Appeal of PRS Action NPRR 351, Calculate and Post Projected Non-Binding LMPs for the Next 15 Minutes Floyd Trefny Texas Steel Companies

Appeal of PRS Action On October 20, 2011, PRS tabled NPRR351, Calculate and Post Projected Non-Binding LMPs for the Next 15 Minutes, delaying action to Approve the NPRR  Motion to table passed by a very narrow margin PRS and WMS desire to hold workshops on the full scope of “look ahead SCED” prior to consideration of NPRR 351  First workshop now scheduled for December 5, 2011 NPRR 351 does not implement any functionality of “look ahead SCED”  Posts “non-binding” projected LMPs on the MIS TAC is requested to instruct PRS to either approve or reject NPRR 351 at their next scheduled meeting in November 2011 without further delay

ERCOT Implementation of NPRR 351 ERCOT intends to implement NPRR 351 using program modules that could be used in the future to support a fully integrated “look ahead SCED” Program modules would be built to produce “Non- Binding” LMPs as originally called for in NPRR 351 The ERCOT modified NPRR 351 would also add additional posting and information that could be used to study the ability of “look ahead SCED” to project future grid conditions  Will provide Base Point projections for up to an hour into the future via the MIS Certified Area

Proposed Scope Of Real-Time Dispatch (RTD) Summer 2012* Current Production SCED Real-Time Dispatch (RTD) Current SCED Inputs Additional “Look Ahead” Inputs Binding MW Dispatch & Binding Prices for SCED interval T Advisory MW Dispatch & Advisory Prices (LMP only) for SCED interval T+5, …T+60 ICCP & MIS MIS * - Slide from ERCOT presentation on Implementation of NPRR 351, October 12, 2011

Funding Approved for NPPR 351 At PRS, ERCOT stated, as part of the Impact Analysis discussion, that funding of NPRR 351 would come from the 2012 project budget already approved by the Board  Implementation would build the modules for RT Dispatch of “look ahead” SCED  Initial capital cost of $690-$790k An additional $290k over the original line item of $500k may be needed from the project budget ERCOT estimates that it will take up to six months to implement

Urgency Is Needed Language of the NPPR is very broad and not likely to be changed as a result of WMS and PRS Workshops  Likely there will be many more workshops before any consensus is built on the future features of ‘look ahead” SCED  Holding up posting of prices pending detail development of Real Time co-optimization of Ancillary Services, Real Time unit commitment, Outage anticipation, and other features is not needed to move forward REPs who plan “time of use” residential products need assurances ERCOT will implement the non-binding postings for summer 2012

Urgency Is Needed (concluded) Prospects for increasing the Market Offer Cap and/or adding floors to energy offers as part of the Resource Adequacy issues is likely  However, without also giving the consumers the opportunity to reject the prices by limiting consumption is patently unfair to consumers ERCOT has on several occasions outlined the concepts of look ahead SCED at WMS  ERCOT provided examples of look ahead RT Dispatch with Ramp constraints

TAC Action ERCOT’s plan to implement “look ahead SCED” in phases is a good idea  Big bang approaches usually bring surprises and unintended consequences Building a parallel calculation alongside the current 5 minute SCED, gives opportunity to compare operations scenarios and effects on prices with a “study” look ahead SCED  ERCOT staff urged PRS to approve the NPRR as is TAC should approve a motion to instruct PRS to either approve or reject NPRR 351 at their next scheduled meeting in November 2011

TAC Motion TAC encourages WMS and PRS to continue discussions with ERCOT on the details of the “look ahead” SCED through workshops, special meetings, or other means. TAC instructs PRS to either approve or reject NPRR 351 at their next scheduled meeting on November 17, 2011 and report back to TAC at the December 1, 2011 TAC meeting.

Appendix

Protocol Language of NPRR Activities for Real-Time Operations Communicate all binding Base Points, Dispatch Instructions and LMPs for energy and Ancillary Services using Inter-Control Center Communications Protocol (ICCP) or Verbal Dispatch Instructions (VDIs) Distribute by ICCP, and post to on the MIS Public Area, the LMPs created by each binding SCED process … Post Hub LMP, Load Zone LMP, and LMPs for each Electrical Bus via on the MIS Public Area. These prices shall be posted immediately subsequent to deployment of Base Points from each binding SCED with the time stamp the prices are effective … Post on the MIS Public Area the 15-minute projected non-binding LMPs created by each SCED process for each Resource Node, and the 15-minute projected Hub LMPs, and Load Zone LMPs, and LMPs for each Electrical Bus. These projected prices shall be posted immediately subsequent to deployment of binding Base Points from at a frequency of every five minutes from SCED for at least 15 minutes in the future from SCED with the time stamp of the SCED SCED study process that produced the projections. Post on the MIS Certified Area the projected non-binding Base Points for each Resource created by each SCED process. These projected non-binding Base Points shall be posted immediately subsequent to deployment of binding Base Points from at a frequency of every five minutes from SCED for at least 15 minutes in the future with the time stamp of the SCED process that produced the projections

Protocol Language of NPRR Security Constrained Economic Dispatch (6)For each SCED process, in addition to the binding Base Points and LMPs, ERCOT shall calculate a non-binding projection of the Base Points and Resource Node LMPs, Hub LMPs and Load Zone LMPs at a frequency of every five minutes for at least 15 minutes into the future based on the same inputs to the SCED process as described in this Section, except that the Resource’s HDL and LDL and the total generation requirement will be as estimated at future intervals. The Resource’s HDL and LDL will be calculated for each interval of the projection based on the ramp rate capability over the study period. ERCOT shall estimate the projected total generation requirement by calculating a Load forecast for the study period. ERCOT shall post the projected non-binding Base Points for each Resource for each interval study period on the MIS Certified Area and the projected non-binding LMPs for Resource Nodes, Hub LMPs and Load Zone LMPs on the MIS Public Area pursuant to Section 6.3.2, Activities for Real-Time Operations.