight) and HB 1779 (PUC reauthorization). The bills have not yet been posted to the House calendar for floor consideration.

Bill texts and status can be viewed at Texas Legislature Online by entering the bill number in the “Quick Bill Status” search block.

ERCOT Meeting Calendar

May 2005