Renewables and Transmission Task Force Report to WMS March 20, 2007

Senate Bill 20 Amended PURA Increased RPS goal to 5,880 MW of installed renewable capacity and created 10,000 MW target PUCT shall designate CREZs PUCT shall develop transmission plan

PUCT CREZ Rule Conducted as a contested case Parties nominate CREZs –Suitable land areas and renewable resources –Must support at least 1,000MW of new renewable capacity Developers must demonstrate financial commitment PUCT designates one or more CREZs and major transmission elements

PUCT CREZ Rule (cont.) CREZ designation order due in 180 days Selected TSPs have 1 year to submit CCN applications after CREZ designation CCN applications processed on accelerated timeline (180 days) CREZ developers collectively post 10% collateral for CREZ transmission CREZ process is iterative

Dispatch Priority Issue Issue raised by developers during CREZ rulemaking First movers’ investment jeopardized by free riders CREZ participation threatened by free rider problem “Dispatch Priority” proposed as free rider solution

PUCT Open Meeting Discussions Jan. 10: Chairman Hudson asked stakeholders to develop the “universe of options” for dispatch priority Mar. 7: Eliminated dispatch priority from List of Issues to be Addressed in Docket No –Commissioner Smitherman: “In reviewing the transcript, I think our discussion on this issue was that we wanted to give the stakeholders at ERCOT an opportunity to try to figure out what a dispatch priority ought to be, if any.

RTTF Charge The RTTF was charged by WMS to develop “the universe of options” for a priority dispatch procedure and report on any policy issues arising from those options such as possible effects on non-renewable generation resources, impacts on the ERCOT planning process and interconnection procedures, or market operations and efficiency.

What Problem Are We Solving Question? No. Answer. Question? No. Answer. Question? No. Answer.

RTTF Solution Framework Participants agreed any dispatch priority mechanism forwarded to the WMS for consideration should meet the following standards: 1. must be technically feasible 2. must work with Texas Nodal 3. must address the “piling on” problem 4. must minimize impacts on other resource types 5. must avoid “open access” issues 6. must avoid creating a “participant funding” regime 7. must solve within existing PUCT rules 8. must promote efficient market outcomes

Approaches Financial Physical

Financial Approach Use the existing Security Constrained Economic Dispatch (SCED) software together with offer floors that differentiate between normal and Latecomer wind- power to provide some amount of curtailment protection for Normal Wind- Power. The offer floor for Latecomers would be set at 5 $/MWh and for Normal Wind-Power at -10 $/MWh.

Physical Approach Utilize a “flag” in the EMS to identify latecomers, which are curtailed first in a wind v wind curtailment scenario.

Issues for WMS Nodal Argument Fossil Question SPS Recommendation

Next Steps 3/28 mtg Further develop 2 options

Possible WMS actions Adopt framework for dispatch priority solution Adopt problem statement Refer SPS recommendation to ROS for review, maybe with statement about market benefit attached Bless the next steps of the RTTF Provide new direction for RTTF