ERCOT Financial Summary For the Month Ended December 31,

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ERCOT Financial Summary For the Month Ended December 31, Powered By Docstoc
					ERCOT Financial Summary
For the Month Ended December 31, 2005


Presented to ERCOT Board of Directors
January 17, 2005
                                               December 2005 Preliminary Financial Dashboard
                                                                                                                                                                                                                               ($ in millions)
                                   Year-to-Date Operating Expenses                                                                                                              Human Resources
Expense category                           Budget              Actual          Var - #         Var - %                Employee Count:                                     Position Budget   FTE Budget               Actual (A)                            Var - %
  Labor and benefits                         50.17                 49.15          1.02               2%                 Market Operations                                         135           127                     127                                   -
  Contractors                                 9.77                  9.05          0.72               7%                 System Operations                                         155           146                     142                                   -
  Hardware and software support               6.50                  7.09         -0.59               -9%                IT Operations                                             171           160                     160                                   -
  Depreciation & Amortization                50.85                 47.89          2.96               6%                 Corporate Operations                                      100           94                      92                                    -
  Other expenses                             16.13                 14.17          1.96               12%                       Total                                              561           527                     521                                   -
  Total                                     133.42             127.35             6.07               5%                                                   * Staff Aug             Total     Total vs FTE            Total vs FTE          * Project
                                                                                                                      Total FTE Resource:              Contractors (B)         (A + B)      Budget Var #        Budget Var %           Contractors (C)
Expense category                           Budget              Actual          Var - #         Var - %                  Market Operations                      0                  127            0                     0.0%                   1
  Market Operations                          13.87                 12.91          0.96               7%                 System Operations                      0                  142            4                     2.7%                   0
  System Operations                          15.49                 16.39         -0.90               -6%                IT Operations                          6                  166            -6                    -3.8%                 19
  IT Operations                              29.26                 28.06          1.20               4%                 Corporate Operations                  10                  102            -8                    -8.5%                 14
  Corporate Operations                       74.80                 69.99          4.81               6%                        Total                          16                  537           -10                    -1.9%                 34
  Total                                     133.42             127.35             6.07               5%                                                    * Combined Staff Augmentation & Project Contractors (B + C)
                                   Year-to-Date Capital Expenditures                                                     Byone            Giuliani          Jones              Shellman       McIntire                Hinsley             Schrader          Total
Project Expenditures                   Orig Budget             Actual          Var - $         Var - %                     20                1                 0                   1             3                      25                    0              50
  Market Operations                           2.91                  1.42          1.49               51%                                             Time Tracking - Hours Allocated to Seven Corporate Goals
  System Operations                           6.47                  4.39          2.08               32%                  Goal         Goal Description                                               Hours                Percent                FTE's
  Retail Operations                           5.73                  3.81          1.92               34%                   1           Reliability and congestion management                     318,847                        39%               204
  IT Operations                               6.94                  3.35          3.59               52%                   2           Retail transaction processing success                         98,882                     12%                   63
  Corporate Operations                        5.19                  3.40          1.79               34%                   3           Wholesale access, settlement and billing                  156,875                        19%               100
  Total                                      27.24                 16.37        10.87                40%                   4           Management systems & business practices                       64,983                       8%                  40
                                             Total           Initiation       Planning        Execution    Complete        5           Financial mgmnt & cost effectiveness                          90,034                     11%                   57
YTD Number of projects by status              113                     3              13              35         62         6           External and stakeholder affairs                              51,834                       6%                  33
                                                                                                                           7           Organizational readiness                                      37,925                       5%                  24
                            Year-to-Date Revenue & Billing Determinants                                               Employee Time Tracking results through December 15, 2005. ERCOT employees track and record time expended on
                                           Budget              Actual        Var -$/ #         Var - %                approximately 200 operational activities. The activity hours were then mapped to seven KEY corporate goals established by
System Administration Fee                   124.17             125.94             1.77               1%               the ERCOT management team.
Other Revenue                                 2.05                  2.42          0.37               18%                                                                Market Settlement and Credit
Total                                       126.22             128.36             2.14               2%                                                                                       Current Mo.                Prior Mo.          % Change
MWH volume (millions)                       295.63             299.86             4.23               1%               QSE and TCR security deposits                                                    96.68                  98.82                -2%
                                                                                                                      QSE advance receipts and due to generators                                       26.51                  10.48               153%
                                                     Debt                                                             TCR auction receipts                                                             58.26                    7.29              699%
                                              Current Month                     Prior Month                                Total market settlement liability                                          181.45                 116.59               56%
Debt Type                                Balance            Rate           Balance            Rate                    Settlement short pmts balance after uplifts                                        4.09                   0.45              809%
Senior Notes                                122.73      6.17%                  122.73     6.17%
Term Notes *                                 37.50      4.45%                   37.50     4.45%                                                                     Year-to-Date Cash Flow Summary
Revolver - Borrowed                           0.00      0.00%                     0.00    0.00%                                                                                                                           Amount
Total / Average                             160.23      5.77%                  160.23     5.77%                       Beginning Cash (January 1, 2005)                                                          $             33.49
TCR Borrowing                                 0.00                                0.00                                     Cash Provided / (Used) by Operations                                                 $             95.00
Term Notes - Unused Capacity                  0.00                                0.00                                     Cash Used in Investing Activities (Projects)                                         $            (25.30)
Revolver - Unused Capacity                   50.00                              50.00                                      Cash Provided / (Used) by Financing Activities                                       $            (17.92)
    * Term Note % was reset on 10/31                                                                                  Ending Cash (December 31, 2005)                                                           $             85.27                         2
                 Financial Dashboard – YTD Operating Expenses
                                   ($ in millions)
Expense category                     Budget          Actual   Var - #    Var - %
   Labor and benefits                  50.17          49.15     1.02         2%
   Contractors                          9.77           9.05     0.72         7%
   Hardware and software support        6.50           7.09    -0.59        -9%
   Depreciation & Amortization         50.85          47.89     2.96         6%
   Other expenses                      16.13          14.17     1.96       12%
   Total                              133.42         127.35     6.07         5%
 _____________________________________________
Expense category                      Budget         Actual    Var - #    Var - %
  Market Operations                    13.87          12.91      0.96         7%
  System Operations                    15.49          16.39     -0.90        -6%
  IT Operations                        29.26          28.06      1.20         4%
  Corporate Operations                 74.80          69.99      4.81         6%
  Total                               133.42         127.35      6.07         5%

                                   Preliminary                                      3
                                   Financial Dashboard – YTD Revenue
                                                             ($ in millions)
                                                                      Budget              Actual              Var -$/ #            Var - %
                 System Administration Fee                            124.17              125.94                  1.77                 1%
                 Other Revenue                                          2.05                2.42                  0.37               18%
                 Total                                                126.22              128.36                  2.14                 2%
                 MWH volume (millions)                                295.63              299.86                  4.23                 1%

                                                    Total Revenue Trend Analysis - Cumulative
                                                            Budget vs Actual / Forecast                           Annual Budget     $126.2M
                140.0                                                                                             Annual Actual     $128.4M
                120.0

                100.0
$ in Millions




                 80.0

                 60.0

                 40.0

                 20.0

                  0.0
                         Jan-05   Feb-05   Mar-05   Apr-05   May-05     Jun-05   Jul-05    Aug-05    Sep-05      Oct-05   Nov-05     Dec-05

                                                                Buget                       Actual


                                                               Preliminary                                                                    4
                             Financial Dashboard – YTD Capital Expenditures
                                                             ($ in millions)
 Project Expenditures                                        Orig Budget                       Actual               Var - $               Var - %
                Market Operations                                       2.91                    1.42                     1.49                51%
                System Operations                                       6.47                    4.39                     2.08                32%
                Retail Operations                                       5.73                    3.81                     1.92                34%
                IT Operations                                           6.94                    3.35                     3.59                52%
                Corporate Operations                                    5.19                    3.40                     1.79                34%
                Total                                                 27.24                    16.37                    10.87                40%

       _________________________________________________
                                                                Total            Initiation              Planning          Execution      Complete
                YTD Number of projects by status                 113                       3                  13                 35            62


                                                   Capital Expenditure Trend Analysis - Cumulative
                                                             Budget vs Actual / Forecast
                30.0
                                                                                                                                            $27.2M
                27.0
                24.0
                21.0
                18.0                                                                                                                        $16.4M
$ in Millions




                15.0
                12.0
                 9.0
                 6.0
                 3.0
                 0.0
                        Jan-05   Feb-05   Mar-05    Apr-05   May-05     Jun-05    Jul-05        Aug-05     Sep-05       Oct-05   Nov-05     Dec-05

                                               Budget                                                          Actual

                                                                                                                                                     5
                                                                    Financial Dashboard - Debt
                                                                                                 ($ in millions)
                                                                                                                   Current Month                                                                                     Prior Month
                    Debt Type                                                                        Balance                                                          Rate                           Balance                                    Rate
                    Senior Notes                                                                          122.73                                                    6.17%                                            122.73                     6.17%
                    Term Notes *                                                                              37.50                                                 4.45%                                             37.50                     4.45%
                    Revolver - Borrowed                                                                            0.00                                             0.00%                                              0.00                     0.00%
                    Total / Average                                                                       160.23                                                    5.77%                                            160.23                     5.77%
                    TCR Borrowing                                                                                  0.00                                                                                                0.00
                    Term Notes - Unused Capacity                                                                   0.00                                                                                                0.00
                    Revolver - Unused Capacity                                                                50.00                                                                                                   50.00
                           * Term Note % was reset on 10/31

                                             Term Loan Interest Rate Trend
                                                                                                                                                                                  Maturity Profile for Existing Senior and Term Notes
                                                   w/ Loan Principal                                                                                      $30,000
                  5.000%                                                                                  55,000

                  4.500%                                                                                  50,000                                          $27,000
                  4.000%                                                                         4.450%   45,000                                          $24,000
                                                                                                          40,000
                                                                                                                   Term Loan Principal



                  3.500%                                                                3.900%                                                            $21,000
Interest Rate %




                                                                                                                                         $ in Thousands


                                                                                                          35,000
                  3.000%                                                3.410%                                                                            $18,000   PAID
                                                                                                                         Balance




                                                             3.105%                                       30,000
                  2.500%                                                                                                                                  $15,000
                                                                                                          25,000
                  2.000%                     2.505%                                                                                                       $12,000
                                                                                                          20,000
                                    2.105%
                  1.500%                                                                                  15,000                                           $9,000
                           1.645%
                  1.000%                                                                                  10,000                                           $6,000   PAID
                  0.500%                                                                                  5,000
                                                                                                                                                           $3,000
                  0.000%                                                                                  -
                                                                                                                                                              $0
                           2Q 04    3Q 04    4Q 04          1Q 05        2Q 05          3Q 05    4Q 05
                                                                                                                                                                    2005   2006      2007       2008         2009      2010        2011         2012   2013   2014
                                                     Interest Reset Date
                                              Term Loan Principal            Interest Rate
                                                                                                                                                                                            Senior Notes (due May)       Term Notes (due Nov)

                                                                                                                                                                                                                                                                     6
                  Financial Dashboard – Human Resources

Employee Count:                                 Position Budget          FTE Budget             Actual (A)
  Market Operations                                     135                  127                   127
  System Operations                                     155                  146                   142
  IT Operations                                         171                  160                   160
  Corporate Operations                                  100                  94                    92
       Total                                            561                  527                   521
                              * Staff Aug               Total         Total vs FTE           Total vs FTE           * Project
Total FTE Resource:          Contractors (B)           (A + B)        Budget Var #           Budget Var %        Contractors (C)
  Market Operations                  0                  127                   0                   0.0%                  1
  System Operations                  0                  142                   4                   2.7%                  0
  IT Operations                      6                  166                  -6                   -3.8%                19
  Corporate Operations               10                 102                  -8                   -8.5%                14
       Total                         16                 537                  -10                  -1.9%                34




                               * Combined Staff Augmentation & Project Contractors (B + C)
    Byone         Giuliani      Jones          Shellman           McIntire            Hinsley            Schrader       Total
      20             1           0                 1                 3                  25                   0           50




                                                                                                                                   7
                                        Staff and Contractor Summary

              600                                                                                                        573      571
                                                                                               545     552      562
                       527     528      531      529                533     540      533
                                                           527
              500


              400
    # FTE




              300


              200


              100


                  -
                      Jan-04   Jan-05   Feb-05   Mar-05   Apr-05   May-05   Jun-05   Jul-05   Aug-05   Sep-05   Oct-05   Nov-05   Dec-05
Project Support        82       16       21        20       18       10       11      15        25      27        28       34       34
Staff Augmentation     60       28       22        16       16       18       19      13        11      15        21       19       16
ERCOT Staff            385      484      488      493      493      505      510      505      509      510      513      520      521



                                                                                                                                           8
                       Financial Dashboard – Time Tracking *

                                                                                Equivalent
Goal     Goal Description                                  Hours     Percent        FTE's
 1       Reliability and congestion management          318,847        39%           204
 2       Retail transaction processing success           98,882        12%            63
 3       Wholesale access, settlement and billing       156,875        19%           100
 4       Management systems & business practices         64,983         8%            40
 5       Financial mgmnt & cost effectiveness            90,034        11%            57
 6       External and stakeholder affairs                51,834         6%            33
 7       Organizational readiness                        37,925         5%          ___
                                                                                      24

                                                                                     521

     Employee Time Tracking results through December 15, 2005. ERCOT
     employees track and record time expended on approximately 200 operational
     activities. The activity hours were then mapped to seven KEY corporate goals
     established by the ERCOT management team.

* Phase 1 of time tracking manual time card submission process.




                                                                                             9
                Financial Dashboard – Labor by Goal


                   Annualized Labor Cost by Corporate Goal
                                (Hypothetical)
                                  $ in 000's
                                                         Reliability and
$15,116 , 39%
                                                         congestion
                                                         management

                                                           Retail / Wholesale
                                          $12,109 , 31%
                                                           Processing


                                                           Organizational /
                                                           Financial / Process
                                                           Effectiveness


                 $11,467 , 30%




                                                                                 10
                    Financial Dashboard – Market Settlement
                                              ($ in millions)



                                                                Current Mo.   Prior Mo.   % Change
QSE and TCR security deposits                                        96.68       98.82        -2%
QSE advance receipts and due to generators                           26.51       10.48       153%
TCR auction receipts                                                 58.26        7.29       699%
     Total market settlement liability                              181.45      116.59        56%
Settlement short pmts balance after uplifts                            4.09       0.45       809%




                                                                                                     11
                               Financial Dashboard – Cash Flow
                                                     ($ in millions)


                                                                 November-05      December-05        $ Change   % Change
Beginning Cash (January 1, 2005)                         $            33.49 $          33.49     $       -           0%
    Cash Provided / (Used) by Operations                 $            26.99 $          95.00           68.01       252%
    Cash Used in Investing Activities (Projects)         $            (22.30) $        (25.30)         (2.99)       13%
    Cash Provided / (Used) by Financing Activities       $            (18.16) $        (17.92)          0.24        -1%
Ending Cash                                                  $        20.02       $    85.27     $     65.25       326%




                                   December Ending Cash Primary Components:
                                           •Prepayments from Market = $26.1 million
                                           •Available Cash to use = $59.2 million




                                                                                                                           12
                          Annual Cost Savings


 $ 907,000 cost savings identified in 1st Qtr 2005
 $ 512,000 cost savings identified in 2nd Qtr 2005
 $ 765,000 cost savings identified in 3rd Qtr 2005
$                  0 cost savings identified in 4th Qtr 2005
  _____________________

 $2,184,000 Dec YTD Realized Cost Savings Identified


Total Cost Savings for 2005 = $2,184,000




                                                                13
                                             Completion Status By Audit


              300    288
              275
                                                                                                                                    47 to
              250                                                                                                                 complete

              225
              200
# of Audits




              175
              150
              125
              100
               75
               50
               25
                0
                    Feb 08 Feb 21   Mar 30   Apr-30 May 31    Jun 30       Jul 18   Aug 15 Sep 14   Oct 17   Nov 07 Dec 06   Jan 06
                                                                   Reporting Date

                       CAN Audit                 D&T Internal Controls          Internal Audits          Ernst & Young
                       PwC                       D&T Lawson/Fixed Assets        Remaining                Verified

                                                                                                                                      14
                                        Projected Audit Point and Gap Progress



                      300

                      250
No. Remaining Items




                      200

                      150

                      100

                       50

                        0
                            Sep-05   Oct-05   Nov-05   Dec-05   Jan-06   Feb-06   Mar-06   Apr-06   May-06   Jun-06   Jul-06   Aug-06   Sep-06   Oct-06
     ICMP Gaps               217      213      205      188      146       88       1        1        1        1        1        1        0        0
     Audit Points             61       62       53       47       44       40       9        9        6        3        3        2        1        0




                                                                                                                                                          15