NOTICE DATE:  June 29, 2018

NOTICE TYPE:  W-A062918-01 Operations

SHORT DESCRIPTION:  Change to the methodology for utilizing Fuel Index Prices (FIPs) for days in which the last day of the month is on a non-trading day

INTENDED AUDIENCE:  Qualified Scheduling Entities

DAY AFFECTED:  June 30, 2018 onward

LONG DESCRIPTION:  ERCOT has discovered a discrepancy between an ERCOT system design and the vendor methodology for applying the FIP for a given day in cases where the last day of the month is a non-trading day (i.e., a weekend day or holiday).  This discrepancy has existed since August 2, 2017, when ERCOT switched FIP vendors, and impacted the following Operating Days: 

•                9/30/2017

•              12/30/2017

•              12/31/2017

•                3/30/2018

•                3/31/2018

ERCOT does not believe that this discrepancy resulted in significant impacts to the market.

The ERCOT Market Management System and Settlement systems are designed to utilize the last effective FIP that was received when a new value is not available.  For example, if a new FIP is not received for a Sunday, then the value used for FIP on Sunday would be the last effective price received.  Typically, this FIP would have been received on the preceding Friday, assuming that Friday was not a holiday.  Thus, the value received on Friday would be the value used for Sunday as well as Saturday.  This approach is not in alignment with the vendor’s methodology when the last day of the month is on a non-trading day.

In cases where the last day of the month is on a non-trading day, the vendor’s methodology intends the last value received to only be applied beginning on the first day of the new month.  The price used for the remaining days of the current month is to be the second-to-last value received by ERCOT.  For example, assuming that the first day of the month falls on a Sunday and neither Thursday nor Friday is a holiday, then the FIP received by ERCOT on Thursday should be used on Saturday, and the FIP received by ERCOT on Friday should be used beginning on Sunday.

This specific scenario will occur again this weekend, where the last day of June is a Saturday.  In order to align ERCOT’s processes with the vendor’s methodology and the data format, ERCOT will be utilizing the FIP received Thursday, June 28, 2018, for Saturday, June 30, 2018, and the FIP received Friday, June 29, 2018, if a new effective FIP is received, for Sunday, July 1, 2018, and Monday, July 2, 2018. This process will remain in effect moving forward.  Additionally, ERCOT will be submitting a Nodal Protocol Revision Request (NPRR) to address ambiguity in the FIP definition to align it with the methodology and the format in which the information is received.

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 email at [log in to unmask].

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