ERCOT Requests to Use Nodal Charge Revenues for Post Go-Live Nodal-Related Activities

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October 26, 2010

ERCOT has requested that the PUCT approve the use of previously approved Nodal Surcharge revenues to pay for expenses associated with the transition to the nodal market that ERCOT will incur after the planned December 1, 2010 nodal market go-live date (Docket 38840).

The post go-live charges all directly relate to the nodal market transition, but the Commission's prior orders approving the Nodal Surcharge did not explicitly address using any of the surcharge revenues to fund expenses incurred after December 2010, ERCOT said.

ERCOT is specifically seeking to use $25.2 million of the Board Discretionary Fund to fund the post-go-live charges.  The Board Discretionary Fund, or contingency fund, stands at $117.7 million as of October 1, 2010.

Directing the $25.2 million to post go-live expenses is expected to extend the collection period of the nodal surcharge, paid only be QSEs representing generation, by approximately three months, from approximately January 2013 to March 2013

"ERCOT's proposal will enable it to effectively manage the transition to the nodal market in 2011 without increases in either the Nodal Surcharge or the ERCOT System Administration Fee.  The overall cost of the nodal implementation program is running well below the budgeted amount approved in 2009.  If Nodal Surcharge revenues are used in 2011 as requested, ERCOT estimates that the overall nodal program cost will still come in approximately $92.5 million under the 2009 budget amount," ERCOT said.

Post go-live activities include:

• Stabilization of nodal market systems as they are tested in real world market situations;
• Implementation of hardware and software licensing and maintenance arrangements related to the new systems and equipment essential to nodal operations;
• Assessment of initiatives placed in the "parking deck" during nodal implementation, including development of technical and operational requirements for completing them;
• Implementation of improved nodal system solutions (and necessary workaround processes) that were deferred until after achievement of nodal market go-live; and
• Completion of work necessary to decommission zonal systems and related equipment.

ERCOT estimates that the total cost to achieve nodal go-live, including debt financing, will be approximately $526.1 million.

   
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