Proposed Budget Freezes Fee, Reduces Debt

In presentations to the ERCOT Board of Directors on Tuesday, October 19, and ERCOT staff at Lunch ‘n Learn on Thursday, October 21, ERCOT CEO Tom Schrader outlined the goals and challenges of the proposed 2005 budget.

The draft budget freezes ERCOT’s administrative fee at $0.44/MWH, funds $35 million in capital projects (with 60% debt, 40% revenue) and reduces ERCOT’s debt by $5 million by the end of 2005.  In addition, outside services expenses are projected to be reduced by $5.4 million, ERCOT will reduce its dependence on outside contractors, and other expenses are to be cut by more than $800,000.  The longer-term budget projections include keeping the fee flat and continuing to reduce the debt through 2009, if ERCOT’s current responsibilities remain unchanged.

ERCOT management will continue to look at ways to use its resources more cost effectively and reduce debt more rapidly.  Position requests will be further reviewed. A salary study will be completed by January 1, 2005, to evaluate compensation levels for consideration in merit increases in January.  Policies on debt and its financing will be considered.

The draft budget also looks to maintain flexibility to address contingencies such as implementation of new PRRs/SCRs and requirements arising from audits.  While the budget does not include costs of implementing wholesale market redesign (Texas Nodal) or increased market monitoring responsibilities (as recommended by the Sunset Commission), if these additional contingencies arise during the 2005 fiscal year, ERCOT will assess its budgetary situation to see if these activities can be absorbed without seeking approval for additional resources.

ERCOT management and the Finance and Audit Committee will continue to work on the final budget for board consideration.  The 2005 ERCOT budget is up for approval at the next board meeting, scheduled for Tuesday, November 16, 2004 at ERCOT Austin.  PUCT filing of the budget is scheduled for November 30, 2004.

The budget presentation of October 19 may be accessed by viewing the Meeting Calendar by date of the board meeting.

ERCOT Membership Record Date – Friday, November 12, 2004

The deadline for 2005 ERCOT membership is Friday, November 12, 2004.  All membership applications and fees must be received by this date if a company intends to participate in the 2005 membership elections for board seats, TAC seats and TAC subcommittee seats.  The application may be filled out electronically and printed.  Current members of ERCOT will be receiving a renewal invoice for 2005 membership.  Send membership application and payment to ERCOT, Attn: Legal Department, 7620 Metro Center Drive, Austin, Texas 78744.

For more information about membership applications, contact Tisa Wilkins x7080

PRR Revision Strengthens Impact Analysis Requirement

The ERCOT Board of Directors approved Protocol Revision Request (PRR) 523, a fairly significant modification to ERCOT Protocol Section 21, Process for Protocol Revision, at the October 19 board meeting.  The PRR, which becomes effective November 1, makes modifications to the process for revising the protocols, formalizes the System Change Request (SCR) approval process, and clarifies the sequence of events and the timeline for the processes.  The major highlights include the requirement that ERCOT include an impact analysis when any PRR is submitted by ERCOT, more formal impact submission requirements for all PRRs (that sponsors must provide), more time for ERCOT to perform impact analyses, two reviews of all PRRs by the Protocol Revision Subcommittee prior to consideration by TAC, an additional month of review after each TAC meeting prior to board consideration, and the requirement that the board approve all SCRs.  The Board Action Report for the PRR can be downloaded.

MS Project Server 2003 Rollout

The MS Project Server 2003 will be rolled out over the next two months as the tool to manage ERCOT’s portfolio of projects.  This will impact all delivery managers and staff that support projects and will serve as the basis for managing our project resources and providing management reports.  MS Project Server is a web-based project management application that allows ERCOT to manage projects and resources at a detail level, while allowing company level views into resource usage and overall portfolio status.  Initial rollout has started and will conclude by December 31, 2004.

Major elements include dynamic scheduling, entry of actual time spent on project work, resource management of project work, project/program reporting, and document repository.  Project managers (both PMO and business), resource managers, project resources (SMEs, developers, etc.) and the executive management team will be trained on the application.

ERCOT Hosts Philippines Regulatory Delegation

Four representatives from the Energy Regulatory Commission (ERC) of the Philippines visited ERCOT on Friday, October 15.  The delegation, which included one of the ERC Commissioners, was interested in understanding the structure of the ERCOT market and the success factors for retail competition in Texas.  As the Philippines prepares for deregulation of its electric industry, their Commission has myriad issues and policy questions to address.  The visit was arranged by the United States Energy Association – the U.S. member committee of the World Energy Council.

ERCOT Meeting Dates

• Monday, October 25: TNT Econ Whitepaper Review, ERCOT Austin 206, 9:00am – 5:00pm
• Tuesday, October 26: TNT Econ Whitepaper Review, ERCOT Austin 206, 8:30am – 5:00pm
• Tuesday, October 26: ISO/RTO Settlement Summit, ERCOT Austin 206; 8:00am – 5:00pm
• Thursday, October 28: PUCT Open Meeting, Travis Building 7th Floor, 9:30am
• Thursday, October 28: TNT Econ Whitepaper Review, ERCOT Austin 206, 9:00am – 5:00pm
• Friday, October 29: TNT Econ Whitepaper Review, ERCOT Austin 206, 8:30am – 5:00pm

ERCOT at a Glance is an electronic summary of the timely and topical events going on within the organization.  ERCOT at a Glance updates employees on the newsworthy and noteworthy events and accomplishments related to the business of ERCOT.  We seek milestones, accomplishments and everyday news.  If you have important stories or information, please provide us with your news in electronic summary format, after first coordinating with the manager and directors in you area.  We welcome your summaries (due by 5:00pm on Thursday of each week) and look forward to hearing from you.  If you have questions, please contact Heather Tindall at 512-225-7023 or htindall@ercot.com.