User Fee - ERCOT Digital Certificate Fee Chad V. Seely Assistant General Counsel ERCOT November 1, 2012 Technical Advisory Committee (TAC)

2 Overview “User Fees” – P.U.C. Subst. R (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 § of this title (relating to Approval of ERCOT Fees and Rates.)...” Propose a Market Participant User Fee for the maintenance and support costs of ERCOT Digital Certificates. Currently, there are ~19,000 active ERCOT Digital Certificates across Market Participant registration types. Implementation of NPRR260, Providing Access to MIS Secure Area to MIS Registered Users, assumes that an additional 500 new Digital Certificates will be issued. No material change to overall costs. November 1, 2012TAC

3 ERCOT Digital Certificate Fee Recommendation Annually, ERCOT incurs approximately $1.3M in costs (including software/support, FTE support, and infrastructure costs) to maintain the Digital Certificate process for Market Participants. –A portion of this amount is variable on an annual basis to account for small percentage increases in the software/support contracts. The Digital Certificate Fee relieves the ERCOT System Admin Fee (SAF) of approximately $1.3M to use towards other ERCOT initiatives. RECOMMENDATION: A $100 annual fee per ERCOT Digital Certificate issued by each registered Market Participant. November 1, 2012TAC

4 Other Information Anticipate that proposed ERCOT Digital Certificate Fee would remain constant for first couple of years, but will review annually based on current software/support, FTE support and infrastructure costs in place. Intend to annually invoice Market Participants through the use of PayPal services. May require Market Participant acceptance of Terms of Use conditions. Quarterly reconciliation and invoicing process to account for additional Digital Certificates issued by Market Participants during the current year. Next Steps –November 12, 2012: ERCOT Staff will present and recommend approval of Digital Certificate Fee at Finance & Audit (F&A) Committee meeting. –November 13, 2012 and/or December 11, 2012: ERCOT Board consideration of F&A Committee recommendation on proposed Digital Certificate Fee. November 1, 2012TAC