1. Weather-Sensitive ERS Pilot Project Proposal March 7, 2013 TAC Meeting

2. 2 Background ERCOT Staff worked with DSWG stakeholders throughout 2012 to identify ways to make ERS friendlier to weather-sensitive Loads NPRR 505 is the result of those discussions –Now tabled indefinitely at PRS in favor of the Weather-Sensitive ERS Pilot Project approach March 1, 2013 – ERCOT Staff presented draft of Governing Document for Weather-Sensitive ERS Pilot Project to interested stakeholders requesting comments Governing Document will be updated to address some of those comments

3. 3 Stated objectives for requesting Weather-Sensitive ERS Pilot Project are: Evaluate the ability of Weather-Sensitive Loads to provide dispatchable demand response during summer system conditions; Evaluate the accuracy of Qualified Scheduling Entity (QSE) projections of demand response capabilities and Load growth; Evaluate deployment impacts on end-use customers; Identify any unforeseen challenges in procuring, deploying and evaluating the performance of Weather-Sensitive Loads. Purpose

4. 4 Key Aspects for Pilot Project Pilot Timeline: –June through September 2013 ERS Contract Period To be eligible to participate: (a)The Load must consist exclusively of residential sites and must qualify for performance evaluation under either the regression baseline methodology or the control group baseline methodology; or (b)The Load must consist exclusively of non-residential sites and must qualify as Weather-Sensitive under the regression baseline evaluation methodology. QSE participating in pilot must agree to participate in a post pilot survey Minimum Offer size – 100 KW

5. 5 Key Aspects for Pilot Project Maximum pilot size of 30 MWs Procure for June through September 2013 pilot project term, BH2, BH3, and Weekend/Holiday Peak Time Period only –(Weekend/Holiday Peak Time Period - 1 p.m. to 8 p.m. on Saturdays, Sundays, and Holidays) Payment –Offers for Weather-Sensitive ERS Pilot will be considered as a separate offer stack from both 10-Minute ERS and 30-Minute ERS Pilot offers –Use reasonableness of offers criteria –Offers may be submitted for BH2, BH3 and the Weekend/Holiday Peak Time Periods only –This payment structure does not set any precedent for future contract periods for Weather-Sensitive ERS

6. 6 Key Aspects for Pilot Project Deployment instructions: –BH2 and BH3 deployments use both XML and VDI –Weekend/Holiday Peak use VDI only ERCOT will modify operator dispatch instruction to explicitly state Weather-Sensitive ERS in the instruction 30-Minute Ramp period applies Must remain deployed until recalled by ERCOT, but no single deployment will last longer than 3 hours Up to two unannounced tests per month unless deployed during EEA events

7. 7 Other Payments and charges associated with Weather-Sensitive ERS Pilot Project will be separate from other ERS charges on Settlements Statements Estimated cost of Pilot - $34,160 to $86,660 No additional ERCOT personnel impacts for pilot Procurement cost will be managed under the $50 million annual cap for ERS

8. 8 ON OFF Questions? mpatterson@ercot.com 512/248-3912