1. 1 RMS Update to RMWG June 6, 2007

2. 2 Market Process for Solar & Wind Devices Retail customers are purchasing and installing wind and solar equipment on their residence and/or in their place of business. Customer owned renewable generation will reduce the amount of usage that is recorded at the billing meter and may generate an output of electricity onto the utility’s distribution line. TX SET recommended broader market review to RMS on 3/14/07 RMS presented to the TAC on 3/30/07. TAC directed RMS to “identify market issues associated with small renewable distributed generation and net metering.”

3. 3 New Technology Creates New Issues Issues and questions in March included: –TX SET 867_03 Monthly Usage statement does not support negative values in usage. –ERCOT Protocols reject receipt of negative incremental or cumulative usage values. –A standard process to communicate net values and/or value of onsite generation is needed. –The REP of Record may want to know exactly how much electricity was generated by the Retail Customer’s equipment to pass onto the customer any savings information. –Does the CR expect to be Settled on the electricity generated? If yes, what are the Settlement implications and how would the information be communicated? –Does current market design support concept of “banking” for wholesale settlement? –Are there impacts to the REC processes?

4. 4 New Technology Creates New Issues –Do the current Protocols support Solar and Wind producing equipment? –Are there any gaps between market processes and Substantive Rules 25.211, 25.212, 25.242 or with PURA 39.101(b)(3)? –Could this type of premise require a change or addition to the Load Profile Assignment because of the frequent fluctuation of usage? –PUCT Project 33874, Advanced Metering Infrastructure Rulemaking may require IDR’s at all locations resulting in negative interval values being communicated. –House Bills 1415 and 1958 may impact –Where should this issue belong because it may cross into both the Retail Market and Commercial Operations Subcommittees? –Are there Wholesale implications as well?

5. 5 New Technology and New Rules Additional Considerations: –PUCT Project 31418 Advanced Metering Rulemaking approved May 10, 2007 AMR requires ERCOT to “support” wholesale settlement for 15 minute interval data from advanced metering system by January 31, 2010. ERCOT does not require 15-minute data to support settlement. Until they do, DSP’s are not required to transmit. Additional details will be determined in an implementation proceeding PUC Staff will conduct.

6. 6 New Technology and New Rules (cont.) Energy Efficiency bill 3693 –Legislation defines Distributed Renewable Generation (DRG) as not more than 2,000 kW; –That metering must consist of either separate meters, or a single meter, that measure both load and generator output; –The DRG owner must sell surplus electricity produced to the REP that serves the owner’s load at the Market Clearing Price of Energy (MCPE) based on Time-of Use (TOU) or other mutually agreed upon commercial arrangement; –Metering must support ERCOT settlement requirements.

7. 7 Segregating the Issues Retail Market –Usage transaction statements that reflect usage and generation values –ESI ID Maintenance transaction to reflect advanced metering at location Commercial Operations –Settlement Implications –Profile development –Reflecting new load profiles considerate of TOU and generation Hardware/Metering

8. 8 Summary RMWG Scope –Per TAC directive: “identify market issues associated with small renewable distributed generation and net metering.” The issues surfaced by TX SET stemmed from RDG applications </=50kW. Primary Issue –How should settlement occur? The determination will drive metering application and what modifications are necessary to support information required in market transaction

9. 9 Questions ?