ERCOT Credit Market Sub Group Meeting Notes - 9/20

Agenda                                               

1.     Antitrust Admonition

2.     Approval of Minutes (Vote)

a.     These will be addressed next month.

3.     New NPRR: New Invoice Report

a.     ERCOT walked through the items that would be in the new report. They may need a sponsor for this instead of sponsoring it themselves, if someone wants this to move forward. This is not high priority for ERCOT, as it may be duplicative to another effort, and they are looking at the costs and timeline to support and sponsor it.

b.     CFSG may choose to support this in the future.

4.     NPRR1112 Implementation: Changes to Reports

a.     ERCOT presentation posted and given.

b.     This implicates a potential to receive a collateral call on October 1^st, which is when the new form goes into use.

c.     A commenter asked whether ERCOT has seen a lot of people actively replacing their collateral and posting LC’s. ERCOT responded that they have seen a few, but not a lot. The number of potentially impacted counterparties is fairly low as well.

d.     The group talked through the process of how to implement the new LC forms. The associated NPRR is NPRR1165, which is due to go to the PUC in October, and the ERCOT implementation is slated for April 2024.

5.     EAL Change Proposals

a.     ERCOT presentation posted and given. They examined the four different proposals, including DC Energy’s and ERCOT’s proposals.

b.     They are waiting for a full set of data to accrue from this historic summer before they perform GAP analysis. They think the ERCOT proposal will address DC Energy and Rainbow Energy’s concerns. However, DC Energy and Rainbow raised some concerns.

c.     Rainbow Energy pointed out places where the data still is not netted, and is likely to propose a change to this proposal.

d.      Another commenter expressed a desire to combing real-time and day-ahead markets in this regard. They raised MCE as something to review. ERCOT response that they don’t think that MCE drives TPE, EAL should be driving this. However, they support generally reviewing collateralization.

6.     New NPRR: Strengthening Credit Qualifications of LC / Surety Bond Issuers

a.     ERCOT presentation posted and given. They are bringing this NPRR to the market and plan to file it in time for the October PRS meeting. They invited feedback.

b.     These changes involve credit rating of banks. They will not accept BBB-rated banks anymore. They’ve also updated from averaging ratings to considering the lowest ratings. Essentially, they are clarifying which ratings they are going to consider.

c.     They also will require international banks to have a separate rating for their US locations.

d.     Stakeholders expressed a desire to have a long enough implementation timeframe to allow a smooth transition.

7.     Standard Review of NPRRs for Credit Impacts (Vote)

a.     ERCOT presentation posted and given. NPRR1172, NPRR1192, NPRR1193, NPRR1196 were considered not to have market credit impacts.

8.     ERCOT Updates

a.     Credit Exposure

                                               i.     ERCOT presentation posted and given.

9.     New Business

a.     The group reviewed the meeting calendar.

10.  Adjourn