protocol revision subcommittee tom burke june 28, 2012

Protocol Revision Subcommittee

Tom Burke

June 28, 2012

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Summary of Revision Requests

9 NPRRs Recommended for Approval

2 Other Binding Documents Recommended for Approval

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Items for a Vote

Unopposed Recommendations

• NPRR436*, Clarify the Use of the Defined Term Season and Its Derivatives• NPRR438, Additional Minimum Counter-Party Qualification Requirements, Including Risk Management

Capability Requirements• NPRR455, CRR Shift Factors Report• NPRR458*, Establishment of ERCOT’s Central Counterparty Role• NPRR462*, Removal of Consumer Benefit Test from the ERCOT Planning Criteria• NPRR468*, Alignment of System-Wide Offer Cap and Scarcity Pricing Mechanism Language with PUCT

Substantive Rules – URGENT

Recommendations with Opposing Votes

• NPRR416, Removal of the RUC Clawback Charge for Resources Other than RMR Units• NPRR459, Better Matching Forward Collateralization with Forward Risk in the Real-Time Market – URGENT• NPRR469, Modifications to CCTs – URGENT

(* denotes no impacts)

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NPRR Descriptions

NPRRs Recommended for Approval

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NPRR416, Creation of the RUC Resource Buyback Provision

Purpose

(Exelon/Calpine)

This NPRR adds a buyback provision for Resources committed by ERCOT’s RUC process that allows all RUC Clawback Charges associated with the RUC commitment to be waived and RUC Make-Whole Payments to be forfeited.

PRS Vote On 4/19/12, PRS unanimously voted to recommend approval of NPRR416 as amended by the 4/18/12 STEC comments and as revised by PRS. On 6/21/12, PRS voted via roll call vote to endorse and forward the 4/19/12 PRS Report as amended by the 6/20/12 ERCOT comments and Impact Analysis for NPRR416 to TAC with a recommended priority of 2012 and rank of 365. There were three opposing votes from the Consumer (2) and IPM Market Segments and two abstentions from the IREP and IPM Market Segments.

Effective Date/Priority Upon System Implementation – Priority 2012; Rank 365

ERCOT Impact $190k - $215k; no impacts to ERCOT staffing; impacts to MMS User Interface, EMS, MMS, S&B, CSI, EIS, and IEP; ERCOT business functions will be updated

Business Case Highlights

Increased efficiency in RUC selection process and lowering RUC uplift costs; economic efficiencies for both the demand and supply sides of the market; removes unnecessary value transfers where more than adequate incentives already exist to incent the desired bidding and offer behaviors.

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NPRR436, Clarify the Use of the Defined Term Season and Its Derivatives

Purpose

(OWG)

This NPRR deletes the reference to the Operating Guides and capitalizes uses of the word “Season” and its derivatives where applicable according to the definition in Section 2.1, Definitions.

PRS Vote On 5/17/12, PRS unanimously voted to recommend approval of NPRR436 as amended by the 4/23/12 OWG comments and as revised by PRS. On 6/21/12, PRS unanimously voted to endorse and forward the 5/17/12 PRS Report and Impact Analysis for NPRR436 to TAC.

Effective Date/Priority August 1, 2012

ERCOT Impact No impacts.


To remove ambiguity between the starting and ending dates of the Seasons in the Operating Guides and the Protocols and standardizes the timeframes of various testing and test result submission dates found throughout the Protocols.

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NPRR438, Additional Minimum Counter-Party Qualification Requirements, Including Risk Management Capability Requirements

Purpose

(ERCOT)

This NPRR establishes minimum requirements for Counter-Parties to participate in the ERCOT markets.

PRS Vote On 5/17/12, PRS voted to recommend approval of NPRR438 as amended by the 4/30/12 Credit WG comments and as revised by PRS. There were two abstentions from the Municipal and Independent Generator Market Segments. On 6/21/12, PRS unanimously voted to endorse and forward the 5/17/12 PRS Report and Impact Analysis for NPRR438 to TAC.

Effective Date/Priority Upon System Implementation of PR014_01, Implementation of NPRR347 and NPRR400

ERCOT Impact Less than $5k (ERCOT systems), $110k-$130k (staffing); estimated ongoing impact of one FTE in to oversee the verification process; impacts to CMM; ERCOT business functions will be updated; no impacts to ERCOT grid operations and practices.


Reduce risk in the ERCOT market and satisfy expected CEA exemption requirements; will also make the ERCOT market more consistent with other ISO requirements.

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NPRR455, CRR Shift Factors Report

Purpose

(MISUG)

This NPRR creates a report on the Market Information System (MIS) Secure Area that provides Shift Factors for any binding constraints in a CRR Auction.

PRS Vote On 4/19/12, PRS unanimously voted to recommend approval of NPRR455 as revised by PRS. On 6/21/12, PRS voted to endorse and forward the 4/19/12 PRS Report and Impact Analysis for NPRR455 to TAC with a recommended priority of 2014 and rank of 900. There were two abstentions from the Municipal and IPM Market Segments.

Effective Date/Priority Upon System Implementation – Priority 2014; Rank 900

ERCOT Impact $245k - $270k; impacts to CRR, ISM, and MIS; ERCOT business functions will be updated;


Provides ability to validate CRR Auction prices based on the binding constraints; Greater transparency of pricing information to the public; Provides additional means of identifying potential errors within the CRR Auction power flow solution; helps to detect network model errors; proper modeling of the ERCOT System, improves CRR Auction revenue adequacy; Increases the accuracy of constraint price information; Improved CRR Auction revenue adequacy benefits all Market Segments; Improved risk management and better risk controls.

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NPRR458, Establishment of ERCOT’s Central Counterparty Role

Purpose

(ERCOT)

This NPRR establishes ERCOT as the central counterparty to all transactions in the ERCOT market, except those involving bilateral trades or self-arranged services.

PRS Vote On 5/17/12, PRS voted to recommend approval of NPRR458 as submitted. There were two abstentions from the Cooperative and Municipal Market Segments. On 6/21/12, PRS voted to endorse and forward the 5/17/12 PRS Report as amended by the 6/13/12 ERCOT comments and Impact Analysis for NPRR458 to TAC. There was one abstention from the Cooperative Market Segment.




Enhance ERCOT’s ability to net any amount owed to a Market Participant with the amount of the Market Participant’s debt to ERCOT, thus reducing default risk.

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NPRR459, Better Matching Forward Collateralization with Forward Risk in the Real-Time Market - URGENT

Purpose

(NRG)

This NPRR more appropriately collateralizes for forward risk in the RTM; and instructs that ERCOT should exercise its judgment to remove Operating Days from credit calculations when the use of those Operating Days is leading to unreasonable results based on expected forward market outcomes.

PRS Vote On 6/21/12, PRS voted via roll call vote to recommend approval of NPRR459 and the proposed Other Binding Document, Procedure for Setting Forward Risk Multiplier, as amended by the 6/18/12 NRG comments and as revised by PRS and to forward to TAC. There were two opposing votes from the Cooperative Market Segment and ten abstentions from the Cooperative, Municipal (2), IOU, Independent Generator (2), Consumer (2), and IPM (2) Market Segments.

Effective Date/Priority To be determined.

ERCOT Impact To be determined.


Avoid defaults due to high prices, but reduce the cost of collateral posting for all Market Participants on an annual basis; increase in collateral requirements could reduce the cost or occurrence of a default from Real-Time market activity.

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NPRR462, Removal of Consumer Benefit Test from the ERCOT Planning Criteria

Purpose

(ERCOT)

This NPRR removes the consumer benefit test from the ERCOT planning criteria consistent with the Public Utility Commission of Texas (PUCT) Project 39537, Rulemaking to Implement HB 971, Relating to Economic Criteria for a Certificate of Convenience and Necessity for an Electric Transmission Project.

PRS Vote On 5/17/12, PRS voted to recommend approval of NPRR462 as amended by the 5/16/12 Oncor comments and as revised by PRS. There was one abstention from the Cooperative Market Segment. On 6/21/12, PRS voted to endorse and forward the 5/17/12 PRS Report and Impact Analysis for NPRR462 to TAC. There was one abstention from the Cooperative Market Segment.


ERCOT Impact ERCOT business functions will be updated.


Planning criteria will be consistent with the PUCT rulemaking in Project 39537.

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NPRR468, Alignment of System-Wide Offer Cap and Scarcity Pricing Mechanism Language with PUCT Substantive Rules - URGENT

Purpose

(ERCOT)

This NPRR removes the specifics for determining the System-Wide Offer Cap (SWCAP) and operating the scarcity pricing mechanism language from the Protocols. The SWCAP and scarcity pricing mechanism language will be incorporated into the proposed Other Binding Document (OBD), System-Wide Offer Cap and Scarcity Pricing Mechanism Methodology.

PRS Vote On 6/21/12, PRS unanimously voted to grant NPRR468 Urgent status. PRS then unanimously voted to recommend approval of NPRR468 and the proposed Other Binding Document, System-Wide Offer Cap and Scarcity Pricing Mechanism Methodology, as submitted and to forward to TAC.




Incorporating specifics for determining the SWCAP and scarcity pricing mechanism into an Other Binding Document allows for language to be updated in a timelier manner.

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NPRR469, Modifications to CCTs - URGENT

Purpose

(Edison Mission)

This NPRR proposes changes to the Constraint Competitiveness Tests (CCTs) to resolve the issues with the current design.

PRS Vote On 6/21/12, PRS unanimously voted to grant NPRR469 Urgent status. PRS then voted via roll call vote to recommend approval of NPRR469 as amended by the 6/20/12 ERCOT comments and as revised by PRS and to forward to TAC. There were seven opposing votes from the Municipal (3), IOU (2), and Consumer (2) Market Segments and five abstentions from the Cooperative (3) and IPM (2) Market Segments.

Effective Date/Priority To be determined.

ERCOT Impact To be determined.


Improve the current process by providing a more robust analysis and a more defensible outcome; prevent market power and market abuse.

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Other Binding Documents

OBDs Recommended for Approval

• Addition of Procedure for Setting Forward Risk Multiplier (NPRR459)

• Addition of System-Wide Offer Cap and Scarcity Pricing Mechanism Methodology (NPRR468)

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Project Priority List (PPL) Prioritization Review

• At the 6/21/PRS meeting, PRS reviewed upcoming revision request project efforts providing stakeholder input on the priority and plan of action for various items in the project queue

• In general, PRS supported the target start dates for revision request projects planned for the remainder of 2012

• In addition, PRS took specific action on the following items• NPRR442, Energy Offer Curve Requirement for Generation Resources

Providing Reliability Must-Run Service• reprioritized to Priority 2012; Rank 720

• NPRR207, Unit Deselection• referred to WMS to review and how it relates to NPRR416

• NPRR241, AIL Calculation and Credit Reports Publish Corrections• requested that ERCOT Staff file an NPRR to delete NPRR241 grey-boxes

• NOGRR034, Rescind Telemetry Performance Calculation Exclusions• referred to ROS/NDSWG to review

• NPRR219, Resolution of Alignment Items A33, A92, A106, and A150• will be discussed at July PRS meeting

• SCR755, ERCOT.com Website Enhancements• referred to MISUG

• SCR756, Enhancements to the MarkeTrak Application• referred to RMS/MTTF to review