i

Receive sion NON
! i, cad of Public Utility Commission of Texas

®

RE: _ Notice of Intent, Pursuant to the Authority in Section 2(h)(7) of the Commodity =

COMMENT Rick Perry
Governor

Of

Barry T. Smitherman
Chairman

ed CFTC

S

1155 21* Street, NW
Washington, DC 20581

ss.
November 16, 2009 S

=

=
Chairman Gary Gensler 5
Commodity Futures Trading Commission @ bi
Three Lafayette Centre “0 4

3B bed

Bo:

PQ

Siviuvisuoas SHL 40 201440

Exchange Act and Commission Rule 36.3(c)(3), To Undertake a Determination Whethe:
Certain Contracts Offered for Trading on the IntercontinentalExchange, Inc. Perform
Significant Price Discevery Runctions (Comment Files:09-011; 09-012,:09-027, 09-032)

Dear Chairman Gensler:

I have been following with iriterest thé receft actions of the Commodity Futures Trading
Commission (CFTC) and the comments on whether certain electricity contracts perform
significant price discovery functions. In that regard, I wanted to provide you with some
background information on the electric. market in, Texas and.the Electric Reliability Council of
Texas (ERCOT), which. is different from. other Independent System Operators (ISOs) ‘in the
country. — : . pee Mo gt ts Bee

ERCOT is located wholly-within the State of Texas. ‘In accordance with Texas state law,
the Public Utility Commission of Texas (PUCT) has certified ERCOT as the independent
organization to ensure nondiscriminatory access to the transmission and distribution systems, to
ensure the reliability and adequacy of the regional electrical network;"and to perform other

essential market functions. While ERCOT performs many of the same functions and is often
grouped with other ISOs in the U.S., it is not regulated by the Federal Energy Regulatory

Commission (FERC) in the same manner as the other ISOs. Instead, ERCOT is directly
responsible and accountable to the PUCT.! Doe eran ote

‘

ERCOT currently facilitates the market with respect to balancing. energy, ancillary
services, and transmission congestion rights. After implementation of the nodal market expected
late next year, ERCOT will also facilitate a day-ahead market. With respect to these market
activities, ERCOT is subject to PUCT regulatory oversight and close scrutiny: by the PUCT’s
independent wholesale electric market monitor.” ,Just ‘as FERC Staff commented regarding the

' Publi Utility Reguilatory Act,.TEX. UTIL. CODE ANN. §'39:151(Vertion 1998-& Supp. 2009) (PURA)
(available at http://www. puc.state.tx.us/rules/statutes/Pura09. pdf).
? PURA § 39.1515.

Printed on recycled paper
1701 N. Congress Avenue, PO Box 13326 Austin, TX 78711 512/936-7000. Faxi'512/936-7003 web site: www.pucstate.wus

‘An Equal Opportunity Employer



comprehensive regulation that they provide to the FERC-regulated RTOs and ISOs, the PUCT
provides similar oversight and detailed regulation of ERCOT and all its market functions.

Thank you for soliciting comments on this matter, and I hope you find my clarification
helpful. Feel free to contact me should you have any questions or want to discuss this matter
further.

Sincere, .
ae = eA

Barry T. Smitherman
Chairman

ce: Michael Dunn, Commissioner
Jill E. Sommers, Commissioner
Bart Chilton, Commissioner
Scott D. O’Malia, Commissioner
Dan M. Berkovitc, General Counsel
Ananda K. Radhakrishnan, Director