ERCOT reached an agreement Tuesday with Public Utility Commission staff and a broad-based group of stakeholders reducing the administrative fee from $.44 to $.42 per megawatt hour, effectively cutting the ERCOT budget by $6 million.

Below is a statement from ERCOT CEO Thomas F. Schrader.

"Through a process led by Public Utility Commission staff, ERCOT has reached agreement in principle with Commission staff and a broad-based group of stakeholders on the framework for ERCOT’s Administration Fee.  The settlement will be considered by the ERCOT Board and, if approved, filed with the Commission for its approval.

"The settlement will impose a rigorous level of fiscal discipline on the ERCOT organization, including:

• A reduction in the ERCOT Administration Fee from $.44 to $.42 — essentially a $6 million budget cut;
• Retention of our commitment to reduce debt by $5 million by the end of 2005;
• Retention of existing limits on new debt.

"In addition, we must make room in the 2005 budget for substantial new funding required to address the findings of the recently-completed PUC-ordered assessments of internal management controls and internal IT security.

"This settlement is a challenge to ERCOT that will require us to find savings in every corner of the organization.  We will need to take a hard look at all of our priorities.

"Spending will be limited to projects and services with the highest value to the ERCOT mission, and some activities may need to be deferred.  Employees across the board will be asked to find ways to meet this challenge.  We will also ask stakeholders to revisit market priorities.

"ERCOT is transitioning from start-up to a mature operating organization.  The settlement will require the new ERCOT to demonstrate its commitment to fiscal discipline and sound business practices with limited resources and extensive oversight.

"ERCOT stands ready to meet this challenge.  In my four months on the job, I have developed a high level of confidence in the capabilities, resourcefulness and resilience of ERCOT’s employees.  ERCOT’s staff is driven in large measure by professional pride, and we are united in our commitment to restore full confidence in ERCOT with the Legislature, the Commission, and the public."