Chad V. SeelyAssistant General Counsel

Tab 6.2: User Fee – Digital Certificate Fee

Finance & Audit Committee MeetingERCOT PublicNovember 12, 2012

2Tab 6.2 ERCOT Public

Overview

• “User Fees” – P.U.C. Subst. R. 25.363(f)– “ERCOT may charge reasonable user fees for services provided by ERCOT to

any market participant or other entity. User fees do not include the system administration fee and the ERCOT nodal implementation surcharge. A new or revised user fee may be approved by the ERCOT governing board, without the filing of an application under § 22.252 of this title (relating to Approval of ERCOT Fees and Rates.). . .”

• Any applicable User Fees are listed in the ERCOT Fee Schedule.

• Purpose of a Digital Certificate Fee is to recover the maintenance and support costs of the ERCOT Digital Certificate program.

• Currently, there are ~19,000 active ERCOT Digital Certificates across all Market Participant registration types (QSEs, CRR Account Holders, LSEs, Resource Entities, TDSPs, etc.).

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Total # of Digital Certificates By Registration Types

Tab 6.2ERCOT Public

# Active Digital Certificates: 18594

# Entities w/ Digital Certificates: 1236

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Overview (con’t)

• ERCOT will implement Nodal Protocol Revision Request (NPRR) 260, Providing Access to MIS Secure Area to MIS Registered Users, by end of 2012.

– NPRR260 created the Independent Market Information System Registered Entity (IMRE) for the sole purpose of accessing the Market Information System (MIS) Secure Area.

– Assumes that an additional 500 new Digital Certificates will be issued to support this IMRE registration type. However, no material change to overall costs to support Digital Certificate program.

• Annually, ERCOT incurs approximately $1.3M in costs to maintain the Digital Certificate program.

– Software/support costs: $430,000

– Full Time Equivalent (FTE) support costs (Legal, Client Services, Data Integrity): $400,000

– Infrastructure support costs: $475,000 

– A portion of the overall amount is variable on an annual basis to account for small percentage increases in the software/support contracts.

• The Digital Certificate Fee would relieve the ERCOT System Admin Fee (SAF) of approximately $1.3M to use towards other ERCOT initiatives

Tab 6.2ERCOT Public

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Proposed Digital Certificate Fee

• A $100 annual fee per ERCOT Digital Certificate issued to each registered Market Participant.

• Assumes a 25% reduction in Digital Certificates (14,250) based upon a Market Participant’s re-evaluation of the need for ALL Digital Certificates.

• Assumes a 10% contingency in place to recover other administrative costs and some of the variability assumptions in issued Digital Certificates over time.

• Assumes a reasonable probability of allowing the Digital Certificate Fee to remain constant for a couple of years to recover incremental costs associated with software/support contracts.

• Under currently issued Digital Certificates (as of September 2012), cost impacts per Market Participant would be:

• Largest Cost Impact: $129,000 (1,290 Digital Certificates x $100).

• Average Cost Impact: $3,900 (39 Digital Certificates x $100).

• Lowest Cost Impact: $100 (1 Digital Certificate x $100).

• Intend to annually invoice Market Participants through either a miscellaneous invoice process or other on-line invoice services.

• Quarterly reconciliation and invoice process to account for additional Digital Certificates issued to Market Participants during the current year.

• Will review annually based on current software/support, FTE support and infrastructure costs in place to ensure appropriate Digital Certificate Fee.

Tab 6.2ERCOT Public

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Next Steps

• Monday, November 11, 2012 ERCOT Staff presentation and recommendation of Digital Certificate

Fee at F&A Committee meeting.

• Monday, December 10, 2012 F&A Committee consideration and recommendation of Digital Certificate

Fee.

• Tuesday, December 11, 2012 ERCOT Board consideration of F&A Committee recommendation on

Digital Certificate Fee.

• Proposed Digital Certificate Fee Implementation Date: January 1, 2013 or later.

Tab 6.2ERCOT Public