SNL ERCOT Broker Index Methodology
SNL methodology follows the recommendations of the Committee of Chief Risk Officers (CCRO) regarding Best Practices for Energy Price Indexes regarding this and other energy price indexes. Visit www.ccro.org for more information on the CCRO. The ERCOT Broker Index calculations are based on the volume weighted average trade prices for the respective delivery points as submitted by the contributing brokers. Outliers are excluded using a two standard deviation method. The outlying trades are not part of any index calculation, but are included in the daily low and high price for each location. Only standard on-peak (1x16) and off-peak( 1x8) deals for 25 megawatts or greater for delivery the next business day are included in the index calculation. Deals for delivery on multiple days or around the clock trades are also excluded. All trades must have been completed by 11:30 AM EST for delivery the following day to be included. Resubmissions for trades meeting all of the preceding criteria will be reposted by 4:00 PM EST each day the index is published. Double counting is effectively eliminated from these index calculations since they are being submitted only by brokers who generally handle both sides of a transaction.
In the event no trades are reported at a given hub, SNL will publish an assessed price. In performing assessments, SNL analysts use a number of market indicators, primarily the usual basis to more liquid locations where trades have been reported.
SNL sometimes receives revisions to the transaction data after the index is published. SNL will revise the index and update the price or prices on its Web site. Prices are final on the third business day after the transaction date. No revisions will be accepted after three business days.
Any party involved in contributing to an index or using an index may challenge the indexes within a period of three business days after publication. Upon receipt of a written request of the date and location in question, SNL Energy will examine its data and calculations to determine if errors or omissions occurred.
If discrepancies are found and the correct index differs, the index will be republished and the challenging party will be notified.
The challenging party may immediately file a written second challenge for power prices if it can provide additional verified trades that SNL Energy did not have at the time of publication. The burden of providing this additional verified information is entirely upon the challenging party. This information must come from the midoffice of trading entities, and SNL Energy must be given the contact information for the appropriate individuals at these entities. Indexes from other publications, clearing or matching services, or electronic platforms will not be considered.
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