1 / 10

Market Credit Working Group Update to WMS

Market Credit Working Group Update to WMS. Mon. April 20, 2009. MCWG April 2009 Update Overview. MCWG meeting April 13, 2009 MCWG Vice-Chair Update NPRR 147, DAM Short Pay Changes Planning Future Items Next Meeting. April 13, 2009 MCWG Meeting .

alea-duke
Download Presentation

Market Credit Working Group Update to WMS

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Market Credit Working Group Update to WMS Mon. April 20, 2009

  2. MCWG April 2009 Update Overview • MCWG meeting April 13, 2009 • MCWG Vice-Chair Update • NPRR 147, DAM Short Pay Changes • Planning Future Items • Next Meeting

  3. April 13, 2009 MCWG Meeting • Updated MCWG on last presentation to WMS, including the WMS approval of the Market Credit Risk Standard • Updated the MCWG on the joint MCWG and CMWG discussions on March 30, 2009 • As presented by Marguerite, Group decided to consider: • Escrow account funded by some very small percent of CRR revenues • No details fleshed out • Pushed to MCWG for further discussion • Call for Vice Chair (next slide) • Discussed NPRR 147 (following slides) • Developing a list of future items for MCWG discussion/consideration • Next MCWG on April 29, 2009

  4. Call for Vice-Chair • At April 13, 2009 opened the nomination for a Vice-Chair. • Nomination period closes today, Monday April 20, 2009 at COB. If interested please contact Vanessa Spells • Voting period will be open through Monday April 27, 2009 • Vote reported to MCWG, on Wed. April 29, 2009 and then submitted to WMS for confirmation of the Vice-Chair

  5. MCWG Discussion NPRR 147 • Appears there is consensus with stakeholders that the existing nodal Protocols uplifting CRR shortfalls to the DAM need to be changed • Concern that the existing nodal Protocols for CRR shortfalls could lead to participants avoiding the DAM • NPRR 147 attempts to remedy the concerns raised with lack of participation in the DAM by modifying the approved nodal shortfall methodology for CRR’s

  6. Issues Raised with NPRR 147 • Issues raised with PRR 147 include: • Some stakeholders want to establish a short-pay fund to minimize the “hit” at any one time that load would need to pay. An alternative proposal has been made to provide for such a shortfall fund, funded via a charge on bids and offers in the CRR market. Potential issues here include: • What amount to charge? • Impact on price convergence, bid/offers • Double counting • Size of the shortfall fund, excess dollars in the fund • Further participant capital tied up • A second concern raised is the methodology for allocation of CRR uplifts • Some argue that a broader socialization should be undertaken for CRR uplift, like the uplift methodologies in the northeast markets (i.e. absolute value of total dollars for market activity at a point in time)

  7. NPRR 147 Alternative Proposal (2) • No prepay into shortfall fund • Instead ERCOT Inc. establishes a short pay fund (a facility in an amount TBD) that is available in the event of a CRR loss. The fund is not funded but instead is available to be drawn against up to the TBD amount • In the even of losses, losses would be socialized to all market activity (RTM, DAM, etc) using some variant of socialization applied in Northeast markets • Shortfalls repaid to the shortfall fund on a stakeholder approved methodology to smooth out repayment if $$’s large enough

  8. NPRR 147 Alternative Proposal (2) • Alternative Proposal (2) results: • Allows for markets to achieve price convergence in the CRR market without introducing an “adder” • Provides a mechanism for allocating shortfalls over a longer period, if shortfall is material (TBD by stakeholders) • Broader socialization across all ERCOT markets and participants • Better allocation of capital. Does not require capital to be tied up front by stakeholders • Open issues: • Size of fund • ERCOT obtaining authorities to procure facility. ERCOT Inc., indicates that using ERCOT, Inc. debt capacity for this purpose is problematic but will present the idea to ERCOT management and the F&A Committee • Modifying nodal Protocols to codify ERCOT’s ability to uplift these costs

  9. Future items for MCWG • Direction of invoice timing change • Perform bottom up review of existing creditworthiness standards (after CCRO Best Practices efforts) • Reduction of settlement cycle due to PRR 568 (7days) • Further reductions in settlement cycles • This includes looking at the potential to reduce the settlement cycle 30% with improved metering • Further acceleration of DAM • Consider Broader allocation of “uplift” from current Load Ratio Share methodology

  10. MCWG Next Meeting • Wed, April 29, 2009 9:30AM

More Related