NPRR709 - Revisions to Alternative Dispute Resolution Procedure

1. Discussion – NPRR709, Revisions to Alternative Dispute Resolution Procedure Nathan Bigbee Jonathan Levine Chad V. Seely ERCOT Legal

2. NPRR709 Discussion – Overview • Scope: What NPRR709 does and does not cover • Background: Reasons for NPRR709 • Description: Short overview of NPRR709 • Summary of ADR Process: Key provisions • Questions and Next Steps Discussion re NPRR709

3. NPRR709 – Scope NPRR709 changes the Alternative Dispute Resolution (ADR) process only. NPRR709 does not change: • The Settlement and Billing Dispute Process (§ 9.14). This process is administered mainly by ERCOT Client Services and Settlement Staff, with limited support from ERCOT Legal. • The Data Extract Variance (DEV) dispute process (Retail Market Guide § 7.2.3 and MarkeTrak Users Guide). ERCOT Legal has historically had no role in this process. • The requirement to submit Settlement disputes to the Settlement and Billing Dispute Process and DEV disputes to the DEV dispute process prior to resorting to ADR. Overall, the ADR timelines will not materially change as a result of NPRR709. Discussion re NPRR709

4. NPRR709 – Scope (continued) Since Nodal Go-Live (December 2010), 42 ADR requests have been filed (approximately 8 per year). • Of the 42 ADR requests, 21 arose from Settlement and Billing Disputes. • In that time period, 743 Settlement and Billing Disputes were filed overall, of which 398 were denied. • Of the 21 S&B-related ADR requests, ERCOT approved 11 ADR claims for an aggregate amount of $7,343,755. (2 claims are still pending.) Discussion re NPRR709

5. NPRR709 – Background ERCOT has noted that ADR requests often present challenging questions of market policy. In those cases, ERCOT believes additional stakeholder input may be helpful in reaching an appropriate resolution. However, under the existing ADR procedures, there is no process by which ERCOT can solicit comments from stakeholders on such issues. At the July 31, 2014 TAC meeting, ERCOT Staff proposed sponsoring an NPRR to allow ERCOT to solicit comments from stakeholders on issues that arise in an ADR proceeding. Discussion re NPRR709

6. NPRR709 – Short Description Main Purpose: To provide a process for stakeholders to comment on issues that arise in an ADR proceeding. Summary of Changes: • Adds a process for stakeholders to comment on: (1) all ADR written requests, and (2) in certain cases, issues for which ERCOT determines broader stakeholder input may be helpful in reaching an appropriate resolution of the claim. • Provides public notice of the rationale for ADR resolutions. • Eliminates mediation and arbitration. • Clarifies and improves supporting language. Impact Analysis: $20k-$40k; 3-5 months; changes to MIS, EIS, ERCOT.com. Discussion re NPRR709

7. NPRR709 – Summary of Revised ADR Process Applicability (§ 20.1): Any claim by a Market Participant that ERCOT has violated any law, including any statute, rule, Protocol, Other Binding Document, or Agreement. Currently ADR process applies “to all disputes between ERCOT and one or more Market Participants or between two or more Market Participants relating to the application, implementation, and interpretation of, or compliance with these Protocols, any approved market guide, or related Agreements.” Discussion re NPRR709

8. NPRR709 – Summary of Revised ADR Process Applicability (§ 20.1) (continued): In general, only a Counter-Party may request ADR to seek correction of Settlement data and resettlement. Exceptions: • A Market Participant that is not a Counter-Party may request ADR on behalf of the Counter-Party if the Market Participant provides documentation that it was named the Counter-Party’s agent for the purpose of submitting the ADR request. • A Load Serving Entity (with itsCounter-Party) or TDSP may submit an ADR request for correction of ESI ID service history, usage information and/or resettlement. Discussion re NPRR709

9. NPRR709 – Summary of Revised ADR Process Applicability (§ 20.1) (continued): ADR does not apply to: • Situations where actual or threatened action would cause irreparable harm and where such harm cannot be addressed within time permitted under the ADR process. • Disputes governed by a separate dispute resolution process. Discussion re NPRR709

10. NPRR709 – Summary of Revised ADR Process (continued) Deadlines for Initiating Proceeding (§ 20.2): Same as existing. • Settlement and billing dispute denied by ERCOT: Within 45 days of denial. • DEV dispute not resolved by True-Up: Within 45 days of True-Up. • Any other claim: Within 6 months from date on which information giving rise to ADR request became available. Discussion re NPRR709

11. NPRR709 – Summary of Revised ADR Process (continued) Exhaustion of Other Dispute Resolution Procedures (§ 20.3): Similar to existing language in § 20.1, but clarified. • If the Protocols, an Other Binding Document or an Agreement sets forth a dispute resolution procedure, a Market Participant shall exhaust the procedure before initiating ADR. This includes: • Resolutions of variances subject to the DEV process. • Corrections of Settlement data and resettlement subject to the Settlement and Billing Dispute process (§ 9.14). Discussion re NPRR709

12. NPRR709 – Summary of Revised ADR Process (continued) Initiation (§ 20.4): A revised ADR written request form will be available on ERCOT.com. • For all ADR proceedings, basic information is required, including a detailed description of the grounds for the relief and the basis of each claim. • For ADR proceedings for which a monetary resolution is sought, additional information regarding the dispute must be provided. • If the written request contains Protected Information, the Market Participant must also submit a redacted copy for posting by ERCOT. Discussion re NPRR709

13. NPRR709 – Summary of Revised ADR Process (continued) ADR Process (§ 20.5): • ERCOT provides Notice to parties and Market Notice to stakeholders, attaching ADR request, redacted if necessary (≤ 7 days after ADR initiation date). • Stakeholders may comment on ADR request (≤ 14 days after Market Notice). • If ADR proceeding involves one or more issues for which broader stakeholder input may be helpful, ERCOT issues Market Notice (≤ 35 days after ADR initiation date). • Stakeholders, PUCT or Texas RE may comment on issues contained in second Market Notice, if any (≤ 14 days after Market Notice). • Parties conduct an initial ADR meeting (≤ 90 days after ADR initiation date). • ERCOT resolution of the ADR proceeding (≤ 120 days after ADR initiation date). Discussion re NPRR709

14. NPRR709 – Summary of Revised ADR Process (continued) Timeline Comparison (new vs. existing) Discussion re NPRR709

15. NPRR709 – Summary of Revised ADR Process (continued) ADR Costs (§ 20.6): No material changes. • Revisions have been made to reflect the deletion of mediation and arbitration. Requests for Documents and Data (§ 20.7): No material changes. • Revisions have been made to reflect the deletion of mediation and arbitration. • Eliminated requirement to enter into confidentiality agreement. Obligations regarding Protected Information are governed by Section 1.3, Confidentiality. • Modernized language regarding delivery methods. Discussion re NPRR709

16. NPRR709 – Summary of Revised ADR Process (continued) Resolution of ADR Proceedings (§ 20.8): • ERCOT shall issue a Market Notice stating the disposition and rationale. • If ERCOT approves the ADR claim, it shall issue a Market Notice describing the total resettlement amount and the manner in which the resulting overpayments or underpayments will be allocated. • If ERCOT determines it is appropriate to correct prices (LMPs, MCPCs, constraint Shadow Prices, ORDC adders, etc.), Board approval is not required. • Any Market Participant that is adversely affected may appeal ERCOT’s decision to the PUCT pursuant to P.U.C. Proc. R. 22.251. Note: ERCOT is still considering whether this exhaustion principle should require a Market Participant to have participated in the ADR proceeding and to have raised the relevant issue(s) in the ADR proceeding. ERCOT may propose additional revisions in comments. Discussion re NPRR709

17. NPRR709 – Summary of Revised ADR Process (continued) Adjustments Based on ADR (§ 20.9): • If resettlement is practicable, ERCOT will issue a Resettlement Statement for the affected Operating Day(s). • If resettlement is not practicable, ERCOT shall use a separate ADR Invoice that is produced outside normal Settlement Invoices. • No amounts greater than $5M will be allocated to any single Invoice. Discussion re NPRR709

18. NPRR709 – Next Steps Next steps? Questions? Discussion re NPRR709