RCWG Update to WMS July 10,

General Update Agenda Items for Today: Fuel Adder NPRR 485-(no vote) Variable O&M for Technology Types (vote) Seasonal Heat Rates - Is the difference between the heat rates for the seasons so small that we should just have one single heat rate? (vote: Option 1 or 2) 2

Fuel Adder NPRR 485 The group decided to move back in the original direction of NPRR 485. We will still entertain other solutions Three of the participants will provide guidelines that are consistent with the key points of NPRR

Fuel Adder NPRR 485 …provide for consistent application of the fuel adder that is meant to compensate Resources for the actual cost of transporting and purchasing fuel on the spot market across MOCs and RUC instructions, as well as, allow for Resource-specific verifiable costs to be submitted and verified by ERCOT. The fuel adder ($/MMBtu) cost may be submitted for each Resource and verified by ERCOT. The current default value of $0.50/MMBtu will continue to be used by ERCOT when no specific fuel adder has been provided for a Resource. clean-up language is also needed to the Verifiable Cost Manual for methodology used to verify those costs, and to define the methodologies used to account for the fuel costs above the Houston Ship Channel price. ERCOT to implement system changes for NPRR485 in

Fuel Adder NPRR 485 Summary of key points: Re-verify annually or revert to the standard adder Provide one year’s supporting data/documentation that establishes the historical costs for fuel, including transportation, spot fuel, and any additional verifiable costs associated with fuel contracts. Data to support these costs should include, but not be limited to, accounting ledger entries, invoices, and copies of fuel contracts. Must be easily differentiated from the standard commodity cost of fuel. The fuel adder is the difference between Filing Entity’s average fuel price paid (including all fees) and the FIP. 5

Variable O&M for Technology Types Resources using power augmentation techniques such as Peak or Duct Firing, Steam Injection and Air Conditioning Fogging, may be subject to higher operations and maintenance costs. These incremental costs cannot be incorporated into the “normal” operating range of the MOC due to current limitations in the ERCOT systems. Short term there the VOM will be added to the Incremental Heat Rate. Longer term there will be a look up table for each point in the operating curve for VOM. 6

Variable O&M for Technology Types 7

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Seasonal Heat Rates WMS Voted to Convert seasonal costs into summer costs Advantages Eliminates or reduces risk to ERCOT – no need to process of hundreds of data points manually every season. Eliminates or reduces risk to QSE/RE – no need to keep track of changes to cost parameters. Question to RCWG should QSEs continue to submit Resource cost information by Season if those cost vary by Season. RCWG answer is yes. Allows ERCOT to verify total cost. No changes to Protocol