DSWG Update to WMS 2/9/2011

EILS Procurement Results from 1/31 Business Hours 1 HE 0900 through 1300, Monday thru Friday except ERCOT Holidays; 425 hours MW Procured or Self Arranged467.7 Number of EILS Resources127 (includes 86 aggregations) Projected cost$1, Average cost per MW per hour$6.39 Business Hours 2 HE 1400 through 1600, Monday thru Friday except ERCOT Holidays; 255 hours MW Procured or Self Arranged470.7 Number of EILS Resources127 (includes 86 aggregations) Projected cost$792, Average cost per MW per hour$6.60 Business Hours 3 HE 1700 through 2000, Monday thru Friday except ERCOT Holidays; 340 hours MW Procured or Self Arranged472.6 Number of EILS Resources125 (includes 86 aggregations) Projected cost$1,089, Average cost per MW per hour$6.78 Non-Business Hours All other hours; 1,859 hours MW Procured or Self Arranged384.2 Number of EILS Resources111 (includes 79 aggregations) Projected cost$4,550, Average cost per MW per hour$6.37

LR - Feb 2 nd & Feb 3 rd Longest LR deployment in history – Approximately 8 hours – Previous record of just under 3 hours set on 4/17/2006 LR performance to be presented to ERCOT Board on 2/15/2011

EILS - Feb 2 nd & Feb 3 rd First EILS deployment – Approximately 28 hours – Second day of Contract Period EILS performance will not be available for at least another month Voluntary EILS deployments may be requested by ERCOT

GroupDateTime Load Participation in SCEDFebruary 24 th, 20119:30 am – 3:30 pm DSWGFebruary 25 th, 20119:30 am – 3:30 pm EILS Improvement SubgroupMarch 11 th, 20119:30 am – 12:00 pm DSWG Meeting Schedule

Loads in SCED Group Chaired by Alice Jackson – Identify issues / identify solutions Updated whitepaper posted – Comments welcomed First meeting on January 21 st, 2011

CategoryIssueNotes Settlement Compensation: Settle DR offers on full LMP, or LMP minus LMPZ? Or, LMP minus Retail Rate ( per FERC)? Or, other? See Appendix B: Settlement for DR Energy This issue mirrors the ongoing debate at FERC over DR compensation. At a high level, this has issues in common with the discussion on how to compensate Storage. If decision is to pay LMP minus LMPZ, how will the calculation/process flow occur in Settlements? TX SET transactions are potentially affected. Settlement Settlement price points for aggregations of small loads. Need to determine whether to create a new category of SPP. Will an aggregation need to be unique to an LSE? What geographical concentration will be required? This issue is dependent on how the modeling question is resolved. SettlementQSE affiliations. Can an LR contract to provide AS thru SCED with a QSE other than its LSE QSE? The difference between LR participation in current AS markets and LR participation in SCED is that energy transactions are affected in the latter. Settlement Participation incentive: LR setting LMP assured of being paid only for a single SCED run ($MWh/12). If LR is dispatched for only a single SCED run, its load will still be settled at the full 15-minute settlement interval LMPZ. Should any additional compensation be considered for these types of situations? Development of a Load reduction offset could avoid volatile dispatch instructions but would not assure sustained prices near the LR's strike price. Minimum run-time parameter will be viewed as unequal treatment with gen. Look at Quick Start solution (possible parallels). Loads in SCED – Identified Issues

Dispatch Block offer at the margin too large for SCED requirement Possible solutions: 1) If SCED requirement is 50%, accept offer and dispatch the LR. 2) Give the QSE the ability to not follow the dispatch instruction under certain parameters, and not incur a penalty, and solve the power balance issue with Regulation (assuming block is not too large). 3) Limit size of block offer. DispatchMultiple block offers tied at same price Possible solutions: 1) if congestion, dispatch LR with highest Shift Factor relative to the constraint. 2) Select LR with block offer that most closely matches the MW need. 3) Random selector. 4) Prior to SCED execution, randomly modify tied block offers by small amount ($.01 or less). Offer Submission Load Resource offers to SCED. Determine parameters needed as part of LR offers (i.e., counterparts to generator requirements). Examples: HSL, LSL. RegistrationModifications to RARFNeed to modify LRARF to accommodate new types of LRs. AS Deployment Should LRs providing RRS have the option of being dispatched by SCED? Would UFR requirement be affected? Could prematurely deplete amount of capacity with armed UFR, thus compromising instant frequency response in case of unit trip during emergency conditions. AS Deployment How to maintain current LR dispatch requirements for Reserve services (10 minutes for RRS; 30 minutes for Nonspin). See Appendix A: Ancillary Services SCED deployment. DispatchThree-hour return to service. How/whether to maintain the current 3-hour return to service window if LR is dispatched by SCED?

Pricing Transparency "Look-Ahead" SCED pricing Advanced notice of pricing would likely improve participation. Concerns shared by quick start generators. THIS ISSUE HAS BEEN ASSIGNED TO QSTF. Participation by Distribution- Connected Loads Aggregated telemetry. See Appendix C: Participation by Small-Customer Aggregations Need to determine acceptable technology to allow aggregations of small, distribution-level loads to participate. Can an acceptable method of statistical sampling be devised? What are the parameters/values that need to be telemetered? Participation by Distribution Connected Loads Network modeling. Need to determine how aggregations of distribution-level loads will be modeled. Model at a Load Aggregation Point (LAP) level TBD? Or can they carry zero shift factors and be dispatched for power balance only (ie, not for congestion management)? Participation by Distribution Connected Loads Aggregations of small loads without shift factors' impact on LFC. Is there an acceptable alternative to assigning shift factors to distribution- connected load aggregations? Market Monitoring Gaming issues. For example: How to prevent gaming by LRs that submit low EOCs prior to a planned outage. Establish an EOC price floor for Loads? Measurement & Verification Performance metrics.Will need to be developed for all types of participants.