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The Electric Reliability Council of Texas (ERCOT), the grid operator for most of the state, is withdrawing its request for a fee increase filed last June with the Public Utility Commission in light of the recently announced delay in the nodal market implementation.

"The revised nodal schedule currently being developed suggests implementation will be delayed, so ERCOT management reviewed the revenue requirements for 2009," says Bob Kahn, president and CEO of ERCOT. "We concluded that the current fee of $0.4171 is sufficient to fund base operations until the new nodal budget and schedule are developed, after which updated 2009 operating costs can be more accurately predicted."
The board of directors approved the 2009 budget in May, with a $0.1527 increase in the system administration fee from $0.4171 to $0.5698 per MWh.

Management's conclusion that the system administration fee can remain unchanged for 2009 hinges on approximately $42 million of revenue requirement reductions that include the following:

- ERCOT labor and costs to support the nodal program will continue to be charged to the nodal program into 2009, rather than ceasing Dec. 1,

- projects scheduled to enhance the completed and operational nodal market will not be undertaken on the timeline contemplated in the 2009 budget, and

- additional incremental debt will either be avoided or repayment deferred until the nodal market is operational.

The system administration fee is assessed on wholesale energy transactions and becomes part of the overall cost of electricity.

SOURCE: Electric Reliability Council of Texas

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