CMWG Update June WMS Meeting CMWG Update 1

CMWG (Vote) Confirmation of new Vice Chair: Greg Thurnher (Representing Luminant/TXU Energy) 2

Auction Activity – Long Term Auction Sequences (LTAS) Sequence 1 (Fall 2014) relative to Sequence 1 (Spring 2015) included: – An increase in total transactions submitted (130K compared to 117K) – A decrease in credit locked by Counter-parties – A 25% increase in # of transactions awarded – A 7% decrease in MW awarded – Equivalent revenue (2% reduction) – A 10% increase in binding constraints The decrease in credit locked may be due to NPRR 484 3

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Auction Activity: Monthlies July 15 Auction opens this week. June 15 results recently posted, noting similar trends to the LTAS (June YOY): – 8% reduction in Credit Locked by Counterparties – 9% increase in transactions submitted – 62% increase in transactions awarded – 12.5% increase in MW awarded – 43% reduction in net auction revenue – 3% increase in binding constraints 5

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Other Updates - Auctions PCRR Allocation Results were posted on May 22 nd 2015 – Years 2016, 2017 – Slight reduction YOY as eligibility slightly changed SCR779 was migrated into production last week, in effect for July and Seq. 3 auctions – Increases system wide transaction limit from 200,000 to 300,000 – Per-CRR Account Holder limit will be 10,000 for monthlies, July forward / 4,000 per LTAS, Sequence 3 forward 7

Other Updates - Auctions The CRR Rolling Balancing Account through April accrued approximately $8M 8

Other Updates Panhandle Export Limit – ERCOT continues to study and monitor for voltage oscillations in the Panhandle region as wind interconnection activity increases. – Absent an industry standard for Short Circuit Fault Current Ratios, ERCOT is collecting study inputs to establish a metric. – The CREZ Upgrade Study will be available on or around August/September

Other Updates Equal Access to Stability Limit Data – A market participant observed that an interconnecting customer may have been aware of constraints relative to their interconnection prior to a market notice. – NPRR 703 may not adequately address the issue. – CMWG recommends a joint meeting or webex with CMWG and PLWG to address equitable dissemination of voltage stability constraints. 10

May 18 th West Zone Congestion June WMS Meeting CMWG Update 11

Sequence of Events: Oncor upgraded the Glenhaven to Midland Airport line (The G-M Line.) Oncor submitted a Network Operations Model Change Request (NOMCR) to change the line rating of the G-M Line on March 13 th. The NOMCR, submitted by Oncor, included an April 1 model load date. 12

Sequence of Events: ERCOT reflected the NOMCR as submitted by Oncor in the Operations Model with a static rating of 326MVA. Oncor continued to telemeter a dynamic rating for this line at or around 178MVA. As congestion accrued and the G-M approached the dynamic rating telemetered by Oncor, ERCOT requested that Oncor develop a Temporary Operations Action Plan (TOAP.) 13

Sequence of Events Oncor recognized the incorrect telemetered rating after discussion with ERCOT: – ERCOT and Oncor coordinated the development of a TOAP for real-time G-M congestion. – Oncor corrected the error as part of the TOAP discussion. The dynamic rating telemetry was then updated with the correct rating. The G-CRMD constraint was active and binding from 10:00:15 until 16:15:11, generating approximately $4.8M in congestion rent (market-wide.) 14

ERCOT suggests that price corrections are not appropriate as SCED successfully delivered valid prices and base points based upon the data provided to ERCOT (including submissions by Oncor.) ERCOT suggests price corrections are not needed 15

Discussion at CMWG Numerous market participants assert that the SCED solution was invalid, since it was based upon an erroneous value telemetered by Oncor. – If it is determined that correcting the Real-Time Settlement Point Prices will affect the Base Points that were received by QSEs, then ERCOT shall correct the prices before the prices are considered final and settle the SCED executions as failed in accordance with Section , Failure of the SCED Process. (Nodal Protocols Section 6.3 Paragraph 5b) 16

Discussion at CMWG Other Market Participants suggested that ERCOT is not responsible to correct prices based upon successful SCED processes that depend upon data submitted by Market participants, citing numerous precedents. – The ERCOT Network Model is dependent upon accurate reporting of millions of elements that impact ratings, and ERCOT depends upon data submitted by TDSPs. 17

Appendix 18

6.3Adjustment Period and Real-Time Operations Timeline Paragraph 4: ERCOT shall correct prices when: (i) a market solution is determined to be invalid, (ii) invalid prices are identified in an otherwise valid market solution, or (iii) the Base Points received by Market Participants are inconsistent with the Base Points of a valid market solution, unless accurate prices cannot be determined. 19

6.3Adjustment Period and Real-Time Operations Timeline Paragraph 4 The following are some reasons that may cause these conditions (a)Data Input error: Missing, incomplete, stale, or incorrect versions of one or more data elements input to the market applications may result in an invalid market solution and/or prices. (b)Data Output error: These include: (i) incorrect or incomplete data transfer, (ii) price recalculation error in post-processing, and (iii) Base Points inconsistent with prices due to the Emergency Base Point flag remaining activated even when the Security-Constrained Economic Dispatch (SCED) solution is valid. (c)Hardware/Software error: These include unpredicted hardware or software failures, planned market system or database outages, planned application or database upgrades, software implementation errors, and failure of the market run to complete. (d)Inconsistency with the Protocols or Public Utility Commission of Texas (PUCT) Substantive Rules: Pricing errors may occur when specific circumstances result in prices that are in conflict with such Protocol language or the PUCT Substantive Rules. 20