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Wholesale Market Subcommittee Update: MCWG Credit Working Group Report

Stay informed with the latest updates from the market credit working group in the wholesale market subcommittee meeting on 03/06/2019. Review of NPRRs, credit impacts, entry qualifications, CRR portfolio, and more. Prepare for Summer 2019 and understand ERCOT credit exposure changes.

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Wholesale Market Subcommittee Update: MCWG Credit Working Group Report

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  1. Market Credit Working Group update to the Wholesale Market Subcommittee 03/06/2019 Bill Barnes NRG, Chair Josephine Wan Austin Energy, Vice Chair

  2. MCWG update to WMS • General Update • February 20th Joint MCWG/CWG Meeting • 7NPRRS reviewed for their credit impacts • 891NPRR Removal of NOIE Capacity Reporting Threshold for the Unregistered Distributed Generation Report • 900NPRR Protocol Section 14 Language Review • 908NPRR Revisions to Mass Transition Processes • 912NPRR Settlement of Switchable Generation Resources (SWGRs) Instructed to Switch to ERCOT • 920NPRR Change to Ramp Rate Calculation in Resource Limit Calculator • 921NPRR RTF-2 Elimination of the Terms All-Inclusive Generation Resource and All-Inclusive Resource • 922NPRR Modifications to DC Tie Import Forecast Method • 6 without any credit impact. NPRR908 improves notice and transparency of mass transition events and is expected to have a positive impact on credit

  3. MCWG update to WMS Market Entry Qualifications/CRR Portfolio Liquidation Process Continued discussion of lessons learned from PJM Greenhat default. What changes should be adopted in ERCOT? • Following the GreenHat Energy LLC default in the PJM market, many prompted discussion on further credit diligence on Market Participant (MP) background check • Discussion over whether ERCOT should have more discretion to suspend/liquidate or do MP’s have to make additional representations? • Protocols say if there’s an instance of default ERCOT can hold a one-time auction of MP’s CRR’s • Additional background checks are currently only performed by PJM and ISO-NE, ERCOT will inquire how they perform these checks and identify this to the PUCT as a possible issue of concern. • What is the level of discretion ERCOT (and PJM/other ISO’s) would have to deny someone entrance into Market? • Looking into company officers’ criminal backgrounds. Coordinate with other ISOs? • CRR portfolio liquidation: all or nothing? Tranche disposition? ERCOT staff is going to bring back recommendations to a future Credit Working Group meeting.

  4. MCWG update to WMS Summer 2019 Preparation • Mass Transition Drill – Implications for credit? • Acquisition Transfer Contract List – Be sure contact info is up-to-date • Credit Training – April?

  5. MCWG update to WMS ERCOT Credit Exposure Updates • Market-wide average TPE decreased from $338.6 million to $330.5 million • The decrease in TPE is due to change in Real Time and Day Ahead settlement point prices. • Discretionary collateral is defined as Secured Collateral in excess of TPE,CRR Locked ACL and DAM Exposure. • Average Discretionary collateral decreased from $ 1,071.7 million to $996.7 million. • The decrease in discretionary collateral is due to the number of days of CRR auctions. • Number of active Counter-Parties remained flat at 228 • No unusual collateral call activity

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