ERCOT Staff Analysis of Weather Sensitivity Code Changes February 8, 2005

2 Analysis Background Analysis based on currently active IDRs Includes both NOIE and IOU ESIIDs Includes prospective changes based on ERCOT’s 2004 assignment review Analysis period is market open to present

3 Current Weather Sensitivity Code Assignments and Change History About 28% of current ESIIDs classified as weather sensitive, 23% for IOUs and 63% for NOIEs About 26% of current ESIIDs have had one or more code changes since market open

4 Weather Sensitivity Code Changes 80% of IOU, 70% of NOIE ESIIDs with no assignment changes About 14% of current ESIIDs are changing as a result of 2004 review

5 Year-by-Year Weather Sensitivity Code Changes 2003 had a significant migration (88% of changes) to WS 2004 had a significant migration (69% of changes) to NWS 57% of ESIIDs with 2004 changes were reverting to pre-2003 code 2002 WS Review was not Performed by ERCOT

6 Potential Action Items Continue using current methodology … current data loading rates lower the impact of applying proxy days Assign all IDRs to WS … WS proxy day routine okay for most ESIIDs and falls back to NWS proxy day if no suitable days are found Assign all IDRs to NWS … reduced processing for proxy day routine, may not introduce that much inaccuracy However … if Initial Settlement is moved from 17 to 10 days, the proxy day routine will be invoked more often … a less accurate routine will increase profiling error Conduct analysis to improve WS assignment methodology –Look at R-square distributions –Use multiple-year window for the analysis –Incorporate additional variable(s) e.g. summer ratio, kW/kWh minimums –Outlier analysis e.g. some ESIIDs have large year-to-year changes in R-square –Apply dead-bands