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NPRR400

Summary

Title: Eliminate Unsecured Credit for CRR Auctions and for Future Credit Exposure and Eliminate Netting of FCE with CCE
Next Group:
Next Step:
Status: Approved on 10/18/2011
Effective Dates:
11/09/2012

Action

Date Gov Body Action Taken Next Steps
10/18/2011 BOARD Approved
10/06/2011 TAC Recommended for Approval Board consideration
09/22/2011 PRS Recommended for Approval TAC consideration
08/18/2011 PRS Deferred/Tabled PRS consideration

Voting Record

Date Gov Body Motion Result
10/18/2011 BOARD To approve NPRR400 as recommended by TAC in the 10/6/11 TAC Report Passed
10/06/2011 TAC To recommend approval of NPRR400 as recommended by PRS in the 9/22/11 PRS Report, as amended by the 10/5/11 ERCOT comments and as revised by TAC. Passed
09/22/2011 PRS To recommend approval of NPRR400 as amended by the 9/19/11 ERCOT comments with a priority of Critical and rank of 9.44 and to forward NPRR400 and the preliminary Impact Analysis to TAC. Passed
08/18/2011 PRS To grant NPRR400 Urgent status andto table NPRR400 for one month. Passed

Vote tallies here reflect individual votes, not the weight of the votes by market segment. Affirmative votes are not recorded in these vote tallies. For additional details on the voting record, please consult the Recommendation or Action Report, or the official vote tally if available, as posted in the key documents.

Background

Status: Approved
Date Posted: Aug 3, 2011
Sponsor: ERCOT
Urgent: Yes
Sections: 16.11, 16.11.4.1, 16.11.4.3, 16.11.4.6, 16.11.4.6.1, 16.11.4.6.2, 16.11.5,
Description: This Nodal Protocol Revision Request (NPRR) requires that a) the Future Credit Exposure (FCE) component of the collateral calculation and b) the CRR Auction credit limit be collateralized with cash, letter of credit or a surety bond. Unsecured credit and unsecured credit through guarantees will no longer be available for this. This NPRR also eliminates netting of FCE with Current Credit Exposure (CCE) for all Counter-Parties. To accomplish the above ERCOT considered the approaches listed below: (1) Establish separate collateral "pools" for Qualified Scheduling Entity (QSE) and CRR activities (similar to zonal); and (2) Continue with a combined collateral pool, but providing sublimits for activity that must be secured. ERCOT has used the second approach in the NPRR as it provides the most flexibility and ability to maximize use of collateral. The NPRR addresses three areas: (1) Splits the Total Potential Exposure (TPE) into two portions: (a) Total Potiential Exposure Secured (TPES) is the TPE that must be secured with cash, letter of credit or surety bond; and (b) Total Potential Exposure Any (TPEA) is the TPE that may be secured with any form of collateral. TPEA will include all exposure not included in TPES. (2) Defines subcomponents of Financial Security and establishes additional requirements to maintain adequate secured collateral: (a) Secured Collateral (cash, letter of credit or surety bond) (b) Remainder Collateral (Financial Security minus TPES minus Net Positive Exposure of approved CRR Bilateral Trades) (3) Redefines Available Credit Limit(ACL) and provides for separate calculations of ACL for the Day Ahead (DAM) (ACLD) and CRR (ACLC) markets. ACL for CRRs must be collateralized with Secured Collateral.
Reason: To ensure that a) the Future Credit Exposure (FCE) component of the collateral calculation and b) the CRR Auction credit limit is secured with cash, letters of credit or surety bonds and to satisfy expected Commodities Exchange Act exemption requirements.

Key Documents

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