COPS – ERCOT PROJECTS UPDATE

1. COPS – ERCOT PROJECTS UPDATE WHOLESALE MARKET DEVELOPMENT Paula Feuerbacher October 20, 2004

2. PROJECTS: • PR30014 – Load Research Sampling: • TDSP Pilot – Initiated 08/18/04 • Estimated Deployment: November 1, 2004 • PR40005 – NIDR to IDR Default Profiling (PRR-471) • Estimated Deployment: November 3, 2004 • PUCT 28407 – Final REC Purchasing Requirements • Estimated Deployment: late November 2004 • PRR-488 – Weather Responsiveness • Estimated Deployment: early December 2004 • PR30026 – EPS Meter Data Extract • Estimated Deployment: mid December 2004 • PR40104 – Zero Charge Elimination • Estimated Deployment: 2nd Quarter of 2005 • Lodestar Upgrade • Estimated Deployment: 1st Quarter of 2005

3. EMMS R4 COPS presentation Ryan Aldridge, ERCOT 9/20/04

4. 4 Projects Affecting Settlements • PR-30093 (RPRS) • PR-30131_02 (Resource Plan Improvements) • PR-40050 (Resource Specific Bid Limits) • PR-30163 (OOM Tool)

5. PR-40093 (RPRS) • PRR’s 413 and 491 • 11 new Bill Determinants • Changes to both Zonal and Local RPRS Settlement formulas

6. PR-40093 (RPRS) Zonal -- Current • Current Zonal RPRS Formula • PCRPqiuz = -1 * MCPCRPiz * ZCRPqiuz • PCRPqiuz = Replacement Reserve Service Payment by Resource per interval for that QSE • MCPCRPiz = Highest Replacement Reserve Market Clearing Price • ZCRPqiuz = Accepted Unit Adjustment Replacement Reserve Service Capacity Quantity (MW)

7. PR-40093 (RPRS) Zonal – R4 • EMMS R4 Zonal RPRS Formula • PCRPqiuz = -1 * Max (PABCRPiu, MCPCRPiz) * ZCRPqiuz • PABCRPiu = CBPRPiu/N + HOBPRPiu • PABCRPiu = Bid Price of the single Resource awarded Replacement Reserve • CBPRPiu = Capacity bid price submitted by the QSE for the single Resource • N = Number of hours that this Resource is continuously procured • HOBPRPiu = Hourly operational bid price submitted by the QSE for the single Resource

8. PR-40093 (RPRS) Local -- Current • Current Local RPRS Formula • LPCRPqi = -1 * SUM (PABCRPiu * LCRPqiu) u • LPCRPqi = Replacement Reserve Service Payment by Resource per interval for that QSE • PABCRPiu = Bid Price of the single Resource awarded Replacement Reserve of that interval • LCRPqiu = Accepted single Resource Replacement Reserve Service Capacity to solve Local Congestion (MW) per interval per QSE for that single Resource.

9. PR-40093 (RPRS) Local – R4 • EMMS R4 Local RPRS Formula • LPCRPiuq = -1 * MAX (0, LPSRPiu + LPORPiu) • LPCRPiq = -1 * SUM (LPSRPiu + LPORPiu) u • LPCRPqi = Replacement Reserve Service Payment by Resource per interval for that QSE • LPSRPiu = Price for starting a unit that is selected for Replacement Reserve Service to resolve Local Congestion • LPORPiu = Price for operating a unit that is selected for Replacement Reserve Service to resolve Local Congestion • LPORPiu = SUM [(RCGMECc – MCPEjz) * MIN (MINCAPju/4, MRju)] j • LPSRPiu = RCGSCc/N • RCGMECc = Resource Category Generic Minimum energy Cost for a specific category of generation unit. • MCPEjz = Market Clear Price • MINCAPju = Generating Unit Low Sustainable Limit as reported in the unit’s Resource Plan • MRju = Actual metered output of the Resource • RCGSCc = Resource Category Generic Startup Cost for a specific category of generation unit • N = Number of hours that this Resource is continuously procured

10. PR-30131_02 Resource Plan Improvements • PRR’s 359 • No new Bill Determinants • No Settlement formula changes

11. PR-30131_02 Resource Plan Improvements • PRR 359 allows QSEs to update their Resource Plans after the adjustment period • EMMS R4 will take a snapshot of the Resource Plan every 15 minutes • All data passed to Settlements from the Resource Plan will come across as 96 hourly interval cuts instead of the current 24 hourly interval cuts • QSEs will see the 96 hourly interval cuts and will need to scale to 24 hourly interval cuts in order to shadow settle

12. PR-40050 Resource Specific Bid Limits • PRR 485 • Bringing back LEIOL’s • Small change to Local Balancing Energy Down formula

13. PR-40050 (Bringing back LEIOL’s) • PRR 485 allows resources to indicate if they are bid or non-bid resources • Deployments to non-bid resources will be paid OOME (NMLEIOL or OOMIOL) • Deployments to bidding resources will be paid as bid (LEIOL)

14. PR-40050 LBE Down formula change -- Current • Current LBEDN formula • LPCRSDquiz = -1 * Σ((MCPEiz - BPMqiuz ) * Max(0, Min(OLqiuz -MRquiz, OLqiuz - IOLqiuz)))u • LPCRSDquiz = Payment to QSE for providing Balancing Energy Down from specific unit to solve Local Congestion per QSE per interval per zone • MCPEiz = Market Clearing Price of Energy per interval per zone • BPMqiuz = Decremental bid premium specified for that specific unit per interval • OLquiz = Resource Plan output level submitted by the QSE for the unit given the unit-specific instruction for that interval • MRquiz = Meter reading per unit per interval • IOLquiz = The instructed output level for the unit given a unit-specific instruction

15. PR-40050 LBE Down formula change – R4 • EMMS R4 LBEDN formula • LPCRSDquiz = -1 * Σ(MAX(0,(MCPEiz - BPMqiuz )) * Max(0, Min(OLqiuz -MRquiz, OLqiuz - IOLqiuz)))u • LPCRSDquiz = Payment to QSE for providing Balancing Energy Down from specific unit to solve Local Congestion per QSE per interval per zone • MCPEiz = Market Clearing Price of Energy per interval per zone • BPMqiuz = Decremental bid premium specified for that specific unit per interval • OLquiz = Resource Plan output level submitted by the QSE for the unit given the unit-specific instruction for that interval • MRquiz = Meter reading per unit per interval • IOLquiz = The instructed output level for the unit given a unit-specific instruction

16. PR-40050 Aggregated LBE Down formula changeCurrent • Current LBEDNAGG formula • LPCRSDqviz = -1 * Σ((MCPEiz - BPMqivz )) * Max(0, Min(OLqivz -MRqviz, NETDEQiv)))v * LBEAGiv • LPCRSDquiz = Payment to QSE for providing Balancing Energy Down from specific Aggregated unit to solve Local Congestion per QSE per interval per zone • MCPEiz = Market Clearing Price of Energy per interval per zone • BPMqivz = Decremental bid premium specified for that specific Aggregated unit per interval • OLqivz = Resource Plan output level submitted by the QSE for the Aggregated Unit containing the unit given the unit-specific instruction for that interval • MRqviz = Meter reading per Aggregated Unit per interval • NETDEQiv = The overall net direction per the instructions given to the Aggregated Unit results in a down direction • LBEAGiv = The percentage of the aggregated instructions to the Aggregate Unit that represents the OOM Energy market.

17. PR-40050 Aggregated LBE Down formula changeR4 • EMMS R4 LBEDNAGG formula • LPCRSDqviz =-1 * Σ(MAX(0,(MCPEiz - BPMqivz )) * Max(0, Min(OLqivz -MRqviz, NETDEQiv)))v * LBEAGiv • LPCRSDquiz = Payment to QSE for providing Balancing Energy Down from specific Aggregated unit to solve Local Congestion per QSE per interval per zone • MCPEiz = Market Clearing Price of Energy per interval per zone • BPMqivz = Decremental bid premium specified for that specific Aggregated unit per interval • OLqivz = Resource Plan output level submitted by the QSE for the Aggregated Unit containing the unit given the unit-specific instruction for that interval • MRqviz = Meter reading per Aggregated Unit per interval • NETDEQiv = The overall net direction per the instructions given to the Aggregated Unit results in a down direction • LBEAGiv = The percentage of the aggregated instructions to the Aggregate Unit that represents the OOM Energy market.

18. PR-30163 (OOM Tool) • No PRR • Probable new Bill Determinants • No changes to Settlement formulas

19. PR-30163 (OOM Tool) • The requirements for this project have not been fully defined • EMMS design has not been finalized yet • Changes to Settlements will result in the designed changes on the EMMS side