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ERCOT 2005 Budget Update

This document provides details about the adjustments made to the ERCOT 2005 budget, including reductions in operating expenses and project expenditures. It outlines the areas where reductions will be made and suggests ways the Technical Advisory Committee (TAC) can collaborate to implement these changes.

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ERCOT 2005 Budget Update

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  1. ERCOT 2005 Budget Update Technical Advisory Committee January 06, 2005

  2. Adjustment of Fee from $ .44 to $ .42 • $ .02 reduction is approx. $6,000,000 • Audit adds are approx. $2,000,000 (includes new financial staff, Director of Security plus staff, Chief Risk Officer and VP of Human Resources plus their new staffs) • Total reduction needs to be $8,000,000

  3. What will we reduce? • Operating Expenses: $ 4,359,000 • Projects (equity portion): 3,080,000 • Still To Be Identified 561,000 • Total: $ 8,000,000

  4. What will we reduce in operations? • Q1 Salary Freeze $ 616,000 • Headcount: • - System Operations 9 FTEs 600,000 • - Market Operations 5 FTEs 360,000 • MP Education Department 3 FTEs 425,000 • Outside Services: • - Combined Cycle Modeling 360,000 • - Project Management 210,000 • - IT Flex Staffing 901,000 • - Project Mgmt Flex Staffing 190,000 • - Sys Ops Flex Staffing 197,000 • HW/SW Lic & Maint Exp 500,000 • Total: $ 4,359,000

  5. What is the reduction in project expenditures? • Projects (equity portion): $ 3,080,000 • Equity portion included in fee: 40% • Reduction in project expenditures: $ 7,720,000 • Original 2005 Projects Budget: $35,000,000 • Reduction in project expenditures: $ 7,720,000 • Proposed 2005 Projects Budget: $27,280,000

  6. Where will reductions come from? • Projects sourced by PRS were unaffected – NONE were deferred • Projects deferred to 2006: • - ADAM Integration $ 1,500,000 • - Operator Training Simulator 1,042,000 • - System Improvement Requests 924,000 • - Lodestar Upgrade 4.0 556,000 • - DC Tie Automation (#50018, #50020) 853,000 • - Enhancements to 727 (#50024) 611,000 • - Lodestar Archive Decommission 180,000 • Reduced contingencies (35/10 to 25/10) 974,000 • Accelerated facilities spend in 2004 1,620,00 • Facilities & New IT storage (net) * (40,000) • New project resulting from audit (500,000) • Total reductions: $ 7,720,000 • * Includes $2,500,000 addition for new IT storage

  7. How can TAC work with us to make this happen? • Support revised project budget for 2005 • Focus on detailed cost/benefit justification for new PRRs & SCRs • Review your digital certificates – we pay for them • Eliminate off-site meetings that incur charges for meeting rooms • Work with our Market Rules group to streamline ERCOT staff support and attendance at meetings • Continue to give us open and honest feedback – this dialogue was pretty good in 2004 - let’s keep it going…

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