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NOTICE DATE: July 19, 2021

NOTICE TYPE: M-A042721-02 Financial / Credit

SHORT DESCRIPTION: Updated Potential Uplift (PUL) Calculation


DAYS AFFECTED: July 19, 2021

LONG DESCRIPTION: Counter-Parties must maintain Financial Security or an unsecured credit limit at an amount that equals or exceeds its Total Potential Exposure (TPE). On April 29, 2021, and May 15, 2021, ERCOT adjusted the Potential Uplift (PUL) component of TPE. See Market Notice M-A042721-01.

On June 18, 2021, Governor Abbott signed Senate Bill (SB) 1580, relating to securitization for electric cooperatives, which provides that “no default or uplift charge or repayment may be allocated to or collected from a market participant that: (1)  otherwise would be subject to an uplift charge solely as a result of acting as a central counterparty clearinghouse in wholesale market transactions in the ERCOT power region; and (2)  is regulated as a derivatives clearing organization, as defined by the Commodity Exchange Act (7 U.S.C. Section 1a).” ERCOT has identified a single Market Participant that qualifies under this exemption— ICE NGX Canada Inc.

On June 29, 2021, ERCOT issued Market Notice M-B041421-02 notifying Market Participants that it was deferring the issuance of default uplift invoices until after the Public Utility Commission of Texas (Commission) issues an order requiring ERCOT to establish a debt funding mechanism to finance short-paid amounts related to the extreme winter weather event. On July 16, 2021, ERCOT filed an application for a debt obligation order to finance default balances pursuant to House Bill (HB) 4492, relating to financing certain costs associated with electric markets; granting authority to issue bonds; authorizing fees. See PUC Docket No. 52321, Application of ERCOT for Debt Obligation Order to Finance Default Balances under PURA Chapter 39, Subchapter M and Request for Good Cause Exception.  

However, the SB 1580 exemption impacts the calculation of the PUL component of TPE, which includes the Counter-Party's share of amounts expected to be uplifted within one year of the date of the calculation. See ERCOT Protocol Section Accordingly, ERCOT has revised the maximum MWh activity total (MMATOT) component of the default uplift calculation to 210,286,948.13 MWh for January 2021. See Protocol Section 9.19.1.

Counter-Parties can find updated PUL amounts on their credit reports. 

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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