Texas PUC Commissioner Seeks Answers From ERCOT Concerning Market Participant Entry & Qualification Changes

October 11, 2023

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

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Texas PUC Commissioner Jimmy Glotfelty in an October 11 memo sought answers from ERCOT concerning various Nodal Protocol Revision Requests that have been approved by the ERCOT Board and which are scheduled for PUC consideration at the October 12 open meeting.

Notably, Glotfelty asked that ERCOT at the open meeting answer the questions below concerning several NPRRs related to market participant entry and qualifications

Glotfelty asked about NPRR 1175, Revisions to Market Entry Financial Qualifications and Continued Participation Requirements

According to a summary cited by Glotfelty's memo, this NPRR, "strengthens ERCOT's market entry qualification and continued participation requirements for ERCOT Counter-Parties, classifies information provided in the background check as Protected Information, modifies application forms for QSEs and CRR Account Holders, and adds a new background check fee to the ERCOT Fee Schedule."

See more details on NPRR 1175 here

NPRR 1175 makes the following modifications to Section 16, Registration and Qualification of Market Participants:

• Creates a new background check process as a part of ERCOT's review of current and prospective Counter-Parties;

• Authorizes ERCOT to review current and prospective Counter-Parties to determine whether they pose an unreasonable financial risk to ERCOT based on their background check;

• Authorizes ERCOT to suspend a QSE or CRR Account Holder if it poses an unreasonable financial risk; and

• Authorizes ERCOT to terminate the registration of a Counter-Party if it is deemed an unreasonable financial risk that cannot be remedied.

Concerning NPRR 1175, Glotfelty asked: "This NPRR seems to give a lot of authority to ERCOT about when they can exclude or expel market participants can decide what is risky and what is not. Are there any guidelines as part of the NPRR that show the market the types of things that might affect their ability to participate in the ERCOT market. Also, what are the guidelines for what you [ERCOT] are looking for on background checks?"

Glotfelty also asked about NPRR 1165, Revisions to Requirements of Providing Audited Financial Statements and Providing Independent Amount

According to a summary cited by Glotfelty's memo, NPRR 1165, "strengthens ERCOT's market entry eligibility and continued participation requirements for ERCOT Counter-Parties (i.e., QSEs and Congestion Revenue Right (CRR) Account Holders)."

Specific changes include:

• Removing minimum capitalization requirements;

• Requiring all ERCOT Counter-Parties to post Independent Amounts;

• Removing references to guarantors;

• Clarifying the requirement for financial statements; and Referencing International Financial Reporting Standards (IFRS) rather than retired International Accounting Standards (IAS).

Glotfelty asked of NPRR 1165, "Can you [ERCOT] explain why this will strengthen market entry as opposed to reduce market entry in the ERCOT Market? Is this NPRR part of an extended group of items that are going to be addressed in the future?"

Project 54445

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