On April 23, 2021, the Electric Reliability Council of Texas (ERCOT) issued a Market Notice that estimated the cumulative aggregate short pay amount due to Storm Uri at $2,992,497,089.61.

Subsequently, on April 27, 2021, ERCOT issued a Market Notice noting that, under ERCOT’s rules, Counter-Parties must maintain Financial Security or an Unsecured Credit Limit at an amount that equals or exceeds its Total Potential Exposure (TPE) and further stating that ERCOT intends to issue Default Uplift Invoices that collectively total no more than $2.5 million each month, the limit set by ERCOT Protocol Section 9.19.1(4). At this rate, ERCOT expects to uplift approximately $30 million within the next 12 months. The Potential Uplift (PUL) component of TPE contemplates including one year’s worth of expected Default Uplift Invoices in the TPE calculation.

However, in a potentially chilling announcement, ERCOT also stated that ERCOT Protocol Section gives ERCOT discretion to deviate from the standard TPE calculation if ERCOT determines that it “does not adequately match the financial risk created by that Counter-Party’s activities.” Additionally, under ERCOT Protocol Section 16.11.7(2), ERCOT has the authority to request Financial Security up to the maximum of the determined TPE for a terminating Market Participant and may then draw against that Financial Security to satisfy payment obligations on any subsequently issued Default Uplift Invoices. ERCOT then advised that for a Counter-Party that accrued an obligation to pay a Default Uplift Ratio Share and that chooses to terminate its Standard Form Market Participant Agreement (SFA), ERCOT will set that Counter-Party’s TPE up to a maximum of the entire amount of the Counter-Party’s Default Uplift Ratio Share.