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CRR Shortfall – Revenue Equalization Part 3 (Continuation from 3/5/08 TPTF discussion). Bill Barnes/Sharon Wang TPTF 3/21/2008. CRR Settlement Revenue – Shortfall Issue Review.
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CRR Shortfall – Revenue EqualizationPart 3 (Continuation from 3/5/08 TPTF discussion) Bill Barnes/Sharon Wang TPTF 3/21/2008
CRR Settlement Revenue – Shortfall Issue Review • Issue: Mathematically possible for ERCOT to pay out more revenue that it collects between the time DAM and RTM are invoiced. See next slide.
CRR Settlement Revenue – Proposed Solution • Proposed Solution: Add an accounting provision to guarantee ISO revenue neutrality (or revenue positive) in DAM • Goal: Do not impact the outcome of current Nodal Protocol design • New charge added to DAM statement to deduct CRR shortfall assigned to RT • New Bill Determinant to track these charges (“I owe you”) • CRR shortfall still assigned to RT CRR AHs • Refund RT shortfall portion back to DAM CRR AHs upon CRR BA closure • See next slide
CRR Settlement Revenue - Overview • Balancing Account Process – managing CRR revenue adequacy • Day-Ahead Congestion Rent is compared to total Day-Ahead CRR payments on an hourly basis for the Operating day. • If excess Day-Ahead Congestion Rent exists compared to Day-Ahead CRR payments for the hour, excess added to Balancing Account. • If there is not enough Day-Ahead Congestion Rent to cover Day-Ahead CRR payments for the hour, a Day-Ahead shortfall is calculated for the operating day and allocated to DA and RT CRR holders. • At the end of the month, the total shortfall accumulation for the month is compared to Balancing Account accrual. • If BA is non-zero, any CRR holders shorted during the month will be made whole up to BA amount. • Excess funds in Balancing Account after alleviating CRR shorts will be paid to QSEs based on LRS. • Balancing Account clearing process independent of DAM or RTM invoicing process.
CRR Settlement Revenue - Shortfall Allocation • Why do we allocate to the Real-Time? • NP Section 4.5.1 (8) • “The directional network element flows for PTP Options declared for settlement in Real-Time must be properly accounted for in determining available transmission network capacity in the DAM.” • Translation: DAM clearing engine will make an economic decision to clear a CRR offer (settled in DAM) or reserve the capacity for Real-Time (settled in RT). • Since RT CRR capacity is reserved in the DAM, it would not be covered by DAM Congestion Rent. • Why do we allocate a shortfall of DAM Congestion Rent compared to DAM CRR payments to RT CRR Account Holders? • Equitable treatment of all CRR AHs