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Invoice Due Dates

Presentation for Joint Meeting

SEWG & MCWGDecember 7, 2009

Jack BrownSettlement Coordinator

Garland

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Invoice Due Dates

Overview: Purpose Current Zonal Invoice Due Dates Nodal Invoice Due Dates:

RTM Invoice Due Dates with Calendars DAM Invoice Due Dates with Calendars CRR Auction Invoice Due Dates with Calendars

Payment Options and Timing Payment Breach and Late Payments DAM Participation Example Discussion

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Invoice Due Dates

Purpose: Compare Areas of Zonal / Nodal Protocols Identify Volume / Timing of Nodal Invoice Activities Identify Payment Options and Timing Provide Example of DAM Participation Provide Insight into Default / Loss Implications Initiate Meaningful Discussions Between the Joint

Working Groups to Understand and Consider Impacts of Decisions Moving Forward.

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Weekly Volume of Zonal Statements & Invoices

Activity (Per QSE) Potential Statements Potential Invoices Total

Zonal Market 21 1 22

(Statements include

7 days of each Initial,

Final, True-Up & more

with any Resettlements)

Monthly Auction (next month) 1 1

21 2 23

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Weekly Volume of Nodal Statements & Invoices

Activity (Per QSE) Potential Statements Potential Invoices Total

Day Ahead Market 7 7 14

Real Time Market 21 1 22

(Statements include

7 days of each Initial,

Final, True-Up & more

with any Resettlements)

Monthly Auction (next month) 1 1

CARD (previous month) 1 1

Balancing Acct (previous month) 1 1

28 11 39

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Invoice Due Dates (Current Zonal)

Current Zonal Invoice Due Dates: Current Zonal Protocol 9.3 states:

The payment date will be five (5) Bank Business Days after the Settlement Invoice date. If the payment date does not fall on a Business Day, the Invoice will become due on the next Business Day.

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Invoice Due Dates (Current Zonal)

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

7 Operating Days

October 6 – 12

Ten (10) Days To Post Settlement Statements

OD 11&12 Invoice Posted Five (5)

Bank Business DaysDue Date

1 2

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Invoice Due Dates (Nodal RTM)

Nodal RTM Invoice Due Dates: Nodal Protocol 9.7.1 (1) states:

The payment due date and time for the RTM Invoice, with funds owed by an Invoice Recipient, is 1700 on the fifth Bank Business Day after the RTM Invoice date, unless the fifth Bank Business Day is not a Business Day. If the fifth Bank Business Day is not a Business Day, the payment is due by 1700 on the next Bank Business Day after the fifth Bank Business Day that is also a Business Day.

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Invoice Due Dates (Nodal RTM)

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

7 Operating Days

October 6 – 12

Ten (10) Days To Post Settlement Statements

OD 11&12 Invoice Posted Five (5)

Bank Business DaysDue Date

1 2

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Invoice Due Dates (Nodal DAM)

Nodal DAM Invoice Due Dates: Nodal Protocol 9.4.1 (1) states:

The payment due date and time for the DAM Invoice, with funds owed by an Invoice Recipient, is 1700 on the fourth Bank Business Day after the DAM Invoice date, unless that fourth Bank Business Day is not a Business Day. If the fourth Bank Business Day is not a Business Day, then the payment is due by 1700 on the next Bank Business Day after the fourth Bank Business Day that is also a Business Day.

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Invoice Due Dates (Nodal DAM)

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

OD DAM PostInvoice Posted Four (4) Bank

Bus. Days Due Date

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Invoice Due Dates (Nodal DAM)

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

OD

DAM PostInvoice Posted Four (4) Bank Business Days

Due Date

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Invoice Due Dates (RTM and DAM)

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

7 Operating Days

October 6 – 12

Ten (10) Days To Post Settlement Statements

OD 11&12 Invoice Posted Five (5)

Bank Business DaysDue Date

1 2

OD

DAM PostInvoice Posted Four (4) Bank Business Days

Due Date

OD DAM PostInvoice Posted Four (4) Bank Bus.

DaysDue Date

OD DAM PostInvoice Posted Four (4)

Bank Business DaysDue Date

OD DAM PostInvoice Posted

Four (4) Bank Business Days Due Date

OD DAM

PostInvoice Posted Four (4) Bank Business Days

Due Date

OD

DAM Post Invoice Posted Four (4) Bank Business Days

Due Date

OD

OD

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Invoice Due Dates (CRR Auction)

Nodal CRR Invoice Due Dates: Nodal Protocol 9.9.1 (1) states:

The payment due date and time for the CRR Auction Invoice, with funds owed by an Invoice Recipient, is 1700 on the third Bank Business Day after the CRR Auction Invoice date, unless the third Bank Business Day is not a Business Day. If the third Bank Business Day is not a Business Day, the payment is due by 1700 on the next Bank Business Day after the third Bank Business Day that is also a Business Day.

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Invoice Due Dates (CRR Auction)

Nodal CRR Auction Process: Bid Submission – 3 Days Optimization – 5 Days Validation and Invoice Posting – 1 Day Payment Deadline – 3 Days Post To Accounts – 1 Day

(must post before the last day of the month – DAM for 1st day of next month happens on last day of month)

13 Days Required For Auction Process

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Invoice Due Dates (CRR Auction)

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 3 4

5 6 7 8 9 10 11

12 13 14 15 16 17 18

19 20 21 22 23 24 25

26 27 28

5 DaysBid Submission 3 Days

Invoice Posted 3 Bank Bus. DaysOptimization

PostDue Date

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Invoice Due Dates

Credit Implications:

RTM Invoice Due Dates Exposure Remains All MPs, 7 ODs, 22 to 28 Calendar Days

DAM Invoice Due Dates Exposure 9 - 12 Days Exposure Only Opting MPs, 1 OD Exposure Still Considerably Less Than RTM 22 to 28 Days

CRR Invoice Due Dates Exposure 6 - 7 Days Exposure Only Opting MPs, Monthly CRRs will only be allocated when payment is received Exposure Still Considerably Less Than RTM 22 to 28 Days

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Invoice Payments (Nodal DAM)

Nodal DAM Invoice Payments: Nodal Protocol 9.4.1 (2) states:

All DAM Invoices due, with funds owed by an Invoice Recipient, must be paid to ERCOT in U.S. Dollars by either of the following:

(a) On or before the payment due date if the payment is made by Electronic Funds Transfer (EFT) in immediately available or good funds (i.e., not subject to reversal); or

(b) On or before two Bank Business Days before the payment due date if the payment is made by Automated Clearing House (ACH) funds.

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Invoice Payment Timing & Activities

Nodal DAM Invoice Payments: Observations:

ERCOT does need some RTM data to settle the DAM (CRRs) ERCOT has until 23:59 on the second Business Day after OD to

post DAM Statements, Invoices and Extracts MPs most likely would not begin validation / approval / shadowing

processes until the morning of the third Business Day after the OD ACH payments would have to be initiated that morning of the third

Business Day after the OD in order to abide by the current (4 day) Protocol deadline “on or before two Bank Business Days before the payment due date”

Wires must be initiated by 1500 to arrive by 1700 on the payment due date

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Payment Breach and Late Payments

Payment Breach and Late Payments by MPs: Nodal Protocol 16.11.6 can be summarized:

(1) MP responsible to pay full amount when due(2) MP cannot net separate invoice payments together(3) MP failure to pay is “Payment Breach” and ERCOT

will attempt to contact AR and Credit Contact by phone and written notices demanding payment

(4) ERCOT may waive the Payment Breach if ERCOT receives full payment within two Bank Business Days after the due date. ERCOT will track

number of Late Payments. Upon a Payment Breach, ERCOT may impose the following remedies:

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Payment Breach

ERCOT Payment Breach Remedies: Nodal Protocol 16.11.6.1 can be summarized:

.1 No Payments by ERCOT to MP

.2 ERCOT May Draw On, Hold or Distribute Funds

.3 ERCOT Shall Aggregate Amount Owed by Breaching MP Immediately Due.4 ERCOT May Repossess CRRs.5 ERCOT May Declare Forfeit of CRRs & Auction Off.6 ERCOT May Revoke MPs Rights and Terminate Agreements

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Late Payments

ERCOT Remedies for Late Payments by MPs: Nodal Protocol 16.11.6 .2 can be summarized:

.1 First Late Payment in rolling 12-month period: written notice (ERCOT determines if Level I Enforcement action necessary).2 Second Late Payment in rolling 12-month period:

written notice (Level I action taken or Level II Enforcement action taken if Level I taken on first).3 Third Late Payment in rolling 12-month period: written notice (Level II action taken or Level III action taken if Level II taken on second).4 Fourth+ Late Payment in rolling 12-month period:

advise of / or termination (Level III action taken)

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Available Credit Example (due 4 days)

Available Credit Limit DAM Transaction Invoice Paid AmountDay 1 $16,000 Day 2 $14,000 $2,000Day 3 $12,000 $2,000Day 4 $10,000 $2,000 $2,000Day 5 $8,000 $2,000 $2,000Day 6 $6,000 $2,000 $2,000 Day 7 $4,000 $2,000 $2,000 Day 8 $4,000 $2,000 $2,000 $2,000 Day 9 $4,000 $2,000 $2,000 $2,000 Day 10 $2,000 $2,000 $2,000 $ - Day 11 $ - $2,000 $2,000 $ - Day 12 $ - $ - $2,000 $ -Day 13 $ - $ - $2,000 $ -Day 14 $ - $ - $ - $ -Day 15 $ - $ - $ - $ -Day 16 $ - $ - $ - $ -Day 17 $ - $ - $ - $ -

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Available Credit Example (due 2 days)

Available Credit Limit DAM Transaction Invoice Paid AmountDay 1 $16,000 Day 2 $14,000 $2,000Day 3 $12,000 $2,000Day 4 $10,000 $2,000 $2,000Day 5 $8,000 $2,000 $2,000Day 6 $8,000 $2,000 $2,000 $2,000 Day 7 $8,000 $2,000 $2,000 $2,000Day 8 $6,000 $2,000 $2,000 $ - Day 9 $4,000 $2,000 $2,000 $ - Day 10 $2,000 $2,000 $2,000 $ - Day 11 $ - $2,000 $2,000 $ - Day 12 $ - $ - $2,000 $ -Day 13 $ - $ - $2,000 $ -Day 14 $ - $ - $ - $ -Day 15 $ - $ - $ - $ -

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Invoice Due Dates

Summary: Compared Areas of Zonal / Nodal Protocols Identified Volume / Timing of Nodal Invoice Activities Identified Payment Options and Timing Provided Insight into Payment Breach and Late Payment Provided Example of DAM Participation Initiated Meaningful Discussions Between the Joint

Working Groups to Understand and Consider Impacts of Decisions Moving Forward.

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Invoice Due Dates

Questions / Comments / Discussion ?