CMMMarket Trials Handbook

Market Trials

Credit Monitoring and Management Testing Handbook

V1.0

April06, 2010

Revision History

Document Revisions
Date / Version / Description / Author(s)
3/18/2010 / 0.1 / Initial Draft / CMM Team
3/26/10 / 0.2 / Updated with Email templates and made few other corrections / CMM Team
3/29/10 / 0.3 / Made edits to initial draft / CMM Team
3/30/10 / 0.4 / Accepted changes, minor edits to version 0.3 / CMM Team
3/30/10 / 1.0 / Accepted changes, included minor edits / CMM Team

Approval History

Document Sections Approval
Approved by / Date / Version / Description
E. Medina / 03/31/2010 / 1.0
S. Middleton / 04/06/2010 / 1.0
M. Mereness / 04/06/2010 / 1.0

Table of Contents

1Introduction

2System Requirements

3Supporting Documents

4Phase 5.0

4.1Phase 5.0 Description / Overview

4.2Phase 5.0 Entry Criteria

4.2.1ERCOT Entry Criteria

4.2.2Counter-Party Entry Criteria

4.3Phase 5.0 Schedule

4.4Phase 5.0 Detailed Description of Processes to be Exercised

4.4.1Phase 5.0 Market Participant Activities

4.4.2Phase 5.0 ERCOT Activities

4.5Phase 5.0 Reporting Outputs

4.6Phase 5.0 Dashboard / Tracking

4.7Phase 5.0 Exit Criteria

1Introduction

This handbook describes the ERCOT and Market Participant activities for Market Trials for Credit Management and Monitoring (CMM) and payment processes. It contains specific details about the systems and processes that will be tested during each Market Trial phase as well as dates that specific functionality will be released to the market for testing. Throughout all Market Trial phases, ERCOT will: (1) monitor credit exposure (2) manage collateral and (3) monitor invoice and collateral payments. Below is a high-level description of the functionality that will be tested in this phase of Market Trials. This handbook will be updated with details for each Market Trials Phase 30 days prior to each release.

Market Trials Phase 5:

ERCOT will:

  • Monitor Credit Exposure by calculating Total Potential Exposure (TPE)
  • Publish Credit Monitoring and Management Reports
  • Send 90% Available Credit Limit (ACL) to Congestion Revenue Rights (CRR) Auction
  • Send remainder of 90% ACL to DAM System
  • Approve CRR Bi-lateral Trades
  • Test Integration of Credit with other ERCOT systems
  • Determine collateral requirements
  • Issue collateral calls
  • Process collateral payments from Counter-Party to ERCOT (see section 4.4 for e-cash process)
  • Process collateral returns/reductions by ERCOT to Counter-Party (see section 4.4 for e-cash process)

2System Requirements

Must have a Counter-Party Digital Certificate installed with applicable roles assigned to set credit limits in CRR Auction System and download Credit Monitoring and Management (CMM) Reports from MIS.

ERCOT Nodal User Roles

Contact your User Security Administrator (USA) to provide the necessary roles. If you do not know your USA, contact your ERCOT Account Manager.

MP_CRR_Credit Manager / Assigns credit limit to upcoming CRR Auction System
QSE_Extracts / Views QSE certified Extracts
CRRAH Extracts / Views CRRAH certified Extracts
MP CRR Account Holder / Participates in CRR market activities; including nominating, buying, selling or trading of CRRs

3Supporting Documents

The following documentation should be reviewed for a better understanding of the overall Market Trials approach related to Credit Management and Monitoring.

Reference / Location / Version
CMM Market Trials Testing Handbook / / 1.0
ERCOT Market Information List / / N/A
Known Issues List / / N/A
CMM Requirements / / 1.2

4Phase 5.0

4.1Phase 5.0 Description / Overview

The purpose of CMM and payment process activities during Phase 5 Market Trials is to provide Market Participants the ability to a) verify that the ERCOT systems provide needed information and to b) ensure that Market Participants systems and business processes properly allow for timely retrieval and evaluation of CMM reports and collateral.

Systems related to CMM that are in scope for Market Trials Testing Phase 5.0:

  • Settlements and Billing (S&B)
  • Market Information System (MIS)
  • Congestion Revenue Rights (CRR) Auction System
  • Financial Transfer System (FTS)
  • Market Management Systems (MMS)

Market activities that are in scope for Market Trials Testing Phase 5.0:

  • Monitor Credit Exposure by calculating Total Potential Exposure (TPE)
  • Publish Credit Monitoring and Management Reports
  • Send 90% Available Credit Limit (ACL) to Congestion Revenue Rights (CRR) Auction
  • Send remainder of 90% ACL to DAM System
  • Approve CRR Bi-lateral Trades
  • Test Integration of Credit with other ERCOT systems
  • Determine collateral requirements
  • Issue collateral calls
  • Process collateral payments from Counter-Party to ERCOT (see section 4.4 for e-cash process)
  • Process collateral returns/reductions by ERCOT to Counter-Party (see section 4.4 for e-cash process)

Market activities that are out of scope for Market Trials Testing Phase 5.0:

  • Day Ahead Market (DAM) exposure calculation - NPRR206
  • Counter-Party Default and Exit Process
  • Exercise of Letter of Credit, Guarantee Agreement and Surety Bond as Collateral

Other limitations:

ERCOT has not completed performance and stabilization testing of the deployed systems and will not be focused on resolving performance issues in the market-facing test environment during this phase.

4.2Phase 5.0 Entry Criteria

4.2.1ERCOT Entry Criteria

  • Integration testing for functionality exposed in Market Trials Phase 5 completed to ERCOT satisfaction with all market relevant defects published to market participants via the CMM Known Issues List
  • Ensure all Counter-Parties are appropriately set up In the CMM system
  • Establish initial unsecured credit limits for Counter-Parties consistent with Creditworthiness Standards

4.2.2Counter-Party Entry Criteria

  • The market participants must be registered with ERCOT as a Counter-Party and hold a valid digital certificate
  • The Counter-party must have an ERCOT assigned credit limit

4.3Phase 5.0 Schedule

Credit evaluations and updated reports will be available for at least each DAM and CRR Auction.

Credit exposure calculations may include non ERCOT supported DAM AND crr aUCTION ACTIVITY.

Dates / Event
5/7/2010 / Key dates when functionality exposed to market
5/7/2010 / Counter-Party to access and start reviewing daily Credit Monitoring and Management Reports to understand Total Potential Exposure (TPE)
5/7/2010 / Credit and invoice payment scenario testing based on e-cash process
7/3/2010 / Add actual Unsecured Credit Limits

4.4Phase 5.0 Detailed Description of Processes to be Exercised

4.4.1Phase 5.0 Market Participant Activities

During Market Trials Phase 5, Market Participants will…

  • Access and review preliminary Credit Management and Monitoring Reports
  • Request return of collateral all requests should be made to
  • Process request for CRR Bilateral Trade approval by 12 noon
  • Pay collateral timely through e-cash process
  • Reserve 90%ACL in CRR Auction System as needed
  • Access and review final Credit Management and Monitoring Reports
  • Notify ERCOT regarding any issues

E-Cash Process

  • ERCOT will use e-mails to simulate cash transactions (for MT5 will not consider LCs, Guarantee or Surety Bonds)
  • Counter-Parties making a collateral payment to ERCOT will send an e-mail with required specifics to () to indicate that payment is made
  • For making collateral refund payment to Counter-Party Contact provided to ERCOT to indicate that the refund was made
  • Counter-Parties are expected to provide ERCOT with a Contact (Treasury or Credit) to be notified for payments made for Nodal Market Trials. If no contact is provided to ERCOT, ERCOT will send an e-mail to a Nodal PM with which it works currently

Note: Collateral payments received by ERCOT

•by noon will be processed same day and will be reflected in the ACL for the following morning

•after noon will be processed same day but will not be reflected in ACL for the following morning

•E-Mail Templates

•Collateral payment template (from Counter-Party)

Subject line of e-mail:

  • Credit Nodal Collateral Payment to ERCOT (Cash)

Body:

•Counter-Party ID: #########9999

•Counter-Party Name: xxxxxxxxxxxxxxxxxxxxxx

•Collateral Payment Amount: ##########.##

•Treasury or credit contact (Name, phone number, e-mail address)

Collateral refund request template (from Counter-Party)

Subject line of e-mail:

  • Credit Nodal Collateral Refund Request (Cash)Body:
  • Counter-Party ID: #########9999
  • Counter-Party Name: xxxxxxxxxxxxxxxxxxxxxx
  • Collateral Refund Amount Requested: ##########.##
  • Treasury or credit contact (Name, phone number, e-mail address)

4.4.2Phase 5.0 ERCOT Activities

ERCOT Functions

During Market Trials Phase 5, ERCOT will…

  • Review preliminary Credit Monitoring and Management Reports and post to MIS by 12 noon
  • Post collateral received from Counter-Party by e-cashby 12 noon prior to ACL being released
  • Process intra-day TPE adjustments (including the morning DAM invoices, approved CRR bilateral trades and adjustments)
  • Send collateral calls as needed
  • Review, approve and send CRR Bilateral Trades Approval Status to CRR
  • Post collateral received from Counter-Party by e-cash after 12 noon for overnight process (not for ACL)
  • Process and post approved collateral returns
  • Send 90%ACL to CRR Auction System
  • Send remaining 90% ACL to DAM System
  • Review and post final Credit Monitoring and Management Reports to MIS

4.5Phase 5.0 Reporting Outputs

Index# / Product Name / MIS (Pub/Cert/Sec) / MIS Landing Page / Portlet Name / Report Id
FNC-470-SG / Available Credit Limit (ACL) Summary Report / C / Services / Credit Monitoring Reports / 11173
NP16-664-SG / Total Potential Exposure (TPE) Summary Report / C / Services / Credit Monitoring / 11174
NP16-665-SG / Estimate Aggregate Liability (EAL) Summary Report / C / Services / Credit Monitoring Reports / 13003
NP16-666-SG / Future Credit Exposure for CRR PTP Obligations (FCEOBL) Summary Report / C / Services / Credit Monitoring Reports / 13002
NP16-667-SG / Future Credit Exposure for CRR PTP Options (FCEOPT) Summary Report / C / Services / Credit Monitoring Reports / 13001
NP16-669-SG / Estimate Aggregate Liability (EAL) Detail Report / C / Services / Credit Monitoring Reports / 13000
NP16-670-SG / Aggregate Incremental Liability (AIL) Detail Report / C / Services / Credit Monitoring Reports / 11179
NP16-671-SG / Future Credit Exposure for CRR PTP Obligations (FCEOBL) Details Report / C / Services / Credit Monitoring Reports / 11177
NP16-672-SG / Future Credit Exposure for CRR PTP Options (FCEOPT) Detail Report / C / Services / Credit Monitoring Reports / 11176

4.6Phase 5.0 Dashboard / Tracking

Counter-Parties are expected to review Credit Monitoring and Management Reports and contact ERCOT with any issues.

4.7Phase 5.0 Exit Criteria

Note that each phase’s exit criteria do not constitute entry criteria for the following phase unless noted as such.

ERCOT Exit Criteria

  • Credit Monitoring and Management activities were performed by ERCOT as defined above
  • Credit Monitoring and Management Reports return expected results. Any issues with CMM reportsare identified witha resolution plan in place.
  • All the interfaces of Credit and Treasury systems with other ERCOT systems are functioning as expected. Any issues are identified with a resolution plan in place.

Counter-Party Exit Criteria

All Counter-Parties will be expected to review Credit Monitoring and Management reports an notify ERCOT when issues are identified

V1.0Last Modified: 10/22/20181