By Ann de Rouffignac
HOUSTON, Nov. 16, 2001 — The Texas grid operator’s board was scheduled Monday to adopt a $102 million budget that will require additional borrowing capacity to support planned capital expenditures.
The budget includes a 33% increase in labor expenses compared to last year, according to Electric Reliability Council of Texas documents obtained by OGJ Online, but the total is down $20 million from 2001.
According to the documents, 80% of the $36 million capital budget will be funded through debt. Few details were available, but the material noted “achieving the assumed level of debt funding will require ERCOT to obtain additional borrowing capacity.”
The transaction costs of arranging for financing will be included in the 2002 budget and will be approved by the ERCOT board during the first quarter of 2002.
According to ERCOT documents, the budget includes $52.7 million for operation and maintenance including labor, licenses and maintenance, consultants, and contractors. ERCOT will increase the number of employees to 300 from 274, increasing labor expenses to $31.5 million from $23.5 million in 2001.
The budget also includes an ending cash balance of $6.3 million that represents cash operating reserves and also provides for $6 million for debt service. A balance sheet and last year’s budget weren’t available, said a spokeswoman.
ERCOT operations are supported by a 22-/Mw-hr administrative fee charged to all electricity customers whether they choose an alternative supplier or not. The grid operator didn’t seek an increase for 2002, but in 2000, the fee was 15¢/Mw-hr.
The fee is paid through the distribution utilities’ fuel factor. The fuel factor is calculated separately from rates and includes the projected cost of commodities to run power plants, plus purchased power. The Public Utility Commission has allowed other charges, including the cost of operating ERCOT, to be incorporated into fuel factor calculations.
Distribution utilities submit their fuel factor costs, along with supporting material, to the PUC for approval. Regulators are expected to approve the fuel factor this month, and it will become part of the so-called “price-to-beat” that utility retail affiliates charge customers who don’t choose alternative suppliers when the market opens to competition next year.
The grid operator was supposed to submit supporting material for the “reasonableness” of its fee Sept. 1, but asked for a delay in August. The commission extended the deadline until Jan. 11, 2002.