COMMUNICATIONS AND SETTLEMENTS WORKING GROUP (CSWG) April 2015 Update to COPS

Registered DG Threshold Background Unregistered Distributed Generation (DG) are electrical generating facilities located at a Customer’s point of delivery, connected at a distribution voltage, and equal to or less than the DG registration threshold (Currently set at 1 MW). TAC Leadership requested that COPS develop an Change Communication Plan, in case the DG registration threshold is ever reduced below the current 1 MW Items to be considered before reducing the DG Registration Threshold are (1) Settlements (Wholesale generation settlements vs. load aggregation process for settlements, AMS vs. TDSP monthly reported metering, LMP vs. Load Zone pricing) and (2) Operations (what registered DG is and is not included in the Network Operations Model) In order to communicate a new DG registration requirement to ERCOT Stakeholders and specifically DG Owners, ERCOT, TAC Subcommittees and TDSPs (and possibly REPs) will need to be part of the communication plan How to document the DG Registration Threshold Change Communication Plan and where to keep the documentation for future reference and use

Registered DG Threshold Two Discussion Items 1.Development of a Change Communication Plan and where to keep it for future reference (COPSMG: Section 5, Market Notice Communication Process, or Appendix) 2.Whether to change the 10 MW in any Load Zone threshold trigger; For example to 20 MW in any Load Zone (Requires a NPRR) (Protocol Section 16.5 requires ERCOT to reduce the DG Registration Threshold once any Load Zone reaches an aggregated 10 MW, to an amount such that no Load Zone exceeds an aggregated 7 MW; Currently estimated to be at about 300 kW and impacting 10 to 12 DG facilities)

CSWG DG Registration Threshold Discussion Highlights No current reliability or settlement issues Settlement (Unregistered) Competitive area: Outflows are treated as negative load for the Rep In NOIE: Outflows reduce load at the NOIE boundary metering points Operations ERCOT evaluates whether to include registered DG in the Network Operations Model on a case-by-case basis Non-modeled generation is not currently a problem in terms of resource adequacy planning

CSWG DG Registration Threshold Discussion Highlights How to determine a new threshold trigger 2014_QTR4 report shows 87 sites with an aggregated capacity of ~16MW LZ_North is over 7MW; Once any Load Zone reaches 10 MW a 9- month notice to the market of a registration threshold reduction is triggered Raise the DG registration threshold trigger from 10MW to 20MW per load zone The 10 MW trigger will cause the registration of sites >300kW Find an operations network modeled-based criteria for establishing a DG registration threshold; How many MWs from a single DG is enough to be included in the model? This discussion will continue at CSWG

Draft DG Registration Threshold Change Communication Plan Trigger: When Reported Unregistered DG, > 50 kW and <= 1 MW, in any one Load Zone reaches an aggregated 10 MW ERCOT Staff - Post the new (reduced) DG Registration Requirement on the Market Information System (MIS) ERCOT Staff - Meet with the appropriate TAC Subcommittees to announce the new (reduced) DG Registration Threshold ERCOT Staff - Issue a Market Notice announcing the new (reduced) DG Registration Threshold with an implementation date of 9 months after date of the Market Notice Appropriate TDSP/NOIE - Notify individual DG Owners and their REPs that are immediately impacted by the new DG Registration Threshold Notice/Notification content details to be determined at the CSWG

Scope Change to 2015 Market System Enhancements 2015 Market System EnhancementsTiming Phase 1 NPRR626 – Reliability Deployment Price Adder NPRR665 – As-Built Clarification of Reliability Deployment Price Adder NPRR568 Phase 2 – Real-Time Reserve Price Adder Based on ORDC NPRR644 – Operating Reserve Demand Curve Phase 2 Revisions NPRR645 – Real-Time On-Line Capacity Revisions NPRR598 – Clarify Inputs to PRC and ORDC OBD – Methodology for Setting Max Shadow Prices Phase 2 NPRR595 – RRS Load Resource Treatment In ORDC NPRR568 Phase 2 – Real-Time Reserve Price Adder Based on ORDC NPRR644 – Operating Reserve Demand Curve Phase 2 Revisions Ph1 – 6/27- 6/28 Ph2 – 9/21- 9/25 At the 3/4/2014 WMS meeting, ERCOT recommended the removal of NPRR568 Phase 2 from the June delivery WMS concurred with ERCOT’s recommendation and asked that MPs consider whether they would support: – The deferral of NPRR568 Phase 2 to the 2 nd phase of the in-flight project; or, – The removal of NPRR568 Phase 2 altogether (NPRR required to strike the gray box) Follow-up discussion planned at April WMS meeting Slide found in March PRS BusInt Update

Changes to the document formerly known as the “Nodal Settlement Operating Guide” Nodal Settlement Handbook Why? 1.Maintained by CSWG, not ERCOT (though ERCOT is encouraged to review) 2.Non-binding, collaborative work-in-progress 3.Flexibility to incorporate Protocol grey-boxes and work ahead, or wait for efficient time to add 4.Broaden scope to include shadow techniques for charge types not in the ERCOT matrix, e.g. ERS 5.Further broaden to include Settlement-related workflows, not on Settlement statements, e.g. ERO Fee