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NPRR #206 · Revision Request

NPRR206  Nodal Market Day-Ahead Market Credit Requirements

Approved sponsor Randa Stephenson on behalf of Luminant posted 2010-01-20 ercot.com
ReasonThe current collateral requirements for QSEs to participate in the DAM are significant and based on potential offers and bids and not what is actually cleared through the market. Thus, Market Participants have an increased cost of credit. Some are concerned that the significant collateral requirements on QSEs will discourage Market Participants from participating in the DAM, which will create inefficiencies and additional energy price volatility. Additionally, unhedged QSE Load in the DAM may result in extreme default risk in Real-Time. The changes in this NPRR address the over collateralization of QSEs and better reflect the risk and costs of DAM participation. This NPRR contains several "variables" (c, d, a, b, t, u, y, and z highlighted below) that serve as placeholders for values that will ultimately be determined by the Wholesale Market Subcommittee (WMS) prior to the Texas Nodal Market Implementation Date in December 2010.
Created2010-01-26
Approved2010-02-16
Sections Affected
4.4.10
Summary
This Nodal Protocol Revision Request (NPRR) revises the nodal collateral requirements by Qualified Scheduling Entities (QSEs) who participate in the Day-Ahead Market (DAM). The change will potentially reduce the collateral burden for QSE’s bids while sufficiently collateralizing ERCOT. The revisions are based on discussions held at the Market Credit Working Group (MCWG). The proposed NPRR language has been developed for implementation by the Texas Nodal Market Implementation Date (December 2010). Additional changes to further improve nodal collateralization may be proposed in the future, some of which may require nodal system changes. Revisions requiring significant nodal system changes following this NPRR are not expected to be implemented by the December 2010 Texas Nodal Market Implementation Date.
Timeline