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1、Recommended 2008 Budget Finance&Audit Committee August 21,2007,Steve ByoneMike Petterson,2,Recommended 2008 Budget,3,Recommended 2008 Budget-Review Objectives,Review schedule and processReview budget preparation objectivesSummarize the recommended 2008 budgetProvide detailed budget support schedules
2、Determine follow-up action items in preparation for September Board approval,4,2008 Budget Development Schedule,5,2008 Budget Preparation Objectives,Provide high-value,cost-effective service to the citizens of TexasProvide market participants predictable,stable fees Control costs while:Maintaining g
3、rid reliabilityMaintaining and supporting the marketMaintaining critical information technology infrastructureEnsuring reasonable business controls and oversightAccurately anticipate resource requirements in response to regular and substantial market changes:Nodal Program implementationTexas Regiona
4、l Entity start-up and organizationProtocol revisionsLegislative action,6,Recommended 2008 Budget Recap Key Assumptions,No significant change in ERCOT services,systems,or facilitiesNo change in the components of ERCOTs revenue requirementsOperating expenses(excluding depreciation)Revenue-funded proje
5、ct expenditures(40%of project cost)Debt service(principal and interest)Utilization of load projections provided by ERCOT planning Project slate developed,prioritized,and recommended by market participant groupsMaintain ERCOTs strong debt issuer ratingExclude functions with designated funding sources
6、Nodal program implementationTexas Regional Entity statutory functions,7,Recommended 2008 Budget Recap,The recommended 2008 budget-Holds flat all approved feesSystem Administrative Fee-$0.4171 per MWhNodal Surcharge-$0.127 per MWhTexas Regional Entity Fee-$0.016 per MWhAndFulfills obligations and res
7、ponsibilities under Senate Bill 7Delivers priority projects approved through the Technical Advisory Committee processProvides funding and support of the independent market monitorIncorporates impact of Texas Regional Entity activityAnticipates implementation of the nodal marketRequires no fee filing
8、 proceeding at the Public Utility Commission of Texas,8,Recommended 2008 Budget Recap,9,Recommended 2008 Budget Recap Fee Impact,10,2008 Project Priority List/Funding Level Review,2008 Project Budgets and Counts by Program Area and Priority,Counts By Priority(above line),11,2008 Project Priority Lis
9、t/Funding Level Review,2008 Project Prioritization Notes by Program AreaCOLarge number of projects in multiple areasStrong focus on security and process improvementIOKeeping up with computing infrastructure needs MOFocus on Demand Response projectsROFunding request is similar to previous yearsSevera
10、l projects anticipating PUCT rulemakingsSOReduced budget request due to NodalNo new projects are proposed for 2008(two are being carried over for the closing phase)Market lists posted at:http:/,12,Recommended 2008 Budget Recap,13,Recommended 2008 Budget Recap,Sensitivity Overview$0.01 of System Admi
11、nistration Fee is equivalent to:$3.2 million of operating expense-$3.2 million/319,400,000 MWh=$0.01/MWh$8.0 million of capital spending 60%leverage(40%equity funding*$8.0 million=$3.2 million)7.7 GWh 2.5 percent deviation from MWh expected Calculations:$3.2 million/$0.4171 per MWh=7.7 GWh 7.7 GWh/3
12、19.4 GWh=2.4%Response to variancesAll action consistent with Financial Policy regarding F&A Committee and Board of Director awareness and involvementCost controlReduce costsDelay or cancel initiativesAdditional borrowing under existing credit facilitiesInterim or expedited fee request,14,Recommended
13、 2008 Budget Summary and Next Steps,SummaryERCOTs necessary responsibilities are funded ERCOTs fees are held constantNext StepsProvide feedback regarding the recommended 2008 budget to Steve Byone and/or Bob Kahn by September 1,2007Provide the final recommended budget package to the Board on Septemb
14、er 11,2007 for anticipated Board action on September 18,2007,15,Recommended 2008 Budget,Appendix ADetailed work papers relating to the recommended 2008 budget,16,Recommended 2008 Budget Revenue Requirement&Fee Summary Table,17,Recommended 2008 Budget Income on a per MWh Basis,18,Recommended 2008 Bud
15、get Income Sources,19,Recommended 2008 Budget Expenditure Summary,20,Recommended 2008 Budget Expenditure Summary,21,Recommended 2008 Budget Expenditure Summary,22,Recommended 2008 Budget Expenditure Summary,23,Recommended 2008 Budget Expenditure Summary,24,Recommended 2008 Budget MWh Load Budget vs.
16、Actual,25,Recommended 2008 Budget MWh Comparison,26,Recommended 2008 Budget Staffing,27,Recommended 2008 Budget Outside Services,28,Recommended 2008 Budget Outside Services,29,Recommended 2008 Budget Outside Services,30,Recommended 2008 Budget Outside Services,31,Recommended 2008 Budget Outside Serv
17、ices,32,Recommended 2008 Budget Outside Services,33,Recommended 2008 Budget Outside Services,34,Recommended 2008 Budget Outside Services,35,Recommended 2008 Budget Outside Services,36,Recommended 2008 Budget Outside Services,37,Recommended 2008 Budget Outside Services,38,Recommended 2008 Budget Outs
18、ide Services,39,Recommended 2008 Budget Outside Services,40,Recommended 2008 Budget Outside Services,41,Recommended 2008 Budget Outside Services,42,Recommended 2008 Budget Facility Summary,43,Recommended 2008 Budget Maintenance&Support,44,Recommended 2008 Budget Employee Related,45,Recommended 2008
19、Budget Other,46,2008 Project Priority List/Funding Level Review,2008 Project Prioritization Approval StatusCO(Corporate Operations)approved by CO CART on 6/14IO(IT Operations)approved by IO CART on 5/28MO(Market Operations)approved by COPS on 6/11RO(Retail Operations)approved by RMS on 6/13SO(System
20、 Operations)ROS approved on 6/19(via e-mail vote)WMS approved on 6/20PRS approved all lists on 6/21TAC approved all lists on 6/28All lists were reviewed by the ERCOT Executive Committee on 6/4 and 6/11Since this approval,the 2008 budget has been reduced by$5.3M by accelerating four CO and IO project
21、s into 2007,47,2008 Project Priority List/Funding Level Review,2008 Project Budgets and Counts by Program Area and Priority,Counts By Priority(above line),48,2008 Project Priority List/Funding Level Review,2008 Project Budgets by Program Area and Priority,Budgets By Priority(above line),49,2008 Proj
22、ect Priority List/Funding Level Review,2008 Project Prioritization Notes by Program AreaCOLarge number of projects in multiple areasStrong focus on security and process improvementIOKeeping up with computing infrastructure needs MOFocus on Demand Response projectsROFunding request is similar to prev
23、ious yearsSeveral projects anticipating PUCT rulemakingsSOReduced budget request due to NodalNo new projects are proposed for 2008(two are being carried over for the closing phase)Market lists posted at:http:/,50,2008 Project Priority List/Funding Level Review,CO Project Highlights-2008,51,2008 Proj
24、ect Priority List/Funding Level Review,IO Project Highlights-2008,52,2008 Project Priority List/Funding Level Review,MO Project Highlights-2008,53,2008 Project Priority List/Funding Level Review,RO Project Highlights-2008,54,2008 Project Priority List/Funding Level Review,SO Project Highlights-2008,
25、55,2008 Project Priority List Funded Projects,56,2008 Project Priority List Funded Projects,57,2008 Project Priority List Funded Projects,58,2008 Project Priority List Funded Projects,59,2008 Project Priority List Funded Projects,60,2008 Project Priority List Funded Projects,61,2008 Project Priority
26、 List Projects Not Funded,62,2008 Project Priority List Projects Not Funded,63,2008 Project Priority List Projects Not Funded,64,2008 Project Priority List Projects Not Funded,65,2008 Project Priority List Projects Not Funded,66,2008 Project Priority List Projects Not Funded,67,Recommended 2008 Budg
27、et,Appendix BSummary of revenue requirements and fees currently projected for the five-year period 2009-2013,68,Preliminary 2009-2013 Budget Assumptions,Operating expenses Staffing Maintained at 643 employeesEmployee benefits assumed at 33%of base salariesAverage annual merit award consistent with l
28、ong-term market trend assumed at 3%of base salariesAverage annual allowance for employee moves,promotions and other salary administration assumed at 1%of base salariesLabor allocated to project priority list activity based on historical trends and anticipated project budgetsConsultants and contracto
29、rs2009 based on specific requestRemaining years based on historical trendHardware and software maintenance and supportBased on specific identification by information technology staff,69,Preliminary 2009-2013 Budget Assumptions(continued),Operating expenses All other categoriesIncreased for average l
30、ong-term inflation of approximately 2%per yearProject expenditures$22 million planned for 2009No funds allocated for the following:Follow-on project work related to implementation of the nodal marketPotential relocation of the back-up control centerAssumed at$30 million per year for 2010 201340%reve
31、nue-funded and 60%debt-fundedEnergy consumption Approximately 2%MWh growth per year based on analysis prepared by ERCOTs planning staff,70,Recommended 2008 Budget Recap Fee Projection,71,Recommended 2008 Budget Recap Projected Income on a per MWh basis,72,Recommended 2008 Budget Recap Projected Revenue Requirement&Fee Summary,73,Recommended 2008 Budget Recap Projected Expenditure Summary,
