city of georgetown presentation to tac regarding nprr533

City of Georgetown Presentation to TAC regarding NPRR533

02/27/2014

Chris Foster, CGFOManager of Resource Planning and Integration

Georgetown Utility SystemsCity of Georgetown TX

[email protected]

mailto:[email protected]

Issue

When a NOIE who is served by a Non-NOIE wholesale supplier from a portfolio supply, terminates its long-term contract, or opts into competition, what should happen with its PCRR’s?

PCRRs are terminated, and Transmission elements are returned to the market.

PCRRs are Reassigned to other NOIEs served by that Portfolio

PRS Approved Language ERCOT recommended Language

2Georgetown Presentation TAC Feb 26, 2014

Undisputed Facts• PCRR’s are limited to resources, or contracts for resources in place before

September 1, 1999.• NOIEs who own generation, cannot increase their PCRR holdings beyond

1999 ownership applied against the 2010 RARF.• A NOIE has a first right of refusal on a jointly owned unit, cannot increase

its PCRR eligibility by exercising that right.• NOIEs loose PCRR eligibility in one of three ways: 1) termination

/expiration of a Long-term pre 1999 contract, 2) Opting into Competition, or 3) retiring a pre 1999 Resource.


Claims• LCRA claims not allowing their NOIEs to increase

PCRR holdings is discriminatory.• We claim allowing increases in PCRR holdings is

discriminatory.• LCRA claims remaining customers have to pay for

those pre 1999 resources so they should get the PCRR’s. LCRA has purchased and constructed resources since 1999, those same customers have to pay for those resources as well.– They are not trying to get PCRRs for those new resources –

because its against the law.4Georgetown Presentation TAC Feb 26, 2014

LCRA asking TAC to

increase PCRR

allocations to Select

NOIEs

NOIE 2003 4 CP Load4 CP & 2003

PCRR % 2003 PCRRSPost 2016 eligibility

PRS Approved Allocation

Allocation As Filed by

ERCOT

Bandera Electric Coop 98 3.76% 75.2 Y 75.2 115.4Bluebonnet Electric Coop 313 12.00% 240.2 Y 240.2 368.7Sharyland Utilities 18.4 0.71% 14.1 N

Central Texas Electric Coop 88.6 3.40% 68 N

City of Bastrop 12.5 0.48% 9.6 Y 9.6 14.7City of Bellville 12.7 0.49% 9.7 Y 9.7 15City of Brady 15 0.58% 11.5 N

City of Boerne 22.3 0.85% 17.1 N

City of Brenham 59.3 2.28% 45.5 Y 45.5 69.9City of Burnet 15.2 0.58% 11.6 Y 11.6 17.9City of Cuero 24.8 0.95% 19 Y 19 29.2City of Flatonia 4.5 0.17% 3.5 Y 3.5 5.3City of Fredericksburg 28.3 1.09% 21.7 Y 21.7 33.4City of Giddings 12.7 0.49% 9.8 Y 9.8 15City of Goldthwaite 5.1 0.19% 3.9 Y 3.9 6City of Gonzales 16.6 0.63% 12.7 Y 12.7 19.5City of Hallettsville 8.5 0.33% 6.5 Y 6.5 10City of Hempstead 12.3 0.47% 9.4 Y 9.4 14.5City of La Grange 14.8 0.57% 11.3 Y 11.3 17.4City of Lampasas 20.8 0.80% 16 Y 16 24.5City of Lexington 2.7 0.10% 2.1 Y 2.1 3.2City of Llano 9.7 0.37% 7.4 Y 7.4 11.4City of Lockhart 22.7 0.87% 17.4 Y 17.4 26.7City of Luling 11.5 0.44% 8.8 Y 8.8 13.5City of Mason 4.9 0.19% 3.7 Y 3.7 5.7City of Moulton 2.2 0.08% 1.7 Y 1.7 2.6City of San Marcos 96.6 3.70% 74.1 Y 74.1 113.8City of San Saba 8.1 0.31% 6.2 Y 6.2 9.6City of Schulenburg 11.8 0.45% 9.1 Y 9.1 13.9City of Seguin 55.4 2.12% 42.5 N

City of Shiner 8.8 0.34% 6.7 Y 6.7 10.3City of Smithville 9.5 0.37% 7.3 Y 7.3 11.2City of Waelder 3.3 0.13% 2.5 Y 2.5 3.8City of Weimar 7.3 0.28% 5.6 Y 5.6 8.6City of Yoakum 16.8 0.64% 12.9 Y 12.9 19.8Fayette Electric Cooperative39.8 1.53% 30.6 N

Georgetown Utility Systems84.7 3.25% 65 N

Guadalupe Valley Electric Coop220.3 8.45% 169 N

Hamilton County Electric Coop14.6 0.56% 11.2 Y 11.2 17.2Kerrville Public Utility Board98.4 3.77% 75.5 N

New Braunfels Utilities 172.4 6.61% 132.3 N

Pedernales Electric Coop 809.2 31.03% 620.9 Y 620.9 953.2San Bernard Electric Coop 93.9 3.60% 72 N

2,607.90 100.00% 2001 1303.4 20015Georgetown Presentation TAC Feb 26,

2014

WPA PCRRs are a wealth transfer• ERCOT comments show a 6 month auction

results in auction revenue reduction of almost $4mm by granting dead WPA PCRRs to LCRA. Resulting in a reduction of supply of hedge instruments (CRRs) for use by the market.

• Supply curve shifting to the left.• What is the cost of the unhedged risk?– ~ $4mm for 6 months?– $200 to $300mm by 2041.– Is it worth the risk to the

market to forego hedging?


The Loads Served are different

Pre 2012 LCRA Loads with PCRRs Post 2016 LCRA Loads with PCRRs


LCRA is asking TAC to:

• Adopt bad policy that increases PCRR allocations to select NOIEs. Something not done for any other NOIE (except for a unique exception).

• Legitimize LRS methodology which codifies a ritual by which PCRRs are brought back from the dead AKA “PCRR Zombification”. Resulting in PCRRs that can’t be killed.

• Authorize a staggering wealth transfer for contracts having an indefinite term.


Decision

If you believe the deal struck with the NOIEs under SB7 to go to deregulated market, allowed some NOIEs to increase their allocation of PCRRs over time.

Vote for the ERCOT language.

If you believe that the deal included release of PCRR to the market when a NOIE exited a long-term contract or opted into competition.

Vote for the PRS approved language.


city of georgetown presentation to tac regarding nprr533

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