Issues

NPRR459

Summary
Action
Voting Record
Background
Key Documents

Summary

Title	Better Matching Forward Collateralization with Forward Risk in the Real-Time Market
Next Group
Next Step
Status	Approved on 07/17/2012
Effective Dates	08/01/2012

Action

Date	Gov Body	Action Taken	Next steps
07/17/2012	BOARD	Approved
07/09/2012	TAC
06/28/2012	TAC	Recommended for Approval	TAC consideration
06/21/2012	PRS	Recommended for Approval	TAC consideratin
05/17/2012	PRS	Deferred/Tabled	PRS consideration

Date

Gov Body

Action Taken

Next steps

07/17/2012

BOARD

Approved

07/09/2012

TAC

06/28/2012

TAC

Recommended for Approval

TAC consideration

06/21/2012

PRS

Recommended for Approval

TAC consideratin

05/17/2012

PRS

Deferred/Tabled

PRS consideration

Voting Record

Date	Gov Body	Motion	Result
07/17/2012	BOARD	To approve NPRR459 as recommended by TAC in the 7/9/12 TAC Report.	Passed
07/09/2012	TAC	To recommend approval of NPRR459 as amended by the 7/9/12 ERCOT comments with a recommended priority of 2012 and rank of 135; and an interim manual implementation of NPRR459 with an effective date of August 1, 2012.	Failed
06/28/2012	TAC	To recommend approval of the proposed Other Binding Document, Procedure for Setting Forward Risk Multiplier, as recommended by PRS in the 6/21/12 PRS Report and as revised by TAC.	Passed
06/21/2012	PRS	To recommend approval of NPRR459 and the proposed Other Binding Document, Procedure for Setting Forward Risk Multiplier, as amended by the 6/18/12 NRG comments and as revised by PRS and to forward to TAC.	Passed
05/17/2012	PRS	To table NPRR459 and to refer the issue to WMS.	Passed

Date

Gov Body

Motion

Result

07/17/2012

BOARD

To approve NPRR459 as recommended by TAC in the 7/9/12 TAC Report.

Passed

07/09/2012

TAC

To recommend approval of NPRR459 as amended by the 7/9/12 ERCOT comments with a recommended priority of 2012 and rank of 135; and an interim manual implementation of NPRR459 with an effective date of August 1, 2012.

Failed

06/28/2012

TAC

To recommend approval of the proposed Other Binding Document, Procedure for Setting Forward Risk Multiplier, as recommended by PRS in the 6/21/12 PRS Report and as revised by TAC.

Passed

06/21/2012

PRS

To recommend approval of NPRR459 and the proposed Other Binding Document, Procedure for Setting Forward Risk Multiplier, as amended by the 6/18/12 NRG comments and as revised by PRS and to forward to TAC.

Passed

05/17/2012

PRS

To table NPRR459 and to refer the issue to WMS.

Passed

Background

Status:	Approved
Date Posted:	May 1, 2012
Sponsor:	NRG
Urgent:	Yes
Sections:	16.11.4.3, 16.11.4.4
Description:	In order to help manage the seasonal nature of the ERCOT market, this Nodal Protocol Revision Request (NPRR) adds a seasonal adjustment factor to raise and lower collateral requirements throughout the year. In addition, this NPRR also recommends that ERCOT only review the last 40 days of history instead of the last 60 days when determining credit requirements.
Reason:	With the Public Utility Commission of Texas (PUCT) considering increases to the System-Wide Offer Cap (SWCAP) to support Resource adequacy, collateral requirements will need to be reconsidered in parallel. While energy prices and gas prices are typically highly correlated, during shortage pricing conditions the correlation breaks down as energy prices are no longer based on underlying fuel costs. However, they may be more likely to occur on a seasonal basis, so the proposals in this NPRR should help to mitigate the increased risk in the market. Together, these changes should help to fix the under-collateralization going into a potential shortage pricing event and the over-collateralization following the event.