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


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


Status: Approved
Date Posted: May 1, 2012
Sponsor: NRG
Urgent: Yes
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.

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