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Impact of ADTE component on TPE calculation

Impact of ADTE component on TPE calculation. The Average Daily Transaction Extrapolated (ADTE) component of the Total Potential Exposure (TPE) is a core calculation for credit exposure (other than Congestion Revenue Rights (CRRs))

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Impact of ADTE component on TPE calculation

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  1. Impact of ADTE component on TPE calculation • The Average Daily Transaction Extrapolated (ADTE) component of the Total Potential Exposure (TPE) is a core calculation for credit exposure (other than Congestion Revenue Rights (CRRs)) • It is not unusual for ADTE to drive 70+% of the CCE portion of the TPE calculation (with the DALE composing another key component) • In 2011, the high prices experienced in August were captured in the ADTE causing exposure calculations to remain high through mid-November • Primarily due to the 60-day look back feature • As can be seen in the graph on the next page, the calculated TPE exceeded the high benchmark for the market as a whole in September and October as a result of the ADTE. Meeting Title (optional)

  2. ERCOT Credit Monitoring Meeting Title (optional)

  3. Impact of an increase in the system wide offer cap • If the system wide offer cap is increased and high prices are experienced again this summer, ERCOT anticipates that the TPE calculation will again be high for an extended period of time. Meeting Title (optional)

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