Emergency Operations Settlement for Quick Start Generation Resources

1. Current NPRR language: (8) If a QSGR comes On-Line as a result of a Base Point less than its COP LSL, the QSE representing the QSGR may request a manual override from the ERCOT operator to set the LDL to a level greater than or equal to the COP LSL; the energy shall be settled pursuant to Section 6.6.9.1, Payment for Emergency Power Increase Directed by ERCOT. The first x consecutive Settlement Intervals after the manual override shall be settled pursuant to Section 6.6.9.1. The value of x shall initially be set at two and shall be reviewed at least annually by TAC. The value of x shall be provided via Market Notice within three Business Days after a TAC approval of a change in value and the new value shall be effective on the first day of the next month. Following a SCED QSGR deployment, the QSGR is expected to follow the SCED Base Points. Quick Start Resource – Payment for Start-Up at less than LSL

2. Quick Start Resource – Payment for Start-Up at less than LSL NOTE: Example of curve is comparable to what was seen in Mkt Trials. To minimize getting dispatched below physical LSL, QSEs will have to submit their EOC as a flat curve between 0MW & Physical LSL MW. Even if they do that, they might get dispatched below the physical LSL if they are marginal and we don’t need up to their physical LSL to meet the load.

3. 6.6.9 Emergency Operations Settlement (3) In accordance with paragraph (8) of Section 3.8.3 Quick Start Generation resources, QSE’s that receive a manual override from the ERCOT operator may be considered for additional compensation utilizing the formula as stated in Section 6.6.9.1, Payment for Emergency Power Increase Directed by ERCOT. If the Resource’s Settlement Point Price at the Resource Node is lower than the QSGR’s Energy Offer Curve price at the aggregated base point during the 15 minute settlement interval, ERCOT shall pay the QSE additional compensation for the amount of energy from the offline zero base point to the aggregated output level. For the purpose of this settlement, and limited to the first x Settlement Intervals inclusive of the manual override, SCED Base Points will be used in place of the Emergency Base Point. Quick Start Resource – Suggested DRAFT Settlement Languagefor STARTUP at less than LSL

4. Current NPRR language: (9) If the QSGR’s SCED Base Point equals the QSGR’s physical LSL telemetry and the QSE desires to disconnect the QSGR from the ERCOT Grid, the QSE must obtain the approval of the ERCOT Operator before it removes the QSGR from the ERCOT System. After completing the normal shutdown process, the QSE may place the QSGR in an OFF Resource Status or restore the QSGR to the conditions described in this Section 3.8.3 (Resource Status = ON; Output Breaker Status = OPEN; LSL = 0). [WMS Comment: If ERCOT desires the QSGR to remain On-Line, the QSGR will be able to recover its energy costs.] Quick Start Resource – Payment for HOLD

5. Option A: Average Heat Rate (AHR) • Holding is not an incremental change so the Incremental Heat Rate values do not seem appropriate. •  Holding can occur anywhere along the EOC for several settlement intervals, so average heat rate seems more appropriate. •  Average Heat Rate times Fuel price, or the average fuel cost, allows the Resource to recover the cost of fuel. • Requires Resource to submit Heat Rate Coefficients to ERCOT. • Typical AHR for QS Units = 8-12 MMBtu/MWh • Option B: Average Incremental Energy Cost (AIEC) • Based on EOC prices and may include more than actual cost of fuel; however, capped at the Energy Offer Curve Caps for the specific technology type.  • This may cap the EOC at a point that does not allow the Resource to recover its fuel cost or the cap may be higher, allowing the Resource to recover more than its fuel cost. • Does not require Resource to submit Heat Rate Coefficients to ERCOT Quick Start Resource – Payment for HOLD pricing options

6. Quick Start Resource – Payment for HOLD

7. 6.6.9 Emergency Operations Settlement (4) In accordance with paragraph (9) of Section 3.8.3 Quick Start Generation resources, QSE’s that receive a manual override from the ERCOT operator may be considered for additional compensation utilizing the formula as stated in Section 6.6.9.1, Payment for Emergency Power Increase Directed by ERCOT. If the Resource’s Settlement Point Price at the Resource Node is lower than the QSGR’s average heat rate ( Or could be AIEC price as determined by the Market) multiplied times the fuel index price (FIP)  at the held base point during the 15 minute settlement interval, ERCOT shall pay the QSE additional compensation for the amount of energy from a zero base point to the held output level. For the purpose of this settlement, and limited to the first x Settlement Intervals inclusive of the manual override, SCED Base Points will be used in place of the Emergency Base Point. Quick Start Resource – Suggested DRAFT Settlement Languagefor HOLD

8. Treatment for any resource that is held via a manual override: • “Previous BP” = 0 • Applies for all intervals of the hold • Existing Emergency settlement language has flaws for handling “holds” in that it assumes that the current RTSPP was economical for the dispatch up to the previous BP • If BP is = override value, it triggers settlements to evaluate for compensation through the emergency energy charge type • Modification to the calculation of the emergency energy price (applies in all circumstances): • “Cap it” using the RTM mitigated offer cap curve (sent to settlements from Operations) • Pay the minimum of the difference in the mitigated price and RTSPP, vs. the difference between the EOC price and the RTSPP • For resources on OS, will use the difference between the mitigated price and RTSPP ERCOT’s Take-Away…