Future Ancillary Services Cost Benefit Analysis - Additional Runs and Analysis Julie Jin March 10, PRS.

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Future Ancillary Services Cost Benefit Analysis - Additional Runs and Analysis Julie Jin March 10, PRS

PUBLIC Additional Runs and Analysis with Gas $2.36/MMBtu vs. $4.35/MMBtu with Gas $2.36/MMBtu and New IFRO MW vs MW) with Gas $2.36/MMBtu, MW and New NSRS Requirements approved by Board in December

PUBLIC CASFASSavingsComment Procure Less PFR by recognizing equivalency ratios and allowing more FFR (incl. FFR1) 2016 Avg MW1,4681, Allowing > 50% FFR; eliminates the need for buffer. Increasing FFR by 24 MW on average Avg MW1,4531, Slightly less than 2016 due to higher net load & inertia. Increase FFR by 13 MW on average Avg MW w/new tech 1,4531, Assumes 62 MW of new batteries reducing avg. PFR by 57 MW; because residual avg. FFR opportunity (after load resources are considered) is only 62 MW and highly variable Replace Non-Spinning Reserve with less CR and SR (the products are comparable because of common NSRS/CR/SR duties and supply base) 2016 Avg MW1,9311, FAS adapts requirements relative to system conditions; additionally CR is determined based on frequency obligations, and Non-Spinning Reserve is determined to meet deviations in net load Avg MW2,0001,210790See above (note: assumptions about new tech do not affect CR) CBA Findings (Brattle Slide 7) 3

PUBLIC CASFASSavingsComment Procure Less PFR by recognizing equivalency ratios and allowing more FFR (incl. FFR1) 2016 Avg MW $2.36/MMBtu 1,3841,307 78MW saving is less than the original 2016 CBA case due to CC replacing coal under lower gas price analysis Avg MW $2.36/MMBtu & new IFRO 1,3841, MW saving is higher than Row 1 above because the lower IFRO allows more FFR. MW saving is higher than in the original 2016 CBA. Replace Non-Spinning Reserve with less CR and SR (products comparable because of common NSRS/CR/SR duties and supply base) 2016 Avg MW w/ $2.36/MMBtu 1,9311, CR increased because CC replaces coal under the lower gas price analysis which also increases system inertia Avg MW w/ $2.36/MMBtu & new IFRO 1,9311,215716New IFRO didn’t change unit commitment Avg MW w/ new IFRO & new NSRS 1,5711,215356Based on the new NSRS method approved by Board in December 15. The reduced NSRS requirement (compared to original 2016 CBA case) reduces savings. Additional Runs and Analysis 4

PUBLIC CBA Findings (Quantified Annual Benefits) (Brattle Slide 10) 5 ▀ In 2016, PFR reduction provides high DA production cost savings (DA PCS) per MWh because it enables greater coal dispatch has higher net load, so coal is more fully baseloaded. ▀ Real-time opportunity cost savings (RT OCS) analyzed through historical AS bids. ▀ Compare these annual benefits to ERCOT’s one-time implementation cost of $12-15m.

PUBLIC Additional Runs (Quantified Annual Benefits) 6 ▀ In Case 2016 w/ gas $2.36/MMBtu, the day-ahead production cost saving is M$ 3.33 ($4.88/MWh). ▀ In Case 2016 w/ gas $2.36/MMBtu and new IFRO, the day-ahead production cost saving is M$ 3.31 ($2.22/MWh) ▀ Real-time opportunity cost savings (RT OCS) for both PFR and NS/CR are calculated based on the average RT OC on Brattle Slide 10.