NOTICE DATE: February
13, 2009
NOTICE TYPE:
M-B012009-02 Settlements
SHORT DESCRIPTION:
Miscellaneous Debit and Uplift Invoice
INTENDED AUDIENCE: QSE
Financial Personnel
DAYS AFFECTED:
Settlement Statements post February 16, 2009, Invoices post February 19, 2009,
Invoices due February 26, 2009
LONG DESCRIPTION:
Miscellaneous
Debit:
On Monday, February 16, 2009, QSEs
who were short-paid as a result of the defaults will receive an Initial
Settlement Statement for Operating Day 02/05/2009 that includes a Miscellaneous
Debit to recover Late Fees associated with the summer 2008 defaults since
insufficient payments were received from defaulting entities to pay the Late
Fees. The charge will recover Late Fees that were previously paid out to QSEs
as Late Fee credits, as well as Late Fees that remain outstanding. Funds
collected through the Miscellaneous Debit will be applied to the short-paid
principal balances as part of the uplift process. Please refer to the
calendar in the attached (.pdf) file for corresponding invoice and payment
dates.
Uplift: The
ERCOT Region experienced several “Mass Drop” scenarios as a result
of defaulting Qualified Scheduling Entities (“defaulting QSEs”) in
the summer of 2008. The defaulting QSEs include Pre-Buy Electric, LLC, National
Power Company Inc., Hwy 3 MHP LLC, Sure Electric LLC dba Riverway Power Company
and Leach Energy Trading LLC. In each instance, the defaulting QSEs
engaged in financial transactions with ERCOT and owe monies to ERCOT as a
result of those transactions.
Paragraph 5 of Section 9.4.4, Partial Payments, of the
ERCOT Protocols provides:
One
hundred eighty (180) days following a short-pay occurrence, if sufficient funds
continue to be unavailable for ERCOT to pay all amounts in full (excluding
interest or Late Fees) to short-paid Entities, and the short-paying Entity is
not in compliance with a payment plan designed to enable ERCOT to pay all
amounts in full (excluding interest or Late Fees) to short-paid Entities, the
total short-pay amount, less the total payments expected from a payment plan, will be collected from the QSEs representing LSEs, on
a Load Ratio Share basis, using the Load Ratio Share for the calendar month
three (3) months prior to the date on which the Invoice is issued, and paid to
the QSEs that were previously short-paid. ERCOT will cease
charging Late Fees to the default Entity when the conditions initiating Uplift
are met. Any uplifted short-payment
amount greater than two and one half million dollars ($2,500,000) shall be
scheduled such that two and one half million dollars ($2,500,000) is charged on
each set of invoices until the total short-payment amount is uplifted.
Short-pay Invoices shall be issued at least thirty (30) days apart from each
other. Payments will be due on the date specified on the short-pay
Invoice. Any short and late payments will be handled pursuant to Section
9.4.4, Partial Payments and 9.4.6, Late Fees, respectively. (emphasis
added)
Currently, the defaulting QSEs do not have payment plans
and are, therefore, “not in compliance with a payment plan designed to
enable ERCOT to pay all amounts in full to short-paid Entities.”
Consequently, pursuant to the ERCOT Protocols, ERCOT began last month the
process of uplifting to QSEs representing LSEs the principal amount remaining
on the defaulting QSEs’ obligations to ERCOT.
On Thursday, February 19,
2009, ERCOT will send invoices totaling $1,661,186.82 to QSEs representing LSEs based on their Load
Ratio Share (“LRS”) in November 2008. This total amount
represents the uplift of short-payments by defaulting QSEs for Invoices due 6/21/08 – 07/12/08. This is the
second uplift associated with the summer 2008 defaults. Funds received
from the uplift will be combined with a) funds currently held by ERCOT from
credits, and b) funds recovered from the Miscellaneous Debit discussed above,
to repay short-paid Entities $2,243,772.84. The Table in the attached
(.pdf file) provides a breakdown of these summary totals by each defaulting
QSE.
PLEASE NOTE: The Invoice
for this uplift will not be posted on the website as the regular weekly
invoices are. The Invoice will be delivered by e-mail to your Authorized
Representative, with a copy to your credit contact.
The payment due date will be five (5) Business Days after
the Invoice date (i.e. February 26, 2009). ERCOT intends to
distribute the funds to previously short-paid entities on February 27, 2009.
If necessary and as they arise, ERCOT will uplift any
additional unpaid amounts owed by the defaulting QSEs which may arise from
Resettlements. Pursuant to the ERCOT Protocols, ERCOT will calculate those
uplifts (if necessary) using the LRS for the calendar month three months prior
to the date on which ERCOT issues the Invoice. As ERCOT receives monies
associated with the outstanding debt, ERCOT will apply these monies to the
principal amount due from the defaulting QSEs and, in turn, distribute the
monies received to previously short-paid entities.
ACTION REQUIRED:
Payment will be due February 26, 2009, five (5) Business Days after the Invoice
date.
CONTACT: If you have
any questions, please contact your ERCOT Account Manager. You may also call the
general ERCOT Client Services phone number at (512) 248-3900 or contact ERCOT
Client Services via e-mail at [log in to unmask].
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