The Electric Reliability Council of Texas, Inc. (ERCOT), announced today that Moody's Investors Service has upgraded its long-term issuer rating to Aa3 from A1 and designated the outlook as stable. 

The rating upgrade and stable outlook are based on “recognition of the well-established and accepted role ERCOT plays in the Texas electricity market through the reliable operation of the transmission system within its region,” according to Moody’s explanation.   

“ERCOT now has a more certain expectation of the cost of its capital plan for implementation of a nodal market design and has received regulatory board approval for a surcharge to fund this plan,” the report also noted.  Development of a nodal market design was ordered by the Public Utility Commission of Texas in 2003, and implementation is now on target for launch by 2009. 

ERCOT’s financial obligations are secured by a state statute that requires recovery of costs by a fixed administrative fee assessed to the energy scheduling entities in the region, the report stated.  “The size, stability and liquidity of the ERCOT power market also represent key credit factors, since they minimize price and reliability risk as the Texas market matures.”