ERCOT Submits NPRR To Bring More "Finality" To Settlement Process, Limit Timeline For Certain Resettlements -- EnergyChoiceMatters.com

ERCOT Submits NPRR To Bring More "Finality" To Settlement Process, Limit Timeline For Certain Resettlements

September 25, 2023

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Copyright 2010-23 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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ERCOT is sponsoring new Nodal Protocol Revision Request 1201 which would, as stated in the NPRR, "reduce[] exposures for both ERCOT and Market Participants for resettlements and Default Uplift Invoices for historical Operating Days."

Among other things, NPRR 1201, "Limits timeline for resettlement due to errors that are discovered, and a Market Notice of the error is provided to Market Participants, within one year after the Operating Day."

"This limit does not apply to resettlement due to an Alternative Dispute Resolution, a Procedure for Return of Settlement Funds, or a resettlement directed by the Board of Directors to address unusual circumstances," NPRR 1201 states

Apart from such exceptions, the NPRR would revise the protocols to state that, "ERCOT shall issue a DAM Resettlement Statement for a given Operating Day due to errors other than errors in prices when ... The error is discovered, and a Market Notice of the error is provided to Market Participants, within one year of the Operating Day at issue."

Additionally, NPRR 1201 adjusts the Maximum MWh Activity formula in Section 9.19.1 to only consider Congestion Revenue Rights (CRRs) owned during the Operating Days of the reference month, and to not consider CRRs that may have been bought or sold for the month, but are no longer owned on the given Operating Days of the reference month.

In a business case for the NPRR, ERCOT said as follows

This NPRR allows ERCOT and Market Participants more finality in Settlement and reduces disruption and unexpected charges due to the following issues:

1. Current Protocols do not have a timeline on resettlement due to errors and could require resettlement of an Operating Day years after the original Settlement, for an amount as little as $200.
2. This NPRR reduces exposure to and from Market Participants that have left the market that may owe or are owed payments due to the resettlement of historical Operating Days, which could cause delays in payments and may cause short-pays.
3. Resettlement of historical Real-Time Operating Days also involves the re-calculation of load volumes which shifts Settlement amounts for charge types unrelated to the error.

This NPRR does not limit the resettlement timeline for certain situations including: a resettlement due to an Alternative Dispute Resolution Process, a Procedure for Return of Settlement Funds, and a resettlement directed by the Board of Directors to address unusual circumstances.
Similarly, this NPRR reduces exposure to ERCOT and CRR Account Holders to Default Uplift Invoices. Under current Protocol language, a CRR Account Holder could be exposed to an uplift more than two years after they sold their CRRs to another CRR Account Holder.
The current formula for Default Uplift Invoices looks at CRR activity for a given Operating day in addition to CRRs that were owned on the Operating Day. If a CRR was purchased for an Operating Day years in advance and subsequently sold before the Operating Day, the former CRR Account Holder is still exposed to the Default Uplift Invoice, even if they sold all their CRR positions and left the market before the Operating Day. Adjusting the Maximum MWh Activity formula to only count CRRs that were owned by a CRR Account Holder on the given Operating Day increases the likelihood of recovery of a default uplift by ERCOT, decreases the complexity of recovery, and provides CRR Account Holders finality upon selling CRRs, no longer exposing former CRR Account Holders to potential default uplift for CRRs they no longer own.

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