1. Reliability Must Run Workshop RMR Study Process May 24, 2016

2. PUBLIC RMR Study Purpose and Selection Criteria  To determine if the absence of the unit will cause ERCOT System reliability violations as described in the ERCOT Operating Guides that would not exist if the unit was available  RMR status may be granted if the reliability criteria violations cannot be resolved through following list of alternatives: –Redispatch/reconfiguration through operator instruction –Remedial Action Plans (RAPs) –Special Protection Systems (SPSs) initiated on unit trips or Transmission Facilities’ Outages –Load response alternatives once a suitable Load response service is defined and available –Resource alternatives, including capabilities of Distributed Generation (DG), Load Resources, Direct Current Ties (DC Ties), Block Load Transfers (BLTs), etc. –Transmission upgrades that can be implemented prior to the time period that the reliability deficiency has been identified 2

3. PUBLIC Parties Involved in the RMR Study Process  ERCOT  Planning / System Operations: o Develop study scope, perform analysis and make initial and final determination o Post studies, reports and study data  Legal  Client Relations  Transmission Service Provider (TSP)  Participate in the study scope discussion with ERCOT  Verify and provide updates to the study case  Participate in the preliminary results discussion with ERCOT  Generation Resource (as needed) 3

4. PUBLIC RMR Timeline for Study 4 Time PeriodActionProtocol Section Receipt of NSOPost all existing relevant studies/data (if applicable) to: https://tmlretail.ercot.com/ercot/Participants/PublicMa rketInfo/RMR.htm. 3.14.1.2(1) Receipt of NSO Notify Client Relations (if applicable) that studies/data have been posted. Administrative Receipt of NSO + 14 DaysReview MP Comments (if applicable).3.14.1.2(2) Receipt of NSO + 24 Days or 30 Days Make initial determination of whether the GR is required to support ERCOT Reliability. 3.14.1.2(3) or 3.14.1.2.1(2) Receipt of NSO + 60 DaysMake final determination of whether GR is required to support ERCOT Reliability. 3.14.1.2(5) RMR Agreement Execution + 90 Days Report to the Board and post on the MIS a list of feasible alternatives to the continued renewal of the existing RMR Agreement 3.14.1.4 As Studies become AvailablePost unit-specific studies, reports and data, by which ERCOT justifies entering into the RMR Agreement to: https://tmlretail.ercot.com/ercot/Participants/PublicMa rketInfo/RMR.htm. 3.14.1.3(2)

5. PUBLIC RMR Study Process  Select Base Cases  Upcoming Summer Peak SSWG, or other seasonal base case dependent on the effective date in the NSO or transmission project schedule  The regional Load value provided by the appropriate Transmission Service Provider (TSP) as part of the annual Steady State Working Group (SSWG) for the study area.  For Load for the rest of the system - System peak Load forecast for the next 12 months based on the ERCOT weekly Load forecast data  Updates to the Base Cases  All new transmission projects and new generation projects in the study timeframe will be included, unless those projects are known to be delayed  Turn off mothballed units in the study region  Turn off hydro units in the study region  Maintain wind dispatch at the SSWG cases dispatch level  Include planned transmission and generation outages 5

6. PUBLIC RMR Study Process  Study Criteria  Contingencies o NERC category P1, P2.1, P3 and P7, and ERCOT double circuit contingencies with more than 0.5 miles in length (ERCOT 1) o For P3 (Loss of Generator unit + Next Single contingency) - a minimum, two nearby worst generators would be chosen in the study area o For combined cycle facilities, “a single generating” unit shall be defined as the entire train unless the combustion turbine and the steam turbine can operate separately  Monitored Elements o Buses, Lines, and interfaces at 60-kV and above will be monitored for thermal violations and voltage violations  Violations Criteria For thermal, o % loading above 100% of emergency rating o % loading change greater than or equal to 3% For voltage, o voltage violations that have a difference greater than 1% 6

7. PUBLIC RMR Study Process  Study Methodology  For each study case, AC contingency analysis performed for two Scenario case, one with and without the outgoing resource(s) modeled  Any thermal violations that have a difference of flow of greater than 3% will be examined  Any voltage violations that have a difference greater than 1% will be investigated  Any existing SPSs, RAPs, and MPs are considered to determine if violations can be mitigated  Each violations is evaluated to determine if the violations are sensitive to the outgoing generation and whether it will help to relieve the violation  Stability analysis (Dynamic, Voltage Stability) shall be performed, if any stability concern is identified in the study area based the feedback from TSP 7

8. PUBLIC RMR Study Process  Study Determination  RMR units must meet reliability requirements before they can be considered for approval  needed to provide voltage support under G-1 and N-1, and/or  needed to maintain stability under G-1 and N-1, and/or  needed to manage local congestion under G-1 and N-1  ERCOT will evaluate the following alternatives to the proposed RMR Agreement with the following solution options,  Re-dispatch/reconfiguration through operator instruction, and/or  Remedial Action Plan (RAP), and/or  Special Protection Systems (SPS), and/or  Load Response, and/or  Other alternative(s) that is available at the time of study  Market Notice will be issued following the completion of the Initial and Final Determination  Study reports and Study cases will be posted at the MIS 8

9. PUBLIC RMR Study Process 9