Settlements Seminar February 10, 2016 ERCOT Public Agenda 1.
Antitrust Admonition ERCOT 1:00 p.m. 2.
Introduction and Welcome M. Trenary M. Ruane 1:05 p.m. 3. ERCOT
Settlements: Organization, Processes and Controls O. Dinopol 1:15
p.m. 4. CRR Balancing Account Settlement A. Rosel 1:45 p.m. Break
2:15 p.m. 5. ERCOT Credit: High-level calculations and processes V.
Spells 2:25 p.m. 6. Settlements Impacts of 2016 NPRR
Implementations 2:55 p.m. 7. Questions and Additional Discussion
3:25 p.m. Adjourn 3:30 p.m. ERCOT Public Settlements: Organization,
Processes and How Controls are Implemented
Ohlen Dinopol February 10, 2016 ERCOT Public Settlements: An ERCOT
Function
Nodal Protocols 1.2. Functions of ERCOT (d)Ensure that electricity
production and delivery are accurately accounted for among the
All-Inclusive Generation Resources and wholesale buyers and
sellers, and Transmission Service Providers (TSPs) and Distribution
Service Providers (DSPs), in the ERCOT Region. AND administer
settlement and billing for services provided by ERCOT (PUCT
substantive rule ) ERCOT Public Settlements Overview Nodal
Protocols Section S&B Process Overview Settlement is the
process used to resolve financial obligations between a Market
Participant and ERCOT, including administrative and miscellaneous
charges. We figure out who should pay x, who should get charged y
and then create the bill ERCOT Public Organization: Settlements,
Retail & Credit
Mark Ruane Ohlen Dinopol Settlement Operations Austin
RoselSettlement Services Dave Michelsen Retail Operations Don
Tucker Settlements Metering Randy Roberts Data Loading and
Aggregation Vanessa Spells Credit ERCOT Public Settlement
Operations
Ohlen Dinopol Settlement Operations Mark Bengtson Ponda Bethke
Chris Espinosa Connie Harris Anna Rocha Teresa Simien ERCOT Public
Settlement Operations: Responsibilities
All Production Support Batch scheduling and support Systems
Integration Support / Validations Settlement Validations Billing
Validations Approvals Financial Transfer All manual settlement
processes Verifiable Cost Data Entry Disputes Support Process,
Procedures, Controls for Production Activity Protocol Compliance
SSAE16 Audit Support ERCOT Public Austin Rosel Settlement
Services
Magie Annab Steve Chappel Ino Gonzalez Keely Hilton Blake Holt Cary
McCafferty Matt Tozer ERCOT Public Settlement Services
Responsibilities
Stakeholder Support Meetings NPRRs, Comments Data Requests Change
& Analysis Activities Impact Analysis Project Deliverables
Release Management Coordination Project and Change Support Testing
Data Analysis and Mandatory Reports Production Tool Development and
Maintenance Strategic Initiatives Support Verifiable Cost Analysis
and Approval Disputes / ADRAnalysis ERCOT Public Data Flow ERCOT
Public Data Flow and Process ERCOT Public Process Daily batch
activities Preparations before batch
System Integration points and Bill determinants check Inbound from
MMS, EMS, CRR Backout and Rerun jobs as needed Validations after
batch Bill determinants Bill amounts Statements Invoices Approvals
Ad hoc processes Monthly invoices Emergency Response Service (ERS)
MMATOT report Manual changes Support model changes Price
corrections Others ERCOT Public Process Invoice Day Invoice Day + 2
Invoice Day + 3 Timelines
Posting of Statements and Invoices Daily Batch - Catch-up on
weekend runs Financial Transfers Payments processing and approvals
multiple times a day Payouts by 5pm from Treasury Operating Day Day
5 Day 6 ERCOT Issues DAM Statement & Invoice Payment Due (to
ERCOT) Payment Due (to Market Participant) Day 2 1700 Day Ahead
Invoice Day Invoice Day + 2 Invoice Day + 3 1700 1700 ERCOT Issues
Invoice DAM Statements RTM Statements Payment Due (to Market
Participant) Payment Due (to ERCOT) ERCOT Public Processes and
Controls
Settlements covers about 25% of the ERCOT SSAE16 Audit Control
Objectives.Settlement Operations provides evidence of compliance
with the Audit Control Objectives. Evidence examples include:
Independent validations of system results -using SAS or Excel
Two-person teams on all Settlement validations on bill amount and
Statement validations on Invoice validations on all Manual
Processes ERCOT Public Questions ERCOT Public CRR Balancing Account
Austin Rosel February 10, 2016 ERCOT Public Fast Facts The CRR
Balancing Account is not new.ERCOT has had a CRR balancing account
since Nodal Go-Live. In December 2014 NPRR580, Establishment of a
Rolling CRR Balancing Account Fund, changed the balancing account
to a rolling account where instead of allocating all excess balance
to load, only the surplus balance over $10M is allocated to load.
This leaves a starting balance available that can refund CRR short
charges even if there was no net contribution to the balancing
account for the month. This is covered by section 7.6, & 9.12
in the Nodal Protocols. NPRR742, CRR Balancing Account Invoice Data
Cuts, is in flight and will change the extract for the CRR
Balancing Account. The beginning and end of the month balances will
be available on the same extract. Shadow settlements can be run for
a month without pulling the prior months values from the prior
months extract. ERCOT Public Congestion Revenue Rights Balancing
Account
The following slides are from the Market Settlements 301 training
class given by the ERCOT training department. This class is an
advanced 24 hour 3 day course. The schedule for the training can be
found on ERCOTs website and all materials are available for
download at Please download the materials or attend the training
for a more thorough and detailed training on the CRR Balancing
Account. ERCOT Public Congestion Revenue Rights Balancing
Account
CRRs Settled in the Day-Ahead Market Payments for Cleared DAM
Energy Offers Payments for Cleared DAM PTP Obligation Bids Charges
for Cleared DAM Energy Bids Charges for Cleared DAM PTP Obligation
Bids Up to this point all of the payments and / or charges we have
seen are based on the assumption that there are enough funds
collected in the Day-Ahead to sufficiently pay that amount due to
CRR Account Holders. These funds are collected as Congestion Rent
in the DAM which is basically the differences between all the
charges for DAM bids and the payments out for DAM Offers (and a
negative PTP Obligaiton bid which would restult in a payment.The
money left over is DAM Congestion Rent which is used to pay to CRR
Account Holders. Payment due to CRR Account Holders (Target
Payment) Congestion Rent ERCOT Public 20 Congestion Revenue Rights
Balancing Account
CRRs Settled in the Day-Ahead Market Payments for Cleared DAM
Energy Offers Payments for Cleared DAM PTP Obligation Bids Charges
for Cleared DAM Energy Bids Charges for Cleared DAM PTP Obligation
Bids However,in some hours there may not be enough DAM Congestion
Rent collected to pay CRR Account Holders. Some hours there is not
enough Congestion Rent to pay CRR Owners Payment due to CRR Account
Holders (Target Payment) Congestion Rent Congestion Rent ERCOT
Public 21 Congestion Revenue Rights Balancing Account
CRRs Settled in the Day-Ahead Market Payments for Cleared DAM
Energy Offers Payments for Cleared DAM PTP Obligation Bids Charges
for Cleared DAM Energy Bids Charges for Cleared DAM PTP Obligation
Bids However,in some hours there may not be enough DAM Congestion
Rent collected to pay CRR Account Holders. Some hours there is more
Congestion Rent collected than needed to pay CRR Owners Payment due
to CRR Account Holders (Target Payment) Congestion Rent Congestion
Rent ERCOT Public 22 Congestion Revenue Rights Balancing
Account
CRRs Settled in the Day-Ahead Market Occurs hourly Payments for
Cleared DAM Energy Offers Payments for Cleared DAM PTP Obligation
Bids Charges for Cleared DAM Energy Bids Charges for Cleared DAM
PTP Obligation Bids In the DAM, if the Congestion Rent is equal to
or greater than the net amounts due to all CRR Owners for any
Settlement Interval, then ERCOT shall pay the net amounts due to
the CRR Owners and put any excess amount into the CRR Balancing
Account. Payment due to CRR Account Holders (Target Payment)
Congestion Rent Congestion Rent ERCOT Public 23 Any CRR Auction
Fees for the month are also added to the CRR Balancing
Account.
Congestion Rent Determinant CRR Auction Fee Total ERCOT Public CRR
Balancing Account: Outcomes
Refunding short paid CRR Account Holders from CRR Balancing Account
Outcome #2 Dispensing remaining funds in CRR Balancing Account
There are 3 Balancing Account outcomes we need to cover: -Refunding
shortfall charges from the CRR Balancing Account, -The dispensation
of remaining funds in the CRR Balancing Account after paying back
shortfall charges, if any funds remain, -Another avenue of repaying
shortfall charges if Balancing Account funds for the month are
insufficient. Outcome #3 Refunding short paid CRR Account Holders
when funds in CRR Balancing Account are insufficient ERCOT Public
CRR Balancing Account: Outcomes
Refunding short paid CRR Account Holders from CRR Balancing Account
Outcome #2 Dispensing remaining funds in CRR Balancing Account
We'll start with refunding shortfall charges from the CRR Balancing
Account. Outcome #3 Refunding short paid CRR Account Holders when
funds in CRR Balancing Account are insufficient ERCOT Public
Congestion Revenue Rights Balancing Account
CRR Balancing Account Payment due to CRR Account Holders Monthly At
the end of the month, ERCOT liquidates the CRR Balancing Account.If
there were any CRR Account Holders that have been short paidduring
the month, ERCOT will use the funds in the CRR Balancing Accountto
pay these CRR Account Holders.ERCOT will use the CRR Balancing
Account to make up as much of the amount CRR Account Holders were
short paid during the month as possible. ERCOT Public Monthly
Refunds to Short-Paid CRR Owners
Trigger #1 At the end of the month, the CRR Balancing Account and
Shortfall charges included: CRRBACRTOT = $27,000 CRRFEETOT = $3,000
CRRSAMTTOT = $25,000 If CRRAH1s shortfall charges were $2,500, will
they receive a refund from the Balancing Account?If so, how much of
a refund will they receive? Trigger/Outcome #1: -At the end of the
month total CRR Balancing Account was $30,000, and CRRSAMTTOT was
$25,000.If CRRAH1's shortfall charges were $2,500 will they receive
a refund from the Balancing Account?If so, how much of a refund
will they receive? -Yes - because the balancing account holds more
than enough to fully repay all shortfall charges, CRRAH1 will
receive a full refund of $2,500. Outcome #1 Yes!Because CRRBACRTOT
+ CRRFEETOT are sufficient to fully refund CRRSAMTTOT, CRRAH1 will
receive a full refund of $2,500. ERCOT Public CRR Balancing
Account: Outcomes
Refunding short paid CRR Account Holders from CRR Balancing Account
Outcome #2 Dispensing remaining funds in CRR Balancing Account Next
we will discuss the dispensation of any funds that remain in the
CRR Balancing Account after refunding short paid CRR owners.
Outcome #3 Refunding short paid CRR Account Holders when funds in
CRR Balancing Account are insufficient ERCOT Public CRR Rolling
Balancing Account
CRR Balancing Account Fund Payment due to CRR Account Holders
Monthly Pay to QSEsrepresenting Load If there are any funds left
after all short paid CRR Account Holders have been paid, ERCOT
places any excess funds in a savings account called the CRR
Balancing Account Fund, until the defined FUNDCAP of $10 million is
reached. Once the FUNDCAP is reached, ERCOT will distribute any
remaining Balancing Account funds to QSEs on a load ratio share
basis. ERCOT Public CRR Balancing Account Closure
Trigger #2 At the end of the month, the CRR Balancing Account and
Shortfall charges included: CRRBACRTOT = $27,000 CRRFEETOT = $3,000
CRRSAMTTOT = $25,000 The Balancing Account Fund maximum limit has
been met.If QSE1s LRS is 10%, will they receive a payment from the
Balancing Account?If so, how much of a payment will they receive?
Outcome #2 Yes!Because the Balancing Account Fund has reached its
maximum limit, QSE1 will receive 10% x $5,000, or $500. ERCOT
Public CRR Balancing Account: Outcomes
Refunding short paid CRR Account Holders from CRR Balancing Account
Outcome #2 Dispensing remaining funds in CRR Balancing Account Next
we will discuss how CRR owners may be refunded when the CRR
Balancing Account is insufficient. Outcome #3 Refunding short paid
CRR Account Holders when funds in CRR Balancing Account are
insufficient ERCOT Public CRR Rolling Balancing Account
Payment due to CRR Account Holders Monthly If the CRR Balancing
Account does not have enough funds to make up all the short
payments during the month, we can look to the Balancing Account
Fund for repayment. ERCOT Public CRR Rolling Balancing
Account
Trigger #3 At the end of the month, the CRR Balancing Account and
Shortfall charges included: CRRBACRTOT = $27,000 CRRFEETOT = $3,000
CRRSAMTTOT = $50,000 With a Balancing Account Fund of $25,000, will
the shortpaid CRRAHs be fully refunded? Outcome #3 Yes!Although
CRRBACRTOT + CRRFEETOT are insufficient to fully refund CRRSAMTTOT,
the remaining $20,000 of refunds can be paid from the Balancing
Account Fund. ERCOT Public CRR Rolling Balancing Account
Payment due to CRR Account Holders X may remainshort paid Monthly
If the Balancing Account Fund does not have enough funds to make
the rest of the short payments, the CRR Account Holders will remain
short paid, although this outcome is unlikely once the FUNDCAP is
reached. ERCOT Public Balancing Account Data
ERCOT Public Fast Facts - Resettlement
The balancing account is only settled once, in the month after the
month covered by the CRRs. However, if a resettlement occurs the
balancing account may be resettled. ERCOT has not resettled the CRR
Balancing Account since the addition of the rolling fund. If the
CRR Balancing Account was resettled: Market Notice announcing the
DAM resettlement Market Notice announcing the CRR Balancing Account
resettlement Invoices and extracts would flow like usual The
resettlement will be calculated using the CRR Balancing Account
Fund Balance at the end of the previous month from the date of the
resettlement invoice ( ). The Monthly Load Ratio Share (MLRS) used
in the resettlement of the CRR Balancing Account will be the same
MLRS value used on the initial settlement. (9.12 (2)) ERCOT Public
Questions ERCOT Public Credit Exposure and Management
Vanessa Spells February 10, 2016 ERCOT Public TPE is an estimate of
how much a Counter-Party:
Credit Exposure Credit exposure is determined by calculating for
Total PotentialExposure (TPE) daily TPE is an estimate of how much
a Counter-Party: Currently owes (outstanding invoices &
un-invoiced amounts) Expected to owe today and in the future
Objectives: To determine a collateral amount ERCOT will need to
hold if aCounter-Party fails to pay its obligations (invoices)
Minimize losses to be uplifted to the market if Counter-Party
failsto pay/defaults Establish daily credit limits for
participating in CRR Auctions andDay-Ahead Market (ACLs) ERCOT
Public Credit Exposure TPE Inputs Invoices & Statements
Initials, Finals & True-Ups Estimates of Current Activity Price
* Volume Volume (MWH) Load, Generation, DA Bids & Offers,
Trades with other Counter-Parties Price Real Time (RT) & Day
Ahead (DA) Total Potential Exposure (TPE) TPE Secured (CRR-related
exposure) TPE Any (Real-Time & Day-Ahead exposure) ERCOT Public
Credit Exposure TPE Any Exposure can be covered by:
Secured Collateral: Cash Letters of Credit (issued by Bank which
guarantees payment onbehalf of Counter-Party if certain conditions
are met) Surety Bond (issued by Surety company which is obligated
to paycontractual obligations of the Counter-Party) Unsecured
Credit Unsecured Credit (no collateral required; amount determined
byCounter-partys creditworthiness) Guarantee (another entity,
usually a Parent Company promising topay if counter-party fails to
pay) ERCOT Public Credit Exposure TPE Any TPEA = Max [0, MCE, [Max
[0, (EAL)]]
Higher of: EAL (Estimated Aggregate Liability), or MCE (Minimum
Current Exposure) EAL Real-Time Extrapolated Exposure based on
average billed days toaccount for unbilled days and forward
exposure Day-Ahead Extrapolated Exposure: based on average billed
days toaccount for unbilled days and forward exposure Real-Time
Estimates for Unbilled Days Day-Ahead Estimates for Unbilled Days
Forward Week Real-Time Estimates Outstanding Invoices Estimates of
Potential Uplift and Incremental Load Exposure due toMass
Transition ERCOT Public Credit Exposure EAL Max of:(IEL + DALE), or
Max [(MAXRTLE + DALE), (RTLF + DALE)] Add: Max of:RTLCNS or MAXURTA
Add: OUT + PUL + ILE IEL: Initial Estimated Liability (initial
requirement for new CPsonly) MAXRTLE:Highest Real-Time Extrapolated
Exposure (RTLE)in last 40 days RTLE = Average Real-Time Initial
Statements over last 14 daysextrapolated by M1 days (from 12 20
days total) M1 = 12 days + Mass Transition days based on number of
ESI IDs Termination period upon default RTLF: Real-Time Liability
Forward Uses RTLCNS estimates at 150% price factor 7 days: current
day + 6 forward days ERCOT Public Credit Exposure DALE: Average of
Day-Ahead Statements over last 7 daysextrapolated by M1 Days
RTLCNS:Real-Time Liability Estimate for unbilled days Real-Time
Imbalance estimate (based on estimated Load,Generation, Bilateral
Sales & Purchases, and DA Sales andPurchases) Also includes
estimates of DC Ties, Congestion Costs, Point-to- Points
MAXURTA:Highest Unbilled Real-Time ExtrapolatedExposure (URTA) in
last 40 days URTA = Average Real-Time Initial Statements over last
14 daysextrapolated by M2 (9 days) M2 based on current Real-Time
settlement timeline ERCOT Public Credit Exposure OUT (Outstanding
Unpaid Transactions) Sum of:
OIA (Outstanding Invoice Amounts) any unpaid invoices whether
charge or credit UDAA (Unbilled Day Ahead Amounts) estimates of
Day-Ahead charges or credits for days that are not yet settled UFA
(Unbilled Final Amounts) average of Final Statements in last 14
calendar days multiplied by 56 UTA (Unbilled True Up Amounts)
average of True Up Statements in last 14 calendar days multiplied
by 180 CARD (CRR Auction Revenue Distribution) two months of unpaid
CRR auction revenue due to CP PUL (Potential Uplift Amount) CPs
share of estimated uplift/short-pay due to a default ILE
(Incremental Load Exposure) Estimated incremental exposure
resulting from a mass transition ERCOT Public Credit Exposure MCE
Sets a floor for collateral requirement (because EAL can attimes be
very minimal or less than zero); Average of last 14 settled
operating days Higher of any of the following: 5 Days of Load Less
80% of Generation plus Net Bilateral Sales; or less 80% of Net
Bilateral Purchases; 2 Days of 20% of Generation; 1 Day of net
Day-Ahead transactions cleared ERCOT Public Credit Exposure TPE
Secured CRR-related exposure
Is covered ONLY by secured collateral. TPES= Max [0, FCE] + IA
Future Credit Exposure [FCE] FCE= FCEOBL + FCEOPT (credits)
Congestion Path Specific Risk (estimate what is owed in the
futureforthe CRRs in a portfolio) Historic DAM Settlement Point
prices Auction Clearing Prices ERCOT Public Credit Exposure TPE
Secured Portfolio Exposure calculated for
Current month , prompt month and forward months for Obligations
Remaining days in current operating month and prompt month for
Options(Conservative) The final exposure is a volume-weighted
average of risk CRR Obligation can be positive (CRRAH owes ERCOT)
or negative(ERCOT owes CRRAH ) CRR Options only negative
Independent Amount (IA) Required for Counter Parties that do not
meet the capitalizationrequirements to participate in the ERCOT
market. Is not used for trading in the market ERCOT Public Credit
Exposure Available Credit Limit
Credit limit available for bidding in CRR auctions and DayAhead
Market For CRR auctions: 90% of Secured collateral less TPE Secured
For DAM: 90% of Unsecured Credit plus Secured collateral (net of
creditlocked for CRR) less TPE Any ACLs for DAM used in DAM 10 am
of following day ERCOT Public Daily Process CMM calculates TPE
overnight around 2AM (earlier for FCE) Validate
calculations/reports invoices/statements and all otherdata inputs
are received Collateral requests Post Credit reports to MIS (12
noon deadline) Credit posts collateral received and returned Credit
runs afternoon calculations at around 1:45 PM TPE updated with any
invoice payments received by 12 noon ACLs calculated based on
updated TPE and collateral Credit sends updated ACLs to CRR and DAM
ERCOT Public Credit Questions ERCOT Public 2016 NPRRs Impacting
Settlements
Austin Rosel February 10, 2016 ERCOT Public Upcoming NPRRs Before
each release the Settlement Services department reviews the
settlement changes with CSWG. The intent of these reviews is to
cover items that would be of interest to someone doing shadow
settlements. Formulas, protocol changes and any intermediate
billing determinants that may not be obvious are covered during
these reviews with CSWG. 2016 NPRRs (as of 2/1/2016) NPRR689 -
Settlement of Ancillary Service Assignment in Real-Time Operations
(R1) NPRR Revise Real-Time Energy Imbalance and RMR Adjustment
Charge (R2) NPRR617 - Energy Offer Flexibility (R3) NPRR700 -
Utilizing Actual Fuel Costs in Startup-Offer Caps (R3) NPRR662 -
Proxy Energy Offer Curves (R4) NPRR272 - Definition and
Participation of Quick Start Generation Resources (R6) ERCOT Public
NPRR689 NPRR689 - Settlement of Ancillary Service Assignment in
Real-Time Operations (R1) Settlement mechanism for NPRR663
Ancillary Service Insufficiency Actions If sufficient Ancillary
Services cannot be procured via DAM, SASM and RUC, then Ancillary
Service will be assigned to QSEs. QSE assigned the Ancillary
Services (Reg-Up or RRS) is paid the assigned MW times the RTSPP
minus the ORDC price adder. Costs are spread the same way as
current AS costs are spread, on Load Ratio Share basis. The QSE
will receive a Verbal Dispatch Instruction from ERCOT for the
assignment. The QSE must file a settlement dispute to be considered
for the payment. ERCOT implemented this process manually: Data will
not be provided in the extracts (can be requested from client rep)
Will be invoiced via a Misc. Invoice. ERCOT Public NPRR419 NPRR419
Revise Real-Time Energy Imbalance and RMR Adjustment Charge (R2)
New Real-Time Energy Imbalance (RTEIAMT) billing determinants.
Changes were made to provide better information about imbalance
quantities, the end results of the calculations are the same. The
Real Time Market Consolidated Operating Day Extract and Real Time
Market Market Operating Day Extract will be changed for this NPRR.
A new column for the generation site code attribute used in the new
billing determinants will be added to the extracts. Correction was
made in this NPRR to the RMR Adjustment Charge (RMRAAMT) to use the
same prices and quantities that are used in the Real-Time Energy
Imbalance settlement. ERCOT Public NPRR617/700 NPRR617/700 - Energy
Offer Flexibility & Utilizing Actual Fuel Costs in
Startup-Offer Caps Bundled together for cost savings. Allows higher
Startup and Minimum Energy offers into the DAM, 200% of the generic
or verifiable costs. DAM and RUC Make-Whole and RUC Clawback and
Decommit calculations changed so that resources are made whole to
the minimum of verifiable/generic or their offer. VCMRR008 bundled
with NPRR700 to accommodate the changes in the startup cost
calculations used in DAM Make-Whole. ERCOT Public NPRR662 NPRR662 -
Proxy Energy Offer Curves (R4)
Energy Offer Curve extension logic changed. Any shadow settlements
related to the calculation of Real-Time Average Incremental Energy
Cost that has curve transformation logic will need to be changed.
ERCOT Public NPRR272 NPRR272 - Definition and Participation of
Quick Start Generation Resources (R6) Only impacts Quick Start
Generation. Introduces a status, OFFQS, for Quick Start Generation
Resources (QSGR). This status is used to indicate they are Off-Line
and available to SCED and replaces the current work-around that
uses the ON status for this purpose. This changes an ERCOT manual
process that impacts calculations of eligibility for payments for
QSGRs, but does not impact any Settlement Extract data. Any shadow
settlement processes that use telemetered statuses related to QSGR
could be impacted. ERCOT Public Questions ERCOT Public