1. Load Participation in Real-Time Market: Loads in SCED version 2

2. Efforts to Allow More Load Participation in Energy Market
State law calls for ERCOT to permit demand response to participate in markets
Significant potential resource in residential and commercial air conditioning load
REP and third-party demand response providers have sought broader opportunities
Third-party DR providers could bring focus and expertise, could invest in DR equipment at customers’ premises

3. TAC Deliberations
TAC voted to endorse “LMP-G” rather than “Full LMP” as settlement mechanism in 2011
TAC decision based on a conceptual discussion, rather than detailed examination of LMP-G
Presentation to TAC emphasized avoiding double payment: LMP to DR provider plus customer’s avoided cost of energy
TAC endorsed “volumetric” LMP-VG, in which amount of energy curtailed would be added back to the customers’ consumption

4. Recent Stakeholder Efforts
DSWG’s Loads in SCED subgroup has worked on details of how LMP-G could be implemented
Volumetric LMP-G is not workable for residential and small commercial, because ERCOT believes it cannot estimate load reductions for individual residential and small commercial sites with sufficient accuracy
New approach, LMP-Proxy $G can work for all classes of customers
This approach has broad support in DSWG

5. LMP-Proxy $G Settlement
LMP-G would be implemented at the wholesale market level
ERCOT would pay DR QSEs for customers load reduction at LMP-Proxy $G
ERCOT would charge the customer’s LSE at LMP-Proxy $G for the load reduction
Proxy $G would be based on POLR rates
No new market uplifts under this approach

6. LiSCED Consensus Principles
Loads should be permitted to actively participate in Real Time Market
Loads participating in Real Time Market would contribute to wholesale price formation
Loads should not receive financial benefit more than once for providing demand response
The existing ORDC and Loads in SCED “bid to buy” market structures should be preserved

7. LiSCED Consensus Customer Policies
Customer has the right to select or change a DR QSE
REP would be notified if customer agrees to have his load response managed by a DR QSE
Rules should preclude DR-blocker strategies by REPs
Rules should ensure an adequate transition period for REPs to manage existing customer relationships
For the transition period, rules should define what will happen to a customer’s rate plan when customer joins a DR QSE, if the current rate plan includes an incentive tied to DR capability
Customer engagement rules will be needed, so that REPs and DR QSEs compete on equitable term

8. LiSCED Consensus Implementation Mechanisms
New concept of demand response provider of record (DR-POR)
System to notify ERCOT and current REP or DR provider of customer enrollment in DR program and other key events
System needed to resolve competing claims to be customer’s DR-POR

9. Areas of Particular PUC Interest
Can REP charge customer for energy not consumed or for risks related to customer’s participation in 3d party DR?
What are REP’s options when customer joins a DR QSE, if the current rate plan includes an incentive tied to DR capability
Transition period for REPs to manage existing customer relationships
Prohibition of DR-blocker strategies by REPs
Customer engagement rules: REPs and DR QSEs to compete on equitable term
System to resolve competing claims to be customer’s DR-POR

10. Questions for TAC
Should the PUC be brought into the deliberations on Loads in SCED? If so, when and how?
DSWG has taken a different approach to LMP-G than the one discussed at prior TAC meeting. Is there a problem with this change?