NPRR 299 Cost/Benefit Overview

http://nodal.ercot.com 1

ERCOT does not have sufficient information to provide a dependable cost/benefit analysis for NPRR 299. The cost savings which could accrue to this improvement included:

• Reducing costs currently being incurred by market participants looking up public filings of ERCOT with regulatory and standards organizations.

• Reducing costs to Market Participants which could be avoided if they were aware of ERCOT postings to regulatory and standards organizations.

ERCOT believes that approval of NPRR 299 provides a convenience to market participants, not increased business transparency, because all of the postings being requested are available at the regulatory or standards authority.

ERCOT’s approach to this NPRR benefit analysis is to generate scenarios, and present these scenarios and their benefits to the market.

Business case for NPRR 299

http://nodal.ercot.com 2

Some Market Participants have proposed NPRR299 provides additional Transparency:

‘”PRR299 would require ERCOT to post on the ERCOT website all public reports, publicly filed comments, or public presentations that are filed, presented, or otherwise submitted to standards bodies or governing agencies.  Market participants benefit by the increased transparency provided by this requirement.  This posting would provide user-friendly access to these filings in a single location thus saving time and money from looking in different locations.  In addition, it is not always apparent when ERCOT files comments at the different agencies or standards bodies so this provides the needed transparency on the activities of ERCOT and allows others to respond in an appropriate way.”

Others have proposed scenario savings of over $2 Million/year (5 year benefits of $14.3 Million dollars)

ERCOT believes a closer scenario estimate of hard benefits is closer to $52 thousand/year (5 year {benefits – cost} of -$420 thousand), but this estimate neglects the benefits of more user-friendly access.

The proposal moves additional annual staffing costs to the ERCOT budget. The decision becomes one of deciding if the intangible benefits justify the cost.

Scenario Cost/Benefits NPRR 299

http://nodal.ercot.com 3

Scenario Description InitialCost

AnnualCost

AnnualhardBenefit

5 year DiscountedBenefit-Cost

1 Avoided cost: 200 MP’s search for 250 documents taking 46 minutes each at cost of $75/hr – Project allows in 1 minute benefit ½*500*200*.75*$75

33K$ 129K$ 2.8M$ 14.3M$

2 Avoided cost: 20 MP’s search for 50 documents taking 46 minutes at a cost of $75/hr Benefit

33K$ 129K$ 56k$ -420K$

3 No hard avoided cost, but soft benefits of potentially reduced MP costs

33K$ 129K$ 0K$ -710K$