Texas Staff, GDF Suez Seek Approval of Voluntary Mitigation Plan

Staff of the Public Utility Commission of Texas and IPR-GDF Suez Energy Marketing North America, Inc. have sought Commission approval of a Voluntary Mitigation Plan specifying how GDF Suez will be treated for enforcement purposes under P.U.C. Subst. R. 25.504(c) for the remainder of 2012, relating to offering its generation resources into the ERCOT real-time energy market, and memorializing the shared understanding that existing local market protections in the ERCOT Protocols and market are sufficient to prevent an abuse of market power locally.

Currently, GDF Suez controls 3,893 MW of generation in the ERCOT market.

According to the Commission's December 2011 Estimate of Installed Generation Capacity in ERCOT, the estimate of total installed generation capacity in ERCOT used to determine the five-percent threshold in P.U.C. Subst. R. 25.504(c) is 80,987 MW.

GDF Suez's controlled market share is 4.8%, which is below the five-percent "small fish swim free" threshold under which entities are, by rule, deemed not to have ERCOT-wide market power.

Capacity enhancements are planned for the generation controlled by GDF Suez. These capacity enhancements are expected to be completed by December 31, 2012 and will not exceed 134 MW. This capacity increase would bring GDF Suez's controlled market share to 4.97%.

The Voluntary Mitigation Plan would memorialize that after these additions, GDF Suez would be deemed to not have ERCOT-wide market power according to the "small fish swim free" exemption under P.U.C. SUBST. R. 25.504(c).

Because the Commission's Estimate of Installed Generation Capacity in ERCOT relies on three data sources and one of those sources is updated annually, the Commission Staff and GDF Suez agree to rely on the December 2011 report, which included the most recently updated information for all data sources, through January 1, 2013.

The Voluntary Mitigation Plan provides that GDF Suez can offer the resources it controls at prices up to the system-wide offer cap through 2012 because: (1) the Plan establishes that GDF Suez controls less than the 5% limit in P.U.C. SUBST. R. 25.504(c) so is therefore deemed not to have ERCOT-wide market power; and (2) existing ERCOT protocols (including automatic mitigation) provide adequate safeguards against potential local market power abuses.

The Voluntary Mitigation Plan will terminate January 1, 2013.