An article in the Aug. 23 RTO Insider newsletter incorrectly reported that ERCOT’s Board of Directors had approved a protocol change that reduced counterparties’ limit for unsecured credit to $30 million from $50 million. However, the measure actually eliminated unsecured credit entirely. (See “Board Agrees to Lower Unsecured Credit Limit for Counterparties,” ERCOT Board of Directors Briefs: Aug. 16, 2022.)

The motion’s language incorporated the Technical Advisory Committee’s approval of a reduction to $30 million in April, as suggested by its Protocol Revision Subcommittee. However, it then added “as amended by” ERCOT comments from March.

In the comments, staff disagreed with the reinstatement of unsecured credit limits to the nodal protocol revision request (NPRR1112), saying the credit limit “translates directly to a cost that must be borne by other market participants” should there be a default.

“The provision of unsecured credit therefore means that the credit risk from the market activities of some market participants is subsidized by others,” staff said. “Elimination of unsecured credit will reduce the inconsistent cross-subsidization of credit exposure and provide a more level playing field for market participants.”

Staff and stakeholders had also debated the measure during TAC’s April meeting, when the committee voted in favor of the reduction to $30 million. (See “TAC Passes Contentious Outage Measure over Staff’s Objections,” ERCOT Technical Advisory Committee Briefs: April 13, 2022.)

“That was an incredibly confusing motion and could have been more clearly conveyed,” TAC Chair Clif Lange told RTO Insider.

ERCOT General Counsel Chad Seely referred to the motion’s language as “odd” before he offered it to the board for its unanimous approval.

Lange said he was told by the grid operator’s staff that the motion was crafted in the manner it was presented to capture the record developed in TAC’s report on the NPRR.