ERCOT has sought guidance from the Public Utility Commission of Texas concerning the PUC's directive that ERCOT evaluate the interconnection of the Lubbock Power & Light ("LP&L") system into the ERCOT system

Specifically, ERCOT requested further guidance as to the stakeholder process that should be followed in providing the report to the Commission. ERCOT has identified two possible alternatives for consideration.

1. ERCOT could conduct the integration study, solicit ERCOT stakeholder input through the RPG, and then submit the report to the Commission in a public filing. At that point, the Commission could then decide how it would like to handle the next procedural and substantive steps for considering the integration of the LP&L system into the ERCOT system.

2. ERCOT could follow a similar stakeholder review process it uses for Tier 1 transmission projects (i.e., those expected to cost more than $50 million), which would require ERCOT to conduct an independent review of the project, solicit comments from stakeholders through the RPG process, and then obtain project endorsement by ERCOT's Technical Advisory Committee ("TAC") and Board of Directors. This process is codified in the ERCOT Protocols for transmission projects proposed within the ERCOT system - specifically, Section 3.11.4, Regional Planning Group Project Review Process. At that point, ERCOT could submit the report into the designated project and/or to LP&L for the next steps.

Both options are the same with respect to the scope of the integration study but differ on the formality (i. e., endorsements) of the stakeholder review process, ERCOT said. ERCOT notes that the first option is not explicitly contemplated in the ERCOT Protocols, but it may be appropriate in this case given the nature of LP&L's proposal - requesting integration into the ERCOT system. The second option would follow the process outlined in the ERCOT Protocols more closely than the first option, but TAC and the ERCOT Board could not use the criteria specified in the ERCOT Protocols for endorsement of a transmission project because the Protocols do not apply to this type of project as the LP&L system is not yet part of the ERCOT system.

Specifically, unless the LP&L system is assumed to be part of ERCOT, no "need" could be identified under existing planning criteria, because the criteria regarding economic benefit and reliability violations are not designed for a determination of whether new entities should be integrated into the ERCOT system. TAC and the ERCOT Board could possibly take votes on the preferred transmission options to integrate the LP&L and ERCOT systems, but such votes would not address the traditional need determination contemplated in P.U.C. Substantive Rule 25.101, Certification Criteria, which provides the basis for the Board vote being given "great weight" in any future certificate of convenience and necessity ("CCN") proceeding. Further, under the second option, although ERCOT intends to identify owners of substations in the report, the ERCOT Protocols that require ERCOT to designate providers to construct and operate the projects do not apply to the LP&L integration study. ERCOT expects that the transmission integration options that it recommends will involve LP&L (an owner of substations) who is not currently a transmission service provider in the ERCOT region.