ERCOT Generation Adequacy Study TAC Meeting February 7, 2002

Background RFP issued January 22, bidders Transmission Adequacy Consulting (Gene Preston) selected, and study begun in March Conducted under the direction of ERCOT ROS/PARWG with assistance from ERCOT System Planning Performed in 3 phases

Phases I and II Single area studies (several since 1960s) Random, independent outages/deratings of generating units (NERC GADS data) No unit maintenance (May - September) HVDC and switchable units fully available to ERCOT No transmission constraints Representative hourly load shape Service to firm load Load forecast uncertainty effects examined

Phase I Performed to provide a correlation between ERCOT reserve level and reliability indices Basic tasks –Develop FORs/DFORs –Calculate indices (5) for different reserve levels with and without load forecast uncertainty using 2000 generation –Present results graphically One sensitivity study comparing high FOR resources to low FOR resources

Phase I Results

Phase II Performed to establish the sensitivity of reliability indices to future generation additions Basic tasks –Identify new generation planned for –Perform calculations similar to Phase I assuming different amounts of new generation –Examine with and without load forecast uncertainty

Phase II Results (dots are 0%, 25%, 50%, 75%, and 100% of new generation)

Phase III Performed to examine the sensitivity of reliability indices to transmission constraints Basic tasks –Develop transmission FORs –Repeat the 100% new generation calculations of Phase II incorporating all meaningful transmission outages –Present results graphically Two sensitivity studies –Effect of key transmission upgrades –50% new generation calculation

Phase III Results

Phase III Sensitivity Test – Upgrade Ten 345 kV Ckts

Phase III Sensitivity Test – 50% New Planned Generation

Study Costs Incurred Budget Limit NERC data $ 750 Phase I $ $40K Phase I rerun $ 1350 Phase II $ 8737 $20K Phase III $ $50K Exp in 2002 $ ~3450 Total $~54337 $110K

ROS Recommendations 1. The installed reserve level in ERCOT should be calculated annually as the load ratio of demonstrated installed generating capacity (excluding 80% of wind and 80% of hydro generation) less forecasted load (excluding any load under formal agreement with ERCOT to be interrupted at any time, other than load controlled by high-set under-frequency relays, during generation or transmission capacity deficiency conditions), divided by that same net forecasted load. 2. The installed reserve level in ERCOT, as calculated in 1. above, should be maintained at no less than 15%. 3. A significant contribution by a transmission constraint to ERCOT Loss of Load Expectation (as calculated in periodically performed generation adequacy studies) should be considered in the designation of mitigating transmission projects as constraint relief projects by ERCOT. 4. Generation adequacy studies for ERCOT should be performed in any year in which the installed reserve margin, as calculated in 1. above, is less than 17% but no less frequently than every 5 years.