"Comprehensive" Review Of Creditworthiness, Settlement Requirements, Forms Of Credit Among ERCOT Top 8 Priorities After Winter Storm, Per CEO Letter

ERCOT's CEO Bill Magness in a letter to the leadership of ERCOT's Technical Advisory Committee (TAC) presented ERCOT's initial list of priority topics that ought to be addressed in the wake of the recent weather event, and creditworthiness issues are among the listed priorities.

Specifically, a listed issue is, "Comprehensive evaluation of Settlement and Creditworthiness requirements and ERCOT discretion practices during the Event. Consider changes such as: Settlement at Counter-Party level versus Qualified Scheduling Entity level, use of Unsecured Credit and certain Financial Security (e.g., surety bond and guarantees), and creation of Counter-Party financial dashboard."

Magness in the letter wrote, "Before TAC meets on March 5, 2021, ERCOT would like to present our initial list of priority topics that ought to be addressed, whether through data analysis, discussion of technical options, or market rule changes. I am sure TAC members are assembling their ideas as well, and we look forward to working with you to develop joint priorities for short- and long-term work plans."

"This priorities list is a starting point for the work ahead, and is by no means meant to be exhaustive," Magness wrote

"Moreover, this list is intended to cover items that ERCOT and TAC can advance through our stakeholder and Protocols processes. We know there are concurrent efforts at the Legislature and Commission in response to the winter storm events, and we must defer to those efforts, and also prepare to implement directions provided on these or other issues," Magness wrote

ERCOT's initial priority list includes these eight items:

1. Coordinate with Transmission Operators to understand the practical and operational limitations of Transmission Operators and related Distribution Service Providers to facilitate rotating Load shed practices when faced with an extreme magnitude of firm Load shed instructions. The extraordinary amount of Load shed, which resulted in outages that could not rotate from one area to another, was an extremely difficult issue during February 15-19. Upon feedback, consider adjusting operational practices between ERCOT and Transmission Operators to achieve effective rotating Load shed objectives. This objective will likely require industry-wide commitment to develop solutions, but after what occurred here, that effort must begin immediately.

2. Work with applicable government and private entities to improve ERCOT emergency public safety communications (e.g., AMBER Alert and TxDOT digital highway signs) for anticipated and actual Energy Emergency Alert (EEA) events, including Load shed in the ERCOT Region. Incorporate public safety communications strategy into all communication channels such as traditional news media, the ERCOT website, and social media platforms.

3. Increase coordination through the Texas Energy Reliability Council (TERC) and ERCOT's Gas Electric Working Group (GEWG) to identify critical gas facilities for Transmission and/or Distribution Service Providers to avoid disconnection during EEA events.

4. Expand Extreme Peak Load/Extreme Generation Outage scenario analysis in the Seasonal Assessment of Resource Adequacy (SARA) and other resource adequacy reporting for the ERCOT Region. Analyze a greater range of potential risks for extreme weather events and their impacts on the ERCOT grid.

5. Explore overall reporting and timing requirement changes to the ERCOT Outage Scheduler to ensure more specific, complete, and accurate information for Forced Outages of Resources during Real-Time operational conditions. Make appropriate system changes to the ERCOT Outage Scheduler to achieve enhanced situational awareness objective.

6. Ensure accurate exchange of Resource telemetry information related to Physical Responsive Capability (available operating reserves in real time) to enhance situational awareness during EEA events.

7. Expand registration and Real-Time data requirements for all types of resources beyond current modeling requirements (e.g., distribution-level resources) to enhance situational awareness for planning and operational purposes.

8. Comprehensive evaluation of Settlement and Creditworthiness requirements and ERCOT discretion practices during the Event. Consider changes such as: Settlement at Counter-Party level versus Qualified Scheduling Entity level, use of Unsecured Credit and certain Financial Security (e.g., surety bond and guarantees), and creation of Counter-Party financial dashboard.