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TCR-CRR Transition Plan TCR Auction Revenue Refund Process

This document outlines the objectives and proposed methodology for the TCR Auction Revenue Refund Process, including examples of refund calculations for both mid-month and 1st-of-the-month go-live scenarios.

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TCR-CRR Transition Plan TCR Auction Revenue Refund Process

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  1. TCR-CRR Transition PlanTCR Auction Revenue Refund Process Mandy Bauld WMS July 15, 2008

  2. Outline • Objectives • Proposed Methodology • Examples • Mid-Month Go-Live Refund Example • 1st of the Month Go-Live Refund Example

  3. Objectives • The TCR Auction Revenue Refund Process is intended to describe the refund method planned when transitioning from the TCR to CRR market. • ERCOT will refund to TCR/PCR owners the Annual and Monthly TCR/PCR auction revenues for all remaining days of the year that follow the Texas Nodal Market Implementation date. • ERCOT will make refunds to TCR/PCR owners no later than thirty (30) days following the start of the Texas Nodal Market. • Implementation of this process involves the Zonal TCR/Settlements department. • ERCOT seeks WMS approval of the proposed methodology, before submitting modifying comments to PRR743.

  4. Refund of Monthly and Annual TCR Auction Revenues The total refund of auction revenues to a TCR/PCR owner of record is calculated as follows: TCRRAMTp = -1 * (TCRMRp + TCRARp + TCRRRp) ERCOT shall refund each TCR owner of record of its awarded monthly TCRs that are no longer effective for the month of Texas Nodal Market Implementation, calculated as follows: TCRMRp = MAUCRp * MRP ERCOT shall refund each TCR/PCR owner of record of its awarded annual TCRs/PCRs that are no longer effective for the month of Texas Nodal Market Implementation, calculated as follows: TCRARp = AAUCRp * ((MEnergyn / Σ MEnergyn) * MRP ERCOT shall refund each TCR owner of record of any remaining annual TCRs/PCRs for all months following the month of the Texas Nodal Market Implementation, calculated as follows: TCRRRp = AAUCRp * (REnergyn  / Σ MEnergyn)

  5. Variable Definitions

  6. Refund of Monthly and Annual TCR Auction Revenues The total refund of auction revenues to a TCR/PCR owner of record is calculated as follows: TCRRAMTp = -1 * (TCRMRp + TCRARp + TCRRRp) ERCOT shall refund each TCR owner of record of its awarded monthly TCRs that are no longer effective for the month of Texas Nodal Market Implementation, calculated as follows: TCRMRp = MAUCRp * MRP ERCOT shall refund each TCR/PCR owner of record of its awarded annual TCRs/PCRs that are no longer effective for the month of Texas Nodal Market Implementation, calculated as follows: TCRARp = AAUCRp * ((MEnergyn / Σ MEnergyn) * MRP ERCOT shall refund each TCR owner of record of any remaining annual TCRs/PCRs for all months following the month of the Texas Nodal Market Implementation, calculated as follows: TCRRRp = AAUCRp * (REnergyn  / Σ MEnergyn) Example: Nodal Go-Live September 1st If Monthly Auction was run for Sept., Refunds all Monthly Auction TCRs (MRP = 30/30 = 1.0) Refunds all Annual Auction TCRs/PCRs for Sept. (MRP = 30/30 = 1.0) Refunds all Annual Auction TCRs/PCRs for Oct - Dec

  7. Refund of Monthly and Annual TCR Auction Revenues The total refund of auction revenues to a TCR/PCR owner of record is calculated as follows: TCRRAMTp = -1 * (TCRMRp + TCRARp + TCRRRp) ERCOT shall refund each TCR owner of record of its awarded monthly TCRs that are no longer effective for the month of Texas Nodal Market Implementation, calculated as follows: TCRMRp = MAUCRp * MRP ERCOT shall refund each TCR/PCR owner of record of its awarded annual TCRs/PCRs that are no longer effective for the month of Texas Nodal Market Implementation, calculated as follows: TCRARp = AAUCRp * ((MEnergyn / Σ MEnergyn) * MRP ERCOT shall refund each TCR owner of record of any remaining annual TCRs/PCRs for all months following the month of the Texas Nodal Market Implementation, calculated as follows: TCRRRp = AAUCRp * (REnergyn  / Σ MEnergyn) Example: Nodal Go-Live September 19th If Monthly Auction was run for Sept., Refunds Monthly Auction TCRs for days 9/19 through 9/30(MRP = 12/30 = 0.4) Refunds Annual Auction TCRs/PCRs for days 9/19 through 9/30 (MRP = 12/30 = 0.4) Refunds all Annual Auction TCRs/PCRs for Oct - Dec

  8. 1st of the Month Go-Live Refund Example 1st of the month refund (September 1st) for a TCR owner of record with the following information: $100,000 Annual Auction Obligation $20,000 September Monthly Auction Obligation September days to Refund are 30 out of 30 September’s Annual Energy Forecast = 20,000 GWh October - December’s Annual Energy Forecast = 70,000 GWh Annual Energy Forecast = 320,000 GWh The total refund of auction revenues to a TCR/PCR owner of record is calculated as follows: TCRMRp = MAUCRp * MRP TCRMRp = $20,000 * (1) = $20,000 TCRARp = AAUCRp * ((MEnergyn / Σ MEnergyn) * MRP TCRARp = $100,000 * ((20,000 GWh / 320,000 GWh) * (1) = $6,250.00 TCRRRp = AAUCRp * (REnergyn  / Σ MEnergyn) TCRRRp = $100,000 * (70,000 GWh  / 320,000 GWh) = $21,875.00 TCRRAMTp = -1 * ($20,000 + $6,250.00 + $21,875.00) = ($48,125)

  9. Mid-Month Go-Live Refund Example Mid-month refund (September 19th) for a TCR owner of record with the following information: $100,000 Annual Auction Obligation $20,000 September Monthly Auction Obligation September days to Refund are 12 out of 30 September’s Annual Energy Forecast = 20,000 GWh October - December’s Annual Energy Forecast = 70,000 GWh Annual Energy Forecast = 320,000 GWh The total refund of auction revenues to a TCR/PCR owner of record is calculated as follows: TCRMRp = MAUCRp * MRP TCRMRp = $20,000 * (12/30) = $8,000 TCRARp = AAUCRp * ((MEnergyn / Σ MEnergyn) * MRP TCRARp = $100,000 * ((20,000 GWh / 320,000 GWh) * (12/30) = $2,500.00 TCRRRp = AAUCRp * (REnergyn  / Σ MEnergyn) TCRRRp = $100,000 * (70,000 GWh  / 320,000 GWh) = $21,875.00 TCRRAMTp = -1 * ($8,000 + $2,500.00 + $21,875.00) = ($32,375)

  10. Questions?

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