1. LOLEv Methodology Details GATF April 5, 2013

2. 2 Calculation of the Target Reserve Margin in the LOLEv study The reserve margin is calculated by the following equation: Reserve Margin = (Resources - Median Scenario Peak Load) / Median Scenario Peak Load »where, Resources = (NonWind_Capacity + _ × __+_ × __) For the calculation of the 16.1% Target Reserve Margin: –Non-Wind capacity is 84,928 MW. –ELCC Coastal is 32.9% with Coastal Wind capacity of 1,915.5 MW. –ELCC Non-Coastal is 14.2% with Non-Coastal Wind capacity of 10,339.5 MW. Median Scenario Peak Load is the 2006 Weather Year Peak Load. –2006 Weather Year Peak Load is 74,928 MW. –Why 2006? This year is the best representation of the load forecast in the Capacity, Demand, and Reserves (CDR) report. The calculation of all components is detailed in this presentation. April 5, 2013

3. 3 Background Information Three cases were run in the analysis: –“Base Run” –“Base Run without Non-Coastal Wind” –“Base Run without Coastal Wind” The level of Non-Wind capacity is set by the weighted average loss of load events per year (LOLEv) for each case. –Weights are the likelihood probabilities for each weather year based on NOAA data. –Explained prior at Generation Adequacy Task Force (GATF) (http://www.ercot.com/content/meetings/gatf/keydocs/2013/0118/Loss_o f_Load_Study_2013_GATF.ppt) on slide 24 of the linked presentation.http://www.ercot.com/content/meetings/gatf/keydocs/2013/0118/Loss_o f_Load_Study_2013_GATF.ppt April 5, 2013

4. 4 “Base Run” Results For each weather year, the LOLEv values in the table below represent the average number of events resulting from 400 simulation iterations associated with varying levels of non-wind resource capacity (first column). For example, the LOLEv value of 0.015 events/year (in red) results from 78,471 MW of non- wind capacity (in blue) being included in the model. For the “Base Run”, non-wind capacity needed to achieve 0.1 events/year LOLEv is 84,928 MW, interpolated from 84,535 MW and 86,535 MW (in orange). April 5, 2013

5. 5 “Base Run without Non-Coastal Wind” Results For the “Base Run without Non-Coastal Wind”, non-wind capacity needed to achieve 0.1 events/year LOLEv is 86,396 MW (1,468 MW higher than Base Run), interpolated from 84,535 MW and 86,535 MW in the table below (in orange). April 5, 2013

6. 6 “Base Run without Coastal Wind” Results For the “Base Run without Coastal Wind”, non-wind capacity needed to achieve 0.1 LOLEv is 85,558 MW (630 MW higher than Base Run), interpolated from 84,535 MW and 86,535 MW in the table below (in orange). April 5, 2013

7. 7 ELCC Calculation Non-Coastal ELCC –Level of Non-Wind Generation from “Base Run” at point where LOLEv is 0.1 is 84,928 MW (from Slide 4). –Pull out 10,339.5 MW of Non-Coastal Wind. –Level of Non-Wind Generation from “Base Run without Non-Coastal wind” at point where LOLEv is 0.1 is 86,396 MW (from Slide 5). –ELCC of Non-Coastal Wind is (86,396 – 84,928) / 10,339.5, or 14.2%. Coastal ELCC –Level of Non-Wind Generation from “Base Run” at point where LOLEv is 0.1 is 84,928 MW (from Slide 4). –Pull out 1,915.5 MW of Coastal Wind. –Level of Non-Wind Generation from “Base Run without Coastal wind” at point where LOLEv is 0.1 is 85,558 MW (from Slide 6). –ELCC of Non-Coastal Wind is (85,558 – 84,928) / 1,915.5, or 32.9%. April 5, 2013

8. 8 QUESTIONS / COMMENTS??? April 5, 2013