Federal Government Holding Up Market Participant Wire Payments to ERCOT

ERCOT said in a market notice yesterday that it has seen an increase in wires being held for review by the Office of Foreign Asset Control (OFAC), an agency of the US Department of Treasury.

ERCOT said that OFAC administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, states, organizations, and individuals. OFAC has authority, granted by Presidential national emergency powers and specific legislation, to impose controls on transactions and freeze assets under US jurisdiction, ERCOT said.

"OFAC is using this authority to hold wires from market participants to ERCOT," ERCOT said.

"A majority of the affected wires are being held due to payment details in the wire, which contain letters such as 'DAM' or 'AUC' to describe the type of payment. This combination of letters and spaces are being flagged by the Specially Designated Nationals List published by OFAC," ERCOT said.

"Neither ERCOT, nor the sending or receiving bank is responsible for what is being held due to OFAC regulations. If OFAC holds a market participant wire, ERCOT does not have access to the funds, therefore a reminder email will be sent," ERCOT said.

Per Protocol Sections 9.4.1, 9.7.1, and 9.9.1, Payment Process for the DAM, RTM, and CRR respectively, all payments are due to ERCOT by 1700 on or before the payment due date. If a wire is held by OFAC, payment still needs to be made to ERCOT by 1700 on the due date even if a second wire must be sent to ERCOT to cover the invoice. If two wires are sent, with one being held by OFAC, ERCOT will make every effort to work with the Market Participant, and return the held wire, as soon as it is released by OFAC.

In order to minimize such issues going forward, ERCOT asked market participants to follow these directions, though ERCOT noted that wires may still be held by OFAC.

- Do not use letters in the payment details of the wire, even if paying invoices for multiple market invoices (DAM, RTM, AUC, etc). Use the invoice number. Do not use the invoice letters.

- If a market participants is sending one wire to pay Collateral, Prepay, and multiple invoices, please send an email to ERCOTCredit@ercot.com and copy Treasury@ercot.com specifying the breakdown of the wire.

See market notice W-C041012-01 for more detail