Michael Daly Becky Gifford

Michael Daly Becky Gifford
A Closer Look: Commitment Level Cost Recovery and MCR Settlement Design Enhancements Michael Daly Becky Gifford

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Our Goal How recover start-up cost for all Resources
Why proposing settlement enhancements to all Resources What settlement enhancements are specific to Multi-Configuration Combined Cycle Resources (MCRs) Clarification on RR161 so can make informed vote Facilitator Notes: Our goal over the next three hours is to provide clarification on the enhancements outlined in Revision Request (RR) 161 so Market Working Group (MWG) members can make an informed vote during the May meeting and Regional Tariff Working Group (RTWG) members can make an informed vote during their June meeting. How are we going to provide this clarification? First, we will identify why SPP is proposing settlement design enhancements for all Resources. Next, we will explain the proposed way to recover the start-up cost for all Resources. Finally, we will identify the settlement enhancements that are specific to Multi-Configuration Combined Cycle Resources (MCRs). Additional Notes: The MCR enhancements (MPRR101 and RR112) came before this proposal to enhance settlements for all Resources (RR161). However, to clarify RR161, we plan to cover the content in this session in the above order.

Why RR161? Facilitator Notes:
RR161 includes clarification details for MCR settlements, but it also changes non-MCR settlements in one area. Let’s talk about how we got to this RR.

Current Start-Up Cost Allocation
How does the SPP Settlements System currently (today and under RR112) allocate start-up cost? At the interval level Facilitator Notes: The answer is “at the interval level.” The Settlements System takes the start-up cost and spreads that cost over the minimum run time. Let’s take a closer look.

Cost Recovery Today Day-Ahead
$10K Start-Up; 10 hr. Min Run $10K / 10 hrs. = 1K per hour THEN Sum up again Facilitator Notes: Today, we do not have MCRs. Market Participants (MPs) enter a Day-Ahead (DA) Offer into the system if they want to participate in the market. The DA Start-Up cost is entered as an hourly figure by MPs. That will not change. Assume we have a Resource with a DA Start-Up cost of $10K. We will also assume the minimum run time is 10 hours. Today, the Settlements System takes the $10K Start-Up cost and spreads that cost over the minimum run time. Our commitment period happens to be the same number of hours as our minimum run time, which is 10 hours. That comes to $1K cost per hour, or interval, for the DA commitment. But then the Settlements Systems sums the cost per interval back up. Why? It does this to address commitments that cross Operating Days (ODs). Specifically, the system needs to assign costs to the appropriate OD. This interval-level functionality allows SPP to do that. Then to determine eligibility for the DA Make-Whole Payment (MWP), we add the start-up costs to all the other eligible costs (Energy, No-Load, Operating Reserve, Potential Mileage MWP), and if the costs are greater than the revenue for the commitment period, the MP is eligible for DA MWP. Sum up start-up and all other eligible costs; If costs > revenue in commitment period, eligible for Day-Ahead (DA) Make-Whole Payment (MWP)

Cost Recovery Today Reliability Unit Commitment
Reliability Unit Commitment (RUC) adjacent and preceding DA commitment $10K Start-Up; 10 hr. Min Run Facilitator Notes: Now assume that the Reliability Unit Commitment (RUC) process commits the same Resource five hours before the original DA commitment period. This is considered an adjacent and preceding commitment. When this happens, SPP replaces the RUC Start-Up cost with the DA Start-Up cost on the Settlement Statement. In other words, we move the $10K start-up cost to the beginning of the RUC commitment period. Then this $10K is spread out over the 10 hour minimum run time. Note that the RUC intervals are every 5-minutes instead of every hour for DA, even though we show hours here for simplicity. Then the start-up cost is summed back up for the commitment period, with $5K allocated to RUC and $5K allocated to DA. Finally, to determine whether the Resource is eligible for DA or RUC MWP, we add the start-up cost to the other eligible costs, and if these costs are greater than the revenue for the entire commitment period, the Resource is eligible for DA or RUC MWP. Move DA Start-Up cost to beginning of RUC commitment period $10K / 10 hrs. = $1K per hour $5K start-up for RUC $5K start-up DA Sum up start-up and all other eligible costs; If costs > revenue in commitment period, eligible for DA/RUC MWP

Cost Recovery (RR112) RUC Commitment: 2x1 Configuration DA Commitment:
$15K Start-Up $6K Transition 6 hr. Min Run “MARKET” Status DA Commitment: 1x1 Configuration $10K Start-Up; 10 hr. Min Run “MARKET” Status $10K / 10 intervals $1K per interval Facilitator Notes: So that was today. Then we wrote RR112 to add clarification to MCR settlement and registration. RR112 kept the same interval-level functionality when determining start-up costs. However, we discovered additional complexity when we began writing the requirements for MCRs. Take a look at this example. Assume we have a DA commitment from in a 1x1. The start-up cost is $10K, the minimum run time is 10 hours, and the MP offered the Resource in with a “Market” status. With the interval-level functionality, we would once again spread that start-up cost over the minimum run time, which comes to $1K per hour. Now further assume RUC commits the unit in a 2x1 from 1300 to 1800. The RUC Start-Up cost is $15K, the transition cost is $6K, and the minimum run time for that configuration is 6 hours. When you overlap a RUC commitment with a DA commitment, it becomes difficult to allocate proper costs between the two markets. Should SPP use the $15K, $10K, or $6K transition to determine the right cost for start-up? Which minimum run time do we use – 6 hours or 10 hours? The issue is determining the right cost for start-up and which time period to spread the cost out to.

Cost Recovery (RR112) (cont’d.)
Configuration 3 Configuration 2 Configuration 1 RUC Commitment: 2x1 Configuration $15K Start-Up 6 hr. Min Run “MARKET” Status $0 Cost Recovery (no start-up or MWP) DA Commitment: 1x1 Configuration $10K Start-Up; 10 hr. Min Run “SELF” Status Facilitator Notes: In addition, we found another issue. Assume the same example as the last slide, but this time, the MP self-committed the Resource in the DA Market. If we overlap a “Market” RUC commitment over that “Self” DA commitment, the cost recovery for the RUC commitment would be $0 under RR112. In other words, the SPP Market could take advantage of the Resource: SPP wouldn’t have to pay start-up and the Resource would be ineligible for MWP.

Does not allow for proper cost recovery
Complexity Start-up and transition costs for MCRs not considered for certain scenarios Does not allow for proper cost recovery MPRR101 and RR112 complex True incremental cost of MCRs’ Energy and Operating Reserve (OR) DA/RT Offers not considered Facilitator Notes: We know the current Market Design outlined in MPRR101 and RR112 is complex. Specifically, start-up and transition costs for MCRs are not considered in many different scenarios, as we just illustrated. In addition, current Market Design does not consider the true incremental cost of an MCR’s Energy and Operating Reserve DA and Real-Time (RT) Offers. As such, the current Market Design does not allow for proper cost recovery for start-up, transitions, Energy and Operating Reserve.

Addressing the Complexity (RR161)
Fixes interval-level issue Fixes DA “SELF” Commitment Status issue Allows proper cost recovery for MCR configurations Benefits all Resources: ensures settled consistently and efficiently Facilitator Notes: RR161 fixes all this. First, it fixes the issue with the interval-level functionality. It also fixes the “Self” commit issue we just illustrated. This will allow for proper cost recovery for different MCR configurations. In addition, these enhancements will benefit all Resources by ensuring they are settled consistently and efficiently. How does RR161 does this? By fine-tuning the DA and RUC MWPs. Fine-tuned DA and RUC MWP

Recovering Costs Facilitator Notes:
Let’s talk about how RR161 allows the MP to recover costs.

Costs Today vs. Tomorrow
Facilitator Notes: We will begin by comparing costs today to tomorrow. Costs Today vs. Tomorrow

RR161 Start-Up Cost Allocation
How does RR161 change the allocation of start-up cost? Breaks start-up cost into pieces and allocates at the commitment level Facilitator Notes: The answer is that RR161 breaks the start-up cost into pieces and allocates those costs at the Commitment Level. This next section explains this change.

DA Costs Today vs. Tomorrow
DA COSTS* TOMORROW Actual Start-Up DA Commitment Cost*** + Actual Transition – DA Pre-Existing Start-Up** – DA Pre-Existing Transition** – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance + No-Load Recurring (Interval-Level) + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP DA COSTS* TODAY Start-Up + No-Load + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP Facilitator Notes: DA costs today consist of the following: {{See left table on slide.}} Note that each of these costs is its own billing determinant. If you sum up these costs, you get the total costs eligible for the DA MWP. Tomorrow, we will still have a start-up cost, but it will be broken into pieces and settled in a new way. The new pieces of the start-up cost will include: {{See DA Commitment Costs at top of right table on slide.}} These costs will be at the commitment-level, as opposed to the interval-level we illustrated earlier. In other words, we cannot associate these costs with a particular point in time, so we have put them at the commitment level. All of these costs will roll up into a new billing determinant – DA Commitment Cost. Finally, to determine the costs eligible for DA MWP, we will add the DA Commitment Cost total to the No-Load, Energy, Operating Reserve, and Potential Mileage MWP, like we do today. These costs will remain at the interval-level and will be termed “Recurring Costs.” *each cost is own billing determinant **same billing determinant (DA PreExist StartUp Amt) ***also own billing determinant

RUC Costs Today vs. Tomorrow
RUC COSTS* TOMORROW Either Cancelled Start-Up or RUC Commitment Cost*** Actual Start-Up + Actual Transition – Pre-Existing Start-Up** – Pre-Existing Transition** - All DA Commitment** + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition + No-Load Recurring (Interval-Level) + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for RUC MWP RUC COSTS* TODAY Either Cancelled Start-Up or Start-Up + No-Load + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for RUC MWP Facilitator Notes: RUC costs today include: {{See left table.}} Again, each of these costs is its own billing determinant. And if you sum up these costs, you get the total costs eligible for RUC MWP. Just like with the DA Commitment Cost tomorrow, we will have a RUC Commitment Cost. The start-up costs will be just one component of this new billing determinant. Remember, these are costs that will be at the commitment-level, as opposed to the interval-level. To determine the RUC Commitment Cost, we start with either the Cancelled Start-Up or the Actual Start-Up. If we do not have a Cancelled Start-Up, we take the Actual Start-Up and add: {{See RUC Commitment Costs at top of right table on slide.}} Finally, to determine the costs eligible for RUC MWP, we will add the RUC Commitment Cost total to the No-Load, Energy, Operating Reserve, and Potential Mileage MWP, like we do today. Again, these costs will remain at the interval-level and will be termed “Recurring Costs.” *each cost is own billing determinant **same billing determinant (RT PreExist StartUp Amt) ***also own billing determinant 17

DA Commitment Cost Cost to move to different configuration
DA COSTS* TOMORROW Actual Start-Up DA Commitment Cost + Actual Transition – Pre-Existing Start-Up** – Pre-Existing Transition** – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Any DA start-up in “SELF” Any DA transition in “SELF” Cost applies to adjacent and preceding RUC commitments only Facilitator Notes: Let’s take a closer look at the DA Commitment Cost. The Actual Start-Up is the cost to start-up the unit in a DA commitment period. The Actual Transition is the cost to move to a difference configuration. What does DA Pre-Existing Start-Up mean? It means any DA start-Up cost in a “Self” Commitment Status. And DA Pre-Existing Transition includes any DA transition cost in a “Self“ Commitment Status. Remember, both the Pre-Existing Start-Up and Pre-Existing Transition are one billing determinant: The DA Pre-Existing Start-Up Amount. We are breaking it into two pieces so you remember what costs go into this determinant. DA to RUC Share Start-Up Offer is a cost that applies to adjacent and preceding RUC commitments to the DA commitment. We will look at an example of this later. RUC Remainder is the portion of start-up costs from a prior RUC commitment that crosses the OD boundary. Finally, DA Non-Performance (billing determinant) is a cost that applies to the Resource’s start-up grace period. The purpose of this cost is to remove cost avoidance. We will also provide an example of this cost later. Additional Note: The reason Actual Start-Up and Actual Transition are separate billing determinants is because for a traditional Resource, there is one single start-up cost. For a MCR, there are multiple start-up costs (to start unit and to transition). Removes cost avoidance Portion of start-up costs from prior RUC commitment that crosses Operating Day (OD) boundary **same billing determinant (DA PreExist StartUp Amt)

RUC Commitment Cost Cost to move to different configuration
RUC COSTS* TOMORROW Either Cancelled Start-Up or RUC Commitment Cost Actual Start-Up + Actual Transition – Pre-Existing Start-Up** – Pre-Existing Transition** - All DA Commitment** + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Any RUC start-up in “SELF” Any RUC transition in “SELF” All DA settled commitment costs Only applies to adjacent and following DA commitments Facilitator Notes: Here are the RUC Commitment Cost components. The Actual Start-Up is the cost to start-up the unit in a RUC commitment period. The Actual Transition is the cost to move to a difference configuration. What does RUC Pre-Existing Start-Up mean? It means any RUC Start-Up cost in a “Self” Commitment Status. And RUC Pre-Existing Transition includes any RUC transition cost in a “Self” Commitment Status. All DA Commitments is the total of all actual DA commitment costs. The Pre-Existing Start-Up, Pre-Existing Transition, and All DA Commitment are one billing determinant: RT Pre-Existing Start-Up Amount. We are breaking it into three pieces so you remember what costs go into this determinant. DA to RUC Share Start-Up Offer is again a cost that only applies to adjacent and following DA commitments to a RUC commitment. RT Non-Performance applies to the Resource’s start-up grace period. The purpose, again, is to remove cost avoidance. Finally, Cancelled Transition applies to transition that is cancelled by SPP after the transition is scheduled to begin based on the submitted Transition Time offer parameter. Applies to a SPP cancelled transition after transition is scheduled to begin Removes cost avoidance **same billing determinant (RT PreExist StartUp Amt)

Commitment Cost MCR Only Billing Determinants
DA COSTS* TOMORROW Actual Start-Up DA Commitment Cost + Actual Transition – Pre-Existing Start-Up** – Pre-Existing Transition** – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance RUC COSTS* TOMORROW Either Cancelled Start-Up or RUC Commitment Cost Actual Start-Up + Actual Transition – Pre-Existing Start-Up** – Pre-Existing Transition** - All DA Commitment** + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Facilitator Notes: Now that we have taken a closer look at the components, or billing determinants, that make up the DA and RUC Commitment Costs, which of these ONLY apply to MCRs? {{See those highlighted with red boxes.}} That means all the other components apply to ALL Resources. Which costs only apply to MCRs? Please chat answer **same billing determinant

Key Points Created new DA and RUC Commitment Cost Billing Determinants
Breaks start-up costs into pieces Pieces of Commitment Cost apply to all Resources, except transition costs Facilitator Notes: This is what you need to know before we move on.

Examples Non-MCR Cost Recovery Facilitator Notes:
The best way to explain the proposed way (RR161) to recover the start-up cost via the DA and RUC Commitment Costs is with examples. We will start with examples for non-MCR Resources. Examples

Non-MCR Examples Adjacent RUC Commitment DA “SELF” Commitment
Adjacent RUC Commitment and DA “SELF” Commitment* RUC Remainder Facilitator Notes: These are the four examples we will cover. Let’s start with the “Adjacent RUC Commitment” example. *Cost Avoidance Example

Adjacent RUC Commitment

Adjacent RUC Example Parameters
Min Run Time 4 hours DA OFFER PARAMETERS Start-Up Cost $5,000 RUC OFFER PARAMETERS $6,000 Facilitator Notes: Here are the parameters for our example.

DA Commitment #1 $5,000 $6,000 $5,000 DA Commitment Cost (Commitment #1) Actual Start-Up $5,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $5,000 Facilitator Notes: Here we take the cost parameters from the previous slide and apply them to our commitment timeline. For example, look at the first DA commitment from 0500 through 0900. We know the DA Start-Up cost is $5K. We can plug that cost into our DA Commitment Cost calculation for the Actual Start-Up billing determinant. Since this is not an MCR, all of our transition billing determinants are $0. We do not have a Pre-Existing Start-Up cost because we do not have a DA start-up or transition in a “Self” Commitment Status. The DA to RUC Share Start-Up Offer is a cost that applies to RUC commitments adjacent and preceding a DA commitment. For this first DA commitment period, we do not have an adjacent or preceding RUC commitment so there is no DA to RUC Shared Start-Up Offer cost. Our example does not have a RUC commitment that crosses ODs, so the RUC Remainder is $0. We will assume our Resource performed, so the Non-Performance is also $0. If you complete the Commitment Cost calculation, you get a total of $5K. *one billing determinant

How much cost is allocated to RUC?
DA Commitment #2 $5,000 $6,000 $5,000 Have an adjacent and preceding RUC commitment DA Commitment Cost (Commitment #2) Actual Start-Up $5,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer – $5,000 + RUC Remainder + DA Non-Performance Total: = $0 How much cost is allocated to RUC? RUC Hrs. / Min Run Time If < 1, split cost between RUC and DA If ≥ 1, entire cost goes to RUC 4 hrs. / 4 Min Run = 1 1 x $5,000 = $5,000 (All to RUC) Facilitator Notes: Now let’s look at the DA commitment from 1400 through 2400. Again, we need to plug the parameters into our DA Commitment Cost calculation. The Actual Start-Up is $5K and there are no transitions. Like our first DA commitment, we have no pre-existing costs because we do not have DA start-up or transition in a “Self” Commitment Status. We do, however, have an adjacent and preceding RUC commitment. To determine the DA to RUC Share Start-Up Offer, take the number of hours in the RUC commitment and divide by the minimum run time. If that result is less than 1, the start-up cost is split between RUC and DA. If that result is greater than or equal to 1, the entire start-up cost goes to RUC. In this example, the RUC commitment is 4 hours and the minimum run time is 4 hours. That equals 1. Multiply the $5K Actual Start-Up cost by 1, you get the full $5K. By plugging that number into the calculation under the DA to RUC Share Start Up Offer, we are cancelling out the Actual Start-Up amount. We then allocate the entire Start-Up cost to RUC. You will see that when we complete the RUC Commitment Cost calculation. Finally, our RUC Remainder and Non-Performance costs are $0. After completing the Commitment Cost calculation, you get a total of $0. *one billing determinant

RUC Commitment Actual Costs
$5,000 $6,000 $5,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $5,000 + Actual Transition + $0 – Pre-Existing Start-Up* – Pre-Existing Transition* – $0 – All DA Commitment* + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: For actual costs, look at the FINAL commitment level costs (look at like one RUC MWP eligibility period) Facilitator Notes: Next, we need to plug our Resource parameters into the RUC Commitment Cost calculation. For RUC, we need to look at the FINAL commitment level costs to determine actual costs. In other words, look at the DA commitment and RUC commitment periods like one RUC MWP eligibility period, as represented by the yellow color on our timeline. When we look at the DA and RUC commitment as one commitment, the Actual Start-Up cost would be $5K. This is the actual start-up cost that was considered when the commitment decision was made. And we have no transitions since this is a traditional Resource. *one billing determinant

RUC Commitment Additional Costs
$5,000 $6,000 $5,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $5,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $10,000 + DA to RUC Share Start-Up Offer + $5,000 + RT Non-Performance + Cancelled Transition Total: = $0 DA Commitment Cost (Commitment #1) Actual Start-Up $5,000 Facilitator Notes: Now let’s determine the pre-existing costs. The Pre-Existing Start-Up cost in RUC includes any RUC Start-Up cost in a RUC “Self” Commitment Status. In this example, we have no self-commits, so this cost is $0. As for the All DA Commitment cost, we need look at the costs from DA commitment #1 and DA commitment #2. That gives us $10K total in costs. Assuming the Resource performed, the RT Non-Performance is $0. What about the DA to RUC Share Start-Up Offer? We calculated earlier that the entire $5K start-up cost for DA commitment #2 would be allocated to RUC. Therefore, we ADD the $5K here. The total RUC Commitment Cost amount is $0K. DA Commitment Cost (Commitment #2) Actual Start-Up $5,000 *one billing determinant

Total Eligible MWP Costs
DA Commitment Cost (Commitment #1) Actual Start-Up $5,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $5,000 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP = $$$ DA Commitment Cost (Commitment #2) Actual Start-Up $5,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer – $5,000 + RUC Remainder + DA Non-Performance Total: = $0 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP = $$$ RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $5,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $10,000 + DA to RUC Share Start-Up Offer + $5,000 + RT Non-Performance + Cancelled Transition Total: = $0 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for RUC MWP = $$$ Facilitator Notes: Now that we completed our calculations, what does this mean for cost recovery? The total costs eligible for DA MWP for DA commitment #1 are the $5K Commitment Cost plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. The total costs eligible for DA MWP for DA commitment #2 are $0 plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. The total costs eligible for RUC MWP are $0 plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. How will these MWP amounts appear on the Settlement Statement? They will be three separate MWP amounts on your Settlement Statement. *one billing determinant

DA “SELF” Commitment

DA “SELF” Example #1 Parameters
Min Run Time 3 hours DA OFFER PARAMETERS Start-Up Cost $10,000 Facilitator Notes: Assume we have a MP who made a DA Offer on his traditional Resource for all 24 hours of the OD. He submitted the offer in a “Market” Commitment Status for all hours except three, which he submitted in a “Self” Commitment Status: through 1400. The DA Market runs and clears the Resources for the three hours it will be in “Self.” But it also finds the Resource economical for three additional hours – 1500 through 1700. The minimum run time is three hours and the DA Start-Up cost is $10K.

DA Commitment $10,000 DA Commitment Cost Actual Start-Up $10,000
+ Actual Transition + $0 – Pre-Existing Start-Up* – $10,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $0 Facilitator Notes: Let’s determine our DA Commitment Cost. We know the Actual Start-Up cost is $10K. Since this is a traditional Resource, all of our transition billing determinants are $0. However, we do have a Pre-Existing Start-Up cost due to the DA self-commitment. We don’t have any RUC commitments, so the DA to RUC Share Start-Up Offer is $0. This example does not have a RUC commitment that crosses ODs, so the RUC Remainder cost is $0. And we will assume the Resource performed, so the DA Non-Performance cost is also $0. This gives us a DA Commitment Cost of $0. *one billing determinant

DA Commitment Cost Actual Start-Up $10,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $10,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $0 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP = $$$ “SELF” hours: “Gave” Market start-up cost; Eligible for $0 cost recovery for “SELF” hours, but still paid for Energy and OR Eligible to recover Recurring Costs for “MARKET” hours, if MW cleared x DA LMP did not cover eligible costs Facilitator Notes: This means the total costs eligible for DA MWP are $0. Since the Resource self-committed, it “gave” the Market its start-up cost. Therefore, it is not eligible to recover the Commitment Costs nor the Recurring Costs for these hours. However, it is still paid for Energy and Operating Reserve. On the other hand, the Resource is eligible to recover Recurring Costs during the hours it is in “Market” Commitment Status, if the payment for MW cleared x the DA Locational Marginal Price (LMP) did not cover the eligible costs. + $0 + $0 + $0 + $0 = $0 *one billing determinant

DA “SELF” Example #2 Parameters
Min Run Time 5 hours DA OFFER PARAMETERS Commitment #1: Start-Up Cost $15,000 Commitment #2: Start-Up Cost $12,000 Facilitator Notes: In this next “Self” example, assume the MP submitted a DA Offer in “Market” Commitment Status from 0100 through 1300 and in “Self” Commitment Status from 1400 through 2400. The DA Market clears the Resource for the hours it will be in “Self.” But it also finds the Resource economical for five additional hours – 0500 through 0900. The minimum run time is 5 hours and the DA Start-Up cost is $10K.

DA Commitment #1 $15,000 $12,000 DA Commitment Cost (Commitment #1)
Actual Start-Up $15,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $15,000 Facilitator Notes: Let’s determine our DA Commitment Cost for the first commitment period. We know the Actual Start-Up cost is $15K. Since this is a traditional Resource, all of our transition billing determinants are $0. We do not have a Pre-Existing Start-Up cost for this DA commitment period because there are no self-commitments. We don’t have any RUC commitments, so the DA to RUC Share Start-Up Offer is $0. And we do not have a RUC Remainder cost or DA Non-Performance cost in this example. This gives us a DA Commitment Cost of $15K. *one billing determinant

DA Commitment #2 $15,000 $12,000 DA Commitment Cost (Commitment #2)
Actual Start-Up $12,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $12,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $0 Facilitator Notes: For the second commitment period, we have an Actual Start-Up cost of $12K. Again, all of our transition billing determinants are $0. However, it this example, we do have a Pre-Existing Start-Up cost of $12K since this is a self-commitment. We don’t have any RUC commitments, so the DA to RUC Share Start-Up Offer is $0. And we do not have a RUC Remainder cost or DA Non-Performance cost. This gives us a DA Commitment Cost of $0K. *one billing determinant

DA Commitment Cost (Commitment #1) Actual Start-Up $15,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $15,000 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP = $$$ DA Commitment Cost (Commitment #2) Actual Start-Up $12,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $12,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $0 + No-Load + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP Facilitator Notes: The total costs eligible for DA MWP for DA commitment #1 are the $15K Commitment Cost plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. As for the second commitment, is the MP eligible to recover Recurring Costs? The answer is no. The total costs eligible for DA MWP for DA commitment #2 are $0 because of the self-commitment. The MP is only paid for Energy and Operating Reserve. Note that these will be two separate MWP amounts on your Settlement Statement. “SELF” Status: Only paid for Energy and OR *one billing determinant

Adjacent RUC Commitment and DA “SELF” Commitment

Adjacent RUC and DA “SELF” Example Parameters
Min Run Time 5 hours DA OFFER PARAMETERS Commitment #1: Start-Up Cost $15,000 Commitment #2: Start-Up Cost $12,000 RUC OFFER PARAMETERS Start-Up Cost $20,000 Facilitator Notes: What if we add a RUC commitment that is adjacent and preceding the DA commitment in a “Self” status? Here are the parameters.

DA Commitment #1 $15,000 $20,000 $12,000 DA Commitment Cost (Commitment #1) Actual Start-Up $15,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $15,000 Facilitator Notes: We know the Actual Start-Up cost is $15K. Since this is a traditional Resource, all of our transition billing determinants are $0. We do not have a Pre-Existing Start-Up cost for this DA commitment period because we do not have a DA start-up in a “Self” status. We don’t have any RUC commitments, so the DA to RUC Share Start-Up Offer is $0. This example does not have a RUC commitment that crosses ODs, so the RUC Remainder cost is $0. Finally, the Resource performed, so the DA Non-Performance cost is $0. This gives us a DA Commitment Cost of $15K. *one billing determinant

DA Commitment #2 Adjacent and preceding RUC commitment
$15,000 $20,000 $12,000 Adjacent and preceding RUC commitment DA Commitment Cost (Commitment #2) Actual Start-Up $12,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $12,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: How much cost is allocated to RUC? RUC Hrs. / Min Run Time If < 1, split cost between RUC and DA If ≥ 1, entire cost goes to RUC 4 hrs. (RUC) / 5 hrs. (Min Run) = 0.8 0.8 < 1, split costs between RUC and DA Facilitator Notes: For the second commitment period, we have an Actual Start-Up cost of $12K. Again, all of our transition billing determinants are $0. However, it this example, we do have a Pre-Existing Start-Up cost of $12K since this is a self-commitment. We also have an adjacent and preceding RUC commitment. That means we have to determine how much of the $12K start-up cost should be allocated to RUC under the DA to RUC Share Start-Up Offer? To determine that, first we divide the RUC hours by the minimum run time. If the result is less than one, we will split the cost between RUC and DA. If it is greater than or equal to one, the entire cost goes to RUC. In this example, the RUC commitment period is 4 hours and the minimum run time is 5 hours. That equals 0.8. With the result less than one, we will split costs between RUC and DA. *one billing determinant

DA Commitment #2 (cont’d.)
$15,000 $20,000 $12,000 DA Commitment Cost (Commitment #2) Actual Start-Up $12,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $12,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $0 How much cost is allocated to RUC? BUT: If Actual – Pre-Existing = $0, Do NOT share costs $12K - $12K = $0 No costs shared Facilitator Notes: But if the actual cost minus pre-existing costs nets $0, we do not share costs. And in this example our $12K actual and $12K pre-existing net to $0, so no costs are shared. The RUC Remainder and DA Non-Performance costs are $0. This gives us a DA Commitment Cost of $0K. *one billing determinant

$15,000 $20,000 $12,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $15,000 + Actual Transition + $0 – Pre-Existing Start-Up* – Pre-Existing Transition* – $0 – All DA Commitment* + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: For actual costs, look at the FINAL commitment level costs (look at like one RUC MWP eligibility period) Facilitator Notes: Finally, we need to plug our Resource parameters into the RUC Commitment Cost calculation. For RUC, we need to look at the FINAL commitment level costs to determine actual costs. In other words, look at the DA commitment and RUC commitment periods like one RUC MWP eligibility period, as represented by the yellow color on our timeline. When we look at the DA and RUC commitment as one commitment, the Actual Start-Up cost would be $15K, not the $20K. The $15K is the actual start-up cost that was considered when the commitment decision was made. The Market saw the $20K RUC commitment as a free start since the Resource was already on. And we have no transitions since this is a traditional Resource. *one billing determinant

$15,000 $20,000 $12,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $15,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $27,000 + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: = -$12,000 DA Commitment Cost (Commitment #1) Actual Start-Up $15,000 Facilitator Notes: Next, we need to determine the pre-existing costs. The Pre-Existing Start-Up cost in RUC includes any RUC start-up cost in a RUC “Self” Commitment Status. In this example, we have no self-commits, so this number is $0. As for the All DA Commitment cost, we need look at the costs from DA commitment #1 and DA commitment #2. That gives us $27K total in costs. We know we do not share costs when there is a DA self-commitment with an adjacent and preceding RUC commitment, so the DA to RUC Share Start-Up Offer is $0. Finally, the Resource performed, so there are no RT Non-Performance costs. That means the total RUC Commitment Cost amount is $-12K. What does this mean? DA Commitment Cost (Commitment #2) Actual Start-Up $12,000 *one billing determinant

DA Commitment Cost (Commitment #1) Actual Start-Up $15,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $15,000 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP = $$$ DA Commitment Cost (Commitment #2) Actual Start-Up $12,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $12,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $0 + No-Load + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $15,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $27,000 + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: = -$12,000 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for RUC MWP = $$$ “SELF” Status: Only be paid for Energy and OR Facilitator Notes: Well, we know the total costs eligible for DA MWP for DA commitment #1 are the $15K Commitment Cost plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. The total costs eligible for DA MWP for DA commitment #2 are $0 because it is a self-commitment. The Resource is only paid for Energy and Operating Reserve. But for the RUC Commitment Cost, we have a negative $12K. Let’s take a closer look at what this means. *one billing determinant

Cost Avoidance Today, would see $0 eligibility
RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $15,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $27,000 + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: = -$12,000 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for RUC MWP = $$$ Today, would see $0 eligibility Tomorrow (Cost Avoidance): Must exceed $12K in costs above revenue before eligible for MWP MP “gave” the Market $12K by self-committing RUC saw it could avoid $12K in start-up for Resource and Market by bridging DA commitments Facilitator Notes: Today, if there were a -$12K in costs, we would only see $0 eligibility for RUC MWP. Tomorrow, a negative number means the Resource must exceed $12K in costs before it is eligible for RUC MWP. The MP gave the Market that $12K by self-committing its Resource. Note: The MCE still sees a $12K start-up even though the MP is not eligible to recover it though a MWP. RUC saw it could avoid that amount in start-up for the Resource and Market by bridging the “Market” DA commitment with the “Self” DA commitment. We are terming this “cost avoidance” in that is it reduces the costs eligible for MWP. *one billing determinant

Cost Avoidance (cont’d.)
RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $15,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $27,000 + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: = -$12,000 + No-Load + $4,000 + Energy + $20,000 + Operating Reserve + $3,500 + Potential Mileage MWP + $500 = Costs Eligible for RUC MWP = $16,000 Add RUC Commitment Cost to Recurring Costs Costs eligible for recovery through RUC MWP = $16K Facilitator Notes: Now let’s factor in the Recurring Costs. Assume the No-Load, Energy, Operating Reserve and Potential Mileage MWP costs are as follows: {{See bottom of table.}} If you add these costs to the -$12K RUC Commitment Costs, the total costs eligible for recovery through RUC MWP are $16K. *one billing determinant

Cost Avoidance (cont’d.)
RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $15,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $27,000 + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: = -$12,000 + No-Load + $4,000 + Energy + $20,000 + Operating Reserve + $3,500 + Potential Mileage MWP + $500 = Costs Eligible for RUC MWP = $16,000 MP Revenue Energy $18,000 + Operating Reserve + $3,000 Total: = $21,000 $16K Costs < $21K Revenue Not eligible for RUC MWP Facilitator Notes: If we further assume the revenue the MP made during this four-hour RUC commitment was $21K, then the costs are less than the revenue for that period. In this case, the Resource would not eligible for RUC MWP. *one billing determinant

Settlement The Right Way
RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $15,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $27,000 + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: = -$12,000 + No-Load + $4,000 + Energy + $20,000 + Operating Reserve + $3,500 + Potential Mileage MWP + $500 = Costs Eligible for RUC MWP = $16,000 MP Revenue Energy $18,000 + Operating Reserve + $3,000 Total: = $21,000 $28K Costs > $21K Revenue Today: $7K in Recurring Costs eligible for RUC MWP Facilitator Notes: RR161 ensures all Resources are settled the right way. If you look at just the Recurring Costs for the RUC commitment period, you get $28K. With total revenue at $21K, today the MP would be eligible for RUC MWP, which is $7K in eligible costs ($28K - $21K). = TOTAL RECURRING COSTS = $28,000

Settlement The Right Way (cont’d.)
RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $15,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $30,000 + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: = -$15,000 + No-Load + $4,000 + Energy + $20,000 + Operating Reserve + $3,500 + Potential Mileage MWP + $500 = Costs Eligible for RUC MWP = $7,000 $12,000 Tomorrow: 4-hour RUC commitment prevented $12K start-up Recurring Costs $7K more than Revenue for period, but no $12K start-up; MP still $5K better ($12K start - $7K costs) for period since prevented $12K start-up; Market better for not having to pay MWP Facilitator Notes: By making the four-hour commitment between the two DA commitments in this example, the Market prevented the MP from incurring $12K start up. Yes, the Recurring Costs were $7K higher than revenue for the four-hour RUC commitment period. However, the MP entered its “Self” commitment period without incurring the $12K start-up. So overall, the MP is still $5K better because RUC committed them for those four hours. And the Market is better since it did not have to make a MWP. This is the right way to settle this Resource. MP Revenue Energy $18,000 + Operating Reserve + $3,000 Total: = $21,000 = TOTAL RECURRING COSTS = $28,000

RUC Remainder

What is the RUC Remainder Cost?
What does the RUC Remainder cost apply to? DA commitments that came first and are adjacent and following a RUC commitment The portion of start-up costs from a prior RUC commitment that crosses the OD boundary The start-up and transition costs in a RUC commitment period Facilitator Notes: The answer is B. Let’s look at an example.

RUC Remainder Example Parameters
Operating Day 1 (OD1) Operating Day 2 (OD2) DA MARKET Sees Resource in Current Operating Plan (COP) Makes unit “Must Run” OD2; becomes DA commitment Facilitator Notes: Here are the Resource parameters. The MP submitted the Resource Offer in a “Market” Commitment Status. RUC runs early in OD1 and commits the Resource from 1300 through 1200 the next OD. Then when the DA Market runs on OD1 at 1100, it takes a snapshot of the Current Operating Plan (COP). The DA Market will see this RUC commitment and make it a “Must Run” on OD2; and therefore, the unit becomes a DA commitment for OD2 from 0100 through 1200. PARAMETER Min Run Time 24 hours RUC OFFER PARAMETERS Start-Up Cost $24,000

Start-Up Cost Allocation
Operating Day 1 (OD1) Operating Day 2 (OD2) $24,000 How allocate cost between ODs? OD Commitment Period / Min Run Time* x Start-Up Cost *If ≥ 1, all costs assigned to RUC OD1: 12 hrs. / 24 hr. = 0.5 * $24K = $12K OD2: 12 hrs. / 24 hr. = 0.5 * $24K = $12K Facilitator Notes: First we have to determine how much of the Actual Start-Up cost is allocated to each OD. To do that, we take the OD commitment period and divide that by the minimum run time. If that result is greater than or equal to 1, all costs will be allocated to RUC. Then take the result and multiply it by the Start-Up cost. For our first OD, that would be 12 hours divided by 24 hours. This equals 0.5. Since it is less than one, we will split costs. Multiply 0.5 by $24K, which equals $12K in costs for OD1. For our second OD, we do the same thing. The result is also the same at $12 for OD2. Important note: if the result of the OD commitment period divided by the minimum run time is greater than or equal to 1, all of the costs are assigned to RUC. *one billing determinant

No DA to RUC Share because RUC Commitment came first
DA Commitment Operating Day 1 (OD1) Operating Day 2 (OD2) $12,000 $12,000 DA Commitment Cost Actual Start-Up $0 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + $12,000 + DA Non-Performance Total: = $12,000 DA Market did not actually consider start-up because Resource already running; therefore, $12K is not Actual Start-Up cost, it is RUC Remainder cost Facilitator Notes: So we just determined that the Actual Start-Up cost for the “Must Run” DA commitment in OD2 is $12K. But the DA Market did not actually consider start-up because the Resource was already running. Therefore, the $12K is not the Actual Start-Up cost, it is the RUC Remainder cost. Since this is a traditional Resource, all of our transition billing determinants are $0. We do not have a Pre-Existing Start-Up cost for this DA commitment period because we do not have a DA start-up in a “Self” status. We do have a adjacent and preceding RUC commitment, but the RUC commitment came first. The only time the DA to RUC Share Start-Up Offer applies is when the DA commitment came first. Therefore, the cost is $0. Finally, the Resource performed, so the DA Non-Performance cost is $0. This gives us a DA Commitment Cost of $12K. No DA to RUC Share because RUC Commitment came first *one billing determinant

Operating Day 1 (OD1) Operating Day 2 (OD2) $12,000 $12,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $12,000 + Actual Transition + $0 – Pre-Existing Start-Up* – Pre-Existing Transition* – $0 – All DA Commitment* + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: For actual costs, look at the FINAL commitment level costs (look at like one RUC MWP eligibility period) Facilitator Notes: Now let’s plug our Resource parameters into the RUC Commitment Cost calculation. For RUC, we need to look at the FINAL commitment level costs to determine actual costs. In this example, our commitment periods span two ODs, so we will look at just the OD with the RUC commitment. That means the Actual Start-Up cost would be $12K. And we have no transitions since this is a traditional Resource. *one billing determinant

Operating Day 1 (OD1) Operating Day 2 (OD2) $12,000 $12,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $12,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: = $12,000 Facilitator Notes: Next, we need to determine the pre-existing costs. The Pre-Existing Start-Up cost in RUC includes any RUC start-up cost in a RUC “Self” Commitment Status. In this example, we have no self-commits, so this number is $0. As for the All DA Commitment cost, we need look at the costs from any adjacent or underlapping DA commitment that OD. We do not have any, so that cost is $0. There are no adjacent or preceding RUC commitments to a DA commitment in this OD, so the DA to RUC Share Start-Up Offer is $0. Finally, the Resource performed, so there are no RT Non-Performance costs. That means the total RUC Commitment Cost amount is $12K. *one billing determinant

RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $12,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: = $12,000 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for RUC MWP = $$$ DA Commitment Cost Actual Start-Up $0 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + $12,000 + DA Non-Performance Total: = $12,000 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP = $$$ Facilitator Notes: The total costs eligible for DA MWP are the $12K Commitment Cost plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. The total costs eligible for RUC MWP are the $12K Commitment Cost plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. Remember, these will be two separate MWP amounts on your Settlement Statement. *one billing determinant

Examples MCR Cost Recovery Facilitator Notes:
Next let’s review cost recovery examples for MCR Resources. Examples

MCR Examples DA “SELF” Commitment with Overlapping RUC Commitment
Non-Performance Adjacent RUC Commitment, “SELF,” and Multiple Transitions Cancelled Transition Facilitator Notes: Here are the four examples we will cover.

DA “SELF” Commitment with Overlapping RUC Commitment

DA “SELF” and Overlapping RUC Commitment Example Parameters
Configuration 3 Configuration 2 Configuration 1 PARAMETER Min Run Time 11 hours DA OFFER PARAMETERS Configuration 1 Start-Up Cost $10,000 RUC OFFER PARAMETERS Configuration 2 Start-Up Cost $20,000 Facilitator Notes: Here are the parameters for our example.

DA Commitment $20,000 Configuration 3 Configuration 2 Configuration 1
$10,000 DA Commitment Cost Actual Start-Up $10,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $10,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $0 Facilitator Notes: Let’s start with the DA Commitment Cost calculation. We know the Actual Start-Up cost is $10K. We do not have a transition in this DA commitment, so the Actual Transition and Pre-Existing Transition costs are $0. However, we do have a Pre-Existing Start-Up cost of $10K because we have a DA start-up in a “Self” Commitment Status. And in this example, we do not have a: DA to RUC Share Start-Up Offer cost because we do not have an adjacent and preceding RUC commitment. RUC Remainder cost because our example does not have a RUC commitment crosses ODs. Nor a DA Non-Performance cost because the Resource performed. If you complete the DA Commitment Cost calculation, you get $0. *one billing determinant

$20,000 Configuration 3 Configuration 2 Configuration 1 $10,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $20,000 + Actual Transition + $0 – Pre-Existing Start-Up* – Pre-Existing Transition* – $0 – All DA Commitment* + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: For actual costs, look at the FINAL commitment level costs (look at like one RUC MWP eligibility period) Facilitator Notes: Next, let’s look at the RUC Commitment Cost calculation. What is the Actual Start-Up cost in this example? Remember, we need to look at the FINAL commitment level costs to determine actual costs. In other words, look at the DA commitment and RUC commitment periods like one RUC MWP eligibility period, as represented by the yellow color on our timeline. When we look at the DA and RUC commitment as one commitment, the Actual Start-Up cost would be $20K for the start in the 2x1 configuration. This is the actual start-up cost that was considered when the commitment decision was made. The Market saw the $20K RUC commitment as a free start since the Resource was already on. And we have no transitions because the RUC 2x1 commitment is a start, not a transition. *one billing determinant

$20,000 Configuration 3 Configuration 2 Configuration 1 $10,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $20,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $10,000 + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: = $10,000 DA Commitment Cost Actual Start-Up $10,000 + Actual Transition + $0 Facilitator Notes: Next, we need to determine the pre-existing costs. The Pre-Existing Start-Up and Transition costs are $0 because we do not have any RUC start-up or transitions costs in a “Self” Commitment Status. The cost for All DA Commitment is $10K. There are no adjacent and preceding RUC commitments, so the DA to RUC Share Start-Up Offer is $0. The Resource performed, so the RT Non-Performance is $0. That means the total RUC Commitment Cost amount is $10K. *one billing determinant

RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $20,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $10,000 + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: = $10,000 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for RUC MWP + $$$ DA Commitment Cost Actual Start-Up $10,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $10,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $0 + No-Load + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP “SELF” Status: Only be paid for Energy and OR Facilitator Notes: The total costs eligible for DA MWP are $0 because of the self-commit. The Resource is also not eligible to recover the Recurring Costs. The only thing the Resource will be paid for during the DA commitment is Energy and Operating Reserve. The total costs eligible for RUC MWP are $10K plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. These will be two separate MWP amounts on your Settlement Statement. *one billing determinant

Non-Performance

Non-Performance Example Parameters
Configuration 3 Configuration 2 Configuration 1 PARAMETER Min Run Time 6 hours DA OFFER PARAMETERS Start-Up Cost $10,000 RUC OFFER PARAMETERS Transition Costs from Configuration 1 to 2 $3,000 Transition Costs from Configuration 2 to 3 $5,000 Facilitator Notes: Here are the parameters for our example. The DA Market committed the Resource in a 1x1. Then DA RUC ran and committed the Resource in a 2x1 from 1000 through 1200. After DA RUC ran, the MP decided to self-commit the Resource in Configuration 3 from 1100 through 1600.

DA Commitment $3,000 $5,000 Configuration 3 Configuration 2
$10,000 DA Commitment Cost Actual Start-Up $10,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $10,000 Facilitator Notes: Here are our cost parameters applied to our commitment timeline. Let’s look closer at the DA commitment from 0800 through 1600. We know it costs $10K to start-up in Configuration 1, so the Actual Start-Up cost is $10K. There are no transitions in the DA commitment, so both the Actual Transition and Pre-Existing Transition costs are $0. We do not have a Pre-Existing Start-Up cost because we do not have DA start-up in a “Self” Commitment Status. The DA to RUC Share Start-Up Offer is a cost that applies to RUC commitments adjacent and preceding the DA commitment. We do not have a DA to RUC Shared Start-Up Offer in this example. This example does not have a RUC commitment that crosses ODs, so the RUC Remainder cost is $0. Finally, the Resource performed as expected for this DA commitment, so the Non-Performance cost is $0. If you complete the Commitment Cost calculation, you get a total of $10K. *one billing determinant

Did not transition to Configuration 3 (Non-Performance) $3,000 $5,000 Configuration 3 Configuration 2 Configuration 1 $10,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $10,000 + Actual Transition + $3,000 – Pre-Existing Start-Up* – Pre-Existing Transition* – All DA Commitment* + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: For actual costs, look at the FINAL commitment level costs (look at like one RUC MWP eligibility period) Facilitator Notes: Now let’s look at the RUC Commitment Cost calculation. Remember, we need to look at the FINAL commitment level costs to determine actual costs. In other words, look at the DA commitment and RUC commitment periods like one RUC MWP eligibility period, as represented by the yellow color on our timeline. When we look at the DA and RUC commitment as one commitment, the Actual Start-Up cost would be $10K for the start in the 1x1 configuration. This is the actual start-up cost that was considered when the commitment decision was made. And we have two transitions: one to a 2x1 and another to Configuration 3. Assuming the Resource never did get to Configuration 3, what is the Actual Transition cost? The Resource stayed in a 2x1, so it did not perform as expected from 1100 through 1600. Therefore, our Actual Transition cost is only $3K. *one billing determinant

RUC Commitment Pre-Existing Costs
$3,000 $5,000 Configuration 3 Configuration 2 Configuration 1 $10,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $10,000 + Actual Transition + $3,000 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – $5,000 – All DA Commitment* – $10,000 + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: DA Commitment Cost Actual Start-Up $10,000 + Actual Transition + $0 Facilitator Notes: Next, we need to determine the pre-existing costs for RUC. The Pre-Existing Start-Up cost in RUC includes any RUC start-up cost in a RUC “Self” Commitment Status. We do have RUC self-commit, but there is no start-up, only a transition. That means the Pre-Existing Transition cost is $5K. As for the All DA Commitment cost, we only have the $10K start-up. *one billing determinant

Did not transition to Configuration 3 (Non-Performance) $3,000 $5,000 Configuration 3 Configuration 2 Configuration 1 $10,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $10,000 + Actual Transition + $3,000 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – $5,000 – All DA Commitment* – $10,000 + DA to RUC Share Start-Up Offer + $0 + RT Non-Performance + $5,000 + Cancelled Transition Total: = $3,000 If take Non-Performance out of calculation, negative $2K Non-Performance removes cost avoidance that did not happen Facilitator Notes: There are no adjacent and preceding RUC commitments, so the DA to RUC Share Start-Up Offer is $0. For the RT Non-Performance, we enter the $5K transition cost, since that transition did not happen. SPP did not cancel that transition, so the Cancelled Transition amount is $0, That means the total RUC Commitment Cost amount is $3K. What is the purpose of the Non-Performance billing determinant? If you take the $5K Non-Performance out of the calculation, the MP would have to exceed $2K in costs to be eligible for RUC MWP. Non-performance removes the cost avoidance to the Market that never happened. + RT Non-Performance + $0 *one billing determinant Total: = -$2,000

RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $10,000 + Actual Transition + $3,000 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – $5,000 – All DA Commitment* – $10,000 + DA to RUC Share Start-Up Offer + $0 + RT Non-Performance + $5,000 + Cancelled Transition Total: = $3,000 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for RUC MWP + $$$ DA Commitment Cost Actual Start-Up $10,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $10,000 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP = $$$ Facilitator Notes: The total costs eligible for DA MWP are $10K plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. The total costs eligible for RUC MWP are $3K plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. These will be two separate MWP amounts on your Settlement Statement. *one billing determinant

Adjacent RUC Commitment, “SELF,” and Multiple Transitions

Adjacent RUC, “SELF,” and Multiple Transitions Example Parameters
Configuration 3 Configuration 2 Configuration 1 PARAMETERS Plant Min Run Time 6 hours DA OFFER PARAMETERS Configuration 1 Start-Up Cost (HR 1300) $8,000 Configuration 1 Start-Up Cost (HR 1900) $4,000 Configuration 2 Start-Up Cost (HR 0500) $10,000 Transition Costs from Configuration 1 to 2 $3,000 Transition Costs from Configuration 2 to 1 $800 RUC OFFER PARAMETERS Transition Costs from Configuration 1 to 2 $4,000 Transition Costs from Configuration 1 to 3 $9,000 Transition Costs from Configuration 3 to 1 $2,000 Transition Costs from Configuration 2 to 1 $1,000 Facilitator Notes: Here are the parameters for our example.

DA Commitment #1 $3,000 $9,000 $4,000 Configuration 3 Configuration 2
$10,000 $8,000 $4,000 $800 $1,000 $1,000 $800 $2,000 DA Commitment Cost (Commitment #1) Actual Start-Up $10,000 + Actual Transition + $800 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + $0 + DA Non-Performance Total: = $10,800 Facilitator Notes: Let’s take the cost parameters from the previous slide and apply them to our commitment timeline. Then look at the first DA commitment from 0500 through 1000. We know it the Actual Start-Up in Configuration 2 is $10K and the Actual Transition from Configuration 2 to Configuration 1 cost $800. We do not have any pre-existing costs because there is no DA start-up or transition in a “Self” Commitment Status. The DA to RUC Share Start-Up Offer is a cost that applies to RUC commitments adjacent and preceding the DA commitment. For this first DA commitment period, we do not have a DA to RUC Shared Start-Up Offer. This example does not have a RUC commitment that crosses ODs, so the RUC Remainder cost is $0. Finally, the Resource performed, so the Non-Performance is also $0. If you complete the Commitment Cost calculation, you get a total of $10,800. *one billing determinant

DA Commitment #2 Actual and Pre-Existing Costs
$3,000 $9,000 $4,000 Configuration 3 Configuration 2 Configuration 1 $10,000 $8,000 $4,000 $800 $1,000 $1,000 $800 $2,000 DA Commitment Cost (Commitment #2) Actual Start-Up $8,000 + Actual Transition + $3,800 – Pre-Existing Start-Up* – $4,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: In DA Market, “SELF” comes before “MARKET” commitments Facilitator Notes: Now let’s look at the DA commitment from 1300 through 2400. First, the Actual Start-Up is $8K. Then we need to determine our actual transitions. We have two: from Configuration 1 to 2 at $3K and Configuration 2 to 1 at $800, for a total of $3,800. We also have some pre-existing costs since this DA commitment consists of a “Market” status and a “Self” status. The Pre-Existing Start-Up is $4K. It also looks like we have a Pre-Existing Transition cost of $800. However, in the DA Market, all “Selfs” come before “Market” commitments. That means the Market saw the self-commitment before it committed the Resource from hours 1300 through 1800. It saw it was economical to transition that Resource BEFORE the 1x1 “Self” start. And because it was the Market’s decision to transition the Resource from a 2x1 to a 1x1, the $800 transition cost is NOT considered pre-existing. Market saw economical to transition before the 1x1 “SELF” start; Market’s decision, so $800 not pre-existing *one billing determinant

DA Commitment #2 DA to RUC Share Start-Up Offer
$3,000 $9,000 $4,000 Configuration 3 Configuration 2 Configuration 1 $10,000 $8,000 $4,000 $800 $1,000 $1,000 $800 $2,000 DA Commitment Cost (Commitment #2) Actual Start-Up $8,000 + Actual Transition + $3,800 – Pre-Existing Start-Up* – $4,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: Adjacent and preceding RUC commitment How much cost is allocated to RUC? RUC Hrs. / Min Run Time If < 1, split cost between RUC and DA If ≥ 1, entire cost goes to RUC 4 hrs. (RUC) / 6 hrs. (Min RUN) = < 1, split costs between RUC and DA Facilitator Notes: We also have an adjacent and preceding RUC commitment. Here is a reminder of our calculation to determine the cost allocation to RUC. First divide the hours in the RUC commitment by the minimum run time. That equals 0.67. Since the result is less than 1, we will split costs with RUC. *one billing determinant

DA Commitment #2 DA to RUC Share Start-Up Offer
$3,000 $9,000 $4,000 Configuration 3 Configuration 2 Configuration 1 $10,000 $8,000 $4,000 $800 $1,000 $1,000 $800 $2,000 DA Commitment Cost (Commitment #2) Actual Start-Up $8,000 + Actual Transition + $3,800 – Pre-Existing Start-Up* – $4,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer – $5,200 + RUC Remainder + DA Non-Performance Total: How much cost is allocated to RUC? BUT: If Actual – Pre-Existing = $0 Do NOT share costs $11,800 – $4,000 = $7,800 (share costs) $8,000 Start-Up or $7,800 Net (whichever is less) 0.67 x $7,800 = $5,200 Facilitator Notes: But do our actual costs minus our pre-existing costs net $0? No. They net to $7,800. So how much do we share? Take the lesser of the Actual Start-Up and the netted amount just calculated. That is $7,800. Finally, multiply that amount by 0.67. $5,200 is what will be allocated to RUC. Therefore, we subtract that amount out of this DA commitment. *one billing determinant

DA Commitment #2 Additional Costs
$3,000 $9,000 $4,000 Configuration 3 Configuration 2 Configuration 1 $10,000 $8,000 $4,000 $800 $1,000 $1,000 $800 $2,000 DA Commitment Cost (Commitment #2) Actual Start-Up $8,000 + Actual Transition + $3,800 – Pre-Existing Start-Up* – $4,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer – $5,200 + RUC Remainder + $0 + DA Non-Performance Total: = $2,600 Facilitator Notes: Finally, our example does not have a RUC commitment that crosses ODs, so the RUC Remainder is $0. And our Resource performed, so the Non-Performance cost is $0. After completing the Commitment Cost calculation, you get a total of $2,600. *one billing determinant

$3,000 $9,000 $4,000 Configuration 3 Configuration 2 Configuration 1 $10,000 $8,000 $4,000 $800 $1,000 $1,000 $800 $2,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $10,000 + Actual Transition + $17,000 – Pre-Existing Start-Up* – Pre-Existing Transition* – All DA Commitment* + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: For actual costs, look at the FINAL commitment level costs (look at like one RUC MWP eligibility period) Facilitator Notes: Now let’s look at the RUC commitment. Remember, for RUC, we need to look at the FINAL commitment level costs to determine actual costs. In other words, look at the DA commitment and RUC commitment periods like one RUC MWP eligibility period, as represented by the yellow color on our timeline. That means that only the following costs apply. {{Animation removes costs not applicable.}} When we look at the DA and RUC commitment as one commitment, our Actual Start-Up would be $10K. This is the actual start-up cost that was considered when the commitment decision was made. And we would have five transitions: from Configuration n2 to 1 at $1K, 1 to 3 at $9K, 3 to 1 at $2K, 1 to 2 at $4K, and 2 to 1 at $1K. That is a total of $17K. *one billing determinant

RUC Commitment Pre-Existing Costs
$3,000 $9,000 $4,000 Configuration 3 Configuration 2 Configuration 1 $10,000 $8,000 $4,000 $800 $1,000 $1,000 $800 $2,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $10,000 + Actual Transition + $17,000 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – $11,000 – All DA Commitment* – $18,800 + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: Facilitator Notes: Next, we need to determine the pre-existing costs. Remember, RUC pre-existing costs include any start-up or transition costs in RUC with a “Self” Commitment Status and all DA commitments. This is our first example with not only DA commitment costs, but also a RUC self-commit. To make it easier to see what costs are considered pre-existing, we updated the commitment timeline to highlight what applies. {{Animation provides updated commitment timeline and removes costs that do not apply.}} The Pre-Existing Start-Up is any “RUC” self-commit start. We do not have a start, but we do have two RUC transitions: $9K and $2K for a total of $11K. Therefore, the Pre-Existing Start-Up would be $0 and the Pre-Existing Transition cost would be $11K. That means all other costs apply to the DA commitments: $10K, $800, and $8K for a total of $18,800. Remember, the Pre-Existing Start-Up, Pre-Existing Transition, and All DA Commitment costs are all one billing determinant. We just break these costs out in training for greater clarification. Additional Notes: There is no Pre-Existing Start-Up because the RUC self-commit is on top of an already settled DA commitment. The unit is already running. The MP just wanted to go to Configuration 3. Remember: All one billing determinant *one billing determinant

$3,000 $9,000 $4,000 Configuration 3 Configuration 2 Configuration 1 $10,000 $8,000 $4,000 $800 $1,000 $1,000 $800 $2,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $10,000 + Actual Transition + $17,000 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – $11,000 – All DA Commitment* – $18,800 + DA to RUC Share Start-Up Offer + $5,200 + RT Non-Performance + $0 + Cancelled Transition Total: = $2,400 Facilitator Notes: Assuming the Resource performed and SPP did not cancel any transitions, those costs are $0. That means we are left with the DA to RUC Share Start-Up Offer. Again, we know this number is $5,200. But where we subtracted this amount out in the DA Commitment Cost calculation, we add it in for RUC. The total RUC Commitment Cost amount is $600. *one billing determinant

DA Commitment Cost (Commitment #1) Actual Start-Up $10,000 + Actual Transition + $800 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + $0 + DA Non-Performance Total: = $10,800 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP = $$$ DA Commitment Cost (Commitment #2) Actual Start-Up $8,000 + Actual Transition + $3,800 – Pre-Existing Start-Up* – $4,000 – Pre-Existing Transition* – $0 – DA to RUC Share Start-Up Offer – $5,200 + RUC Remainder + $0 + DA Non-Performance Total: = $2,600 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP = $$$ RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $10,000 + Actual Transition + $17,000 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – $11,000 – All DA Commitment* – $18,800 + DA to RUC Share Start-Up Offer + $5,200 + RT Non-Performance + $0 + Cancelled Transition Total: = $2,400 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for RUC MWP = $$$ Eligible to recover Recurring costs for “MARKET” hours; if MW cleared x DA LMP did not cover eligible costs “SELF” hours: “Gave” Market start-up cost; Eligible for $0 cost recovery for “SELF” hours, but still paid for Energy and OR + $0 Facilitator Notes: Now let’s look at the cost recovery. The total costs eligible for DA MWP for DA commitment #1 are the $10,800 Commitment Cost plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. The total costs eligible for DA MWP for DA commitment #2 are $2,600. The Resource is also eligible to recover Recurring Costs during the hours it is in “Market” Commitment Status, if the MW cleared times the DA LMP did not cover eligible costs. But the Resource is not eligible to recover Recurring Costs for the hours it is in “Self” Commitment Status. It is only paid for Energy and Operating Reserve. The total costs eligible for RUC MWP are $2,400 plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. This $2,400 is the true incremental cost over the DA position. Remember, these will be three separate MWP amounts on your Settlement Statement. + $0 $2,400 is true incremental cost over the DA position + $0 + $0 = $0 *one billing determinant

Cancelled Transition Timing: 2 hours, 15 minutes

What is a Cancelled Transition?
Cancelled Transition refers to: SPP cancelling a transition after transition is scheduled to begin SPP cancelling a transition before transition is scheduled to begin SPP cancelling a transition during the DA Market study Facilitator Notes: The answer is A. Let’s look at an example.

Cancelled Transition Example Parameters
Configuration 3 Configuration 2 Configuration 1 PARAMETER Min Run Time 24 hours DA OFFER PARAMETERS Start-Up Cost $20,000 RUC OFFER PARAMETERS Transition Costs from Configuration 1 to 2 $5,000 Facilitator Notes: Here are the parameters for our example. The DA Market committed the Resource in a 1x1 for all hours of the OD. Then DA RUC ran and committed the Resource in a 2x1 from 1200 through 1800.

DA Commitment $5,000 Configuration 3 Configuration 2 Configuration 1
$20,000 DA Commitment Cost Actual Start-Up $20,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $20,000 Facilitator Notes: Here are our cost parameters applied to our commitment timeline. Let’s look closer at the DA commitment. We know it costs $20K to start-up in Configuration 1, so the Actual Start-Up cost is $20K. There are no transitions in the DA commitment, so both the Actual Transition and Pre-Existing Transition costs are $0. We do not have a Pre-Existing Start-Up cost because we do not have DA start-up in a “Self” Commitment Status. The DA to RUC Share Start-Up Offer is a cost that applies to a RUC commitment adjacent and preceding a DA commitment. We do not have an adjacent and preceding RUC commitment, so that cost is $0. This example does not have a RUC commitment that crosses ODs, so the RUC Remainder cost is $0. Finally, the Resource performed as expected for this DA commitment, so the Non-Performance cost is $0. If you complete the DA Commitment Cost calculation, you get a total of $20K. *one billing determinant

SPP cancelled transition after transition is scheduled to begin, so RUC commitment never happened $5,000 Configuration 3 Configuration 2 Configuration 1 $20,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: For actual costs, look at the FINAL commitment level costs (look at like one RUC MWP eligibility period) Facilitator Notes: Now let’s look at the RUC Commitment Cost calculation. Remember, we need to look at the FINAL commitment level costs to determine actual costs. In other words, look at the DA commitment and RUC commitment periods like one RUC MWP eligibility period, as represented by the yellow color on our timeline. When we look at the DA and RUC commitment as one commitment, you would think the Actual Start-Up cost would be $20K for the start in the 1x1 configuration. However, SPP cancelled the transition to the 2x1 after the transition was scheduled to begin, so the RUC commitment never happened. That means all of our RUC Commitment Costs do not apply, except for the Cancelled Transition. *one billing determinant

RUC Commitment Cancelled Transition
$5,000 Configuration 3 Configuration 2 Configuration 1 $20,000 RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition + $1,667 Total: = $1,667 1 hour transition time 12 5-minute intervals in 1 hour Cancelled in interval 4 $5,000 / 12 intervals = $ per interval $ x 4 intervals = $1,667 Facilitator Notes: So what is the cost for the Cancelled Transition? It takes time for a MCR to transition from one configuration to another, and there is a cost associated with that transition. If SPP cancels a transition after the transition is scheduled to begin, the MP should be compensated for the costs it did occur before that cancellation. We do determine that cost on a pro rate basis. First, we determine how long it takes for the Resource to transition from a 1x1 to a 2x1. That offer parameter is 1 hour. Next, we need to determine how many intervals are in that hour. There are 12 5-minute intervals in an hour. Third, we need to know at what interval in that hour did SPP cancel the transition. Let’s assume SPP cancelled the transition at interval 4. That means the MP needs to be compensated for 4 of the 12 intervals. Then take the $5K transition cost and divide that by 12 intervals, which equals $ per interval. Finally, take $ and multiply that by the 4 intervals in which the MP incurred a transition cost. That equals a Cancelled Transition cost of $1,667. Our total RUC Commitment Cost then comes to $1,667. *one billing determinant

RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition + $1,667 Total: = $1,667 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for RUC MWP + $$$ DA Commitment Cost Actual Start-Up $20,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $20,000 + No-Load + $$ + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP = $$$ Facilitator Notes: The total costs eligible for DA MWP are $20K plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. The total costs eligible for RUC MWP are $1,667 plus any No-Load, Energy, Operating Reserve, and Potential Mileage MWP costs. These will be two separate MWP amounts on your Settlement Statement. *one billing determinant

Settlement Enhancements Specific to MCRs
Facilitator Notes: Now that we have talked about the proposed way to recovery costs for all Resources, let’s focus on the RR161 enhancements specific to MCRs.

MCR Enhancements Cost Recovery for Energy and Operating Reserve (OR)
RUC MWP Distribution Charge Type Out-of-Merit Energy (OOME) Charge Type Potential Mileage MWP Facilitator Notes: There are four enhancements we will review.

Cost Recovery for Energy and Operating Reserve (OR)
MCR Enhancements Cost Recovery for Energy and Operating Reserve (OR)

Current MCR Design The current MCR design (RR112) does not take into account: (Select all that apply.) Additional costs incurred for any MW cleared in the DA Market Cost avoidance for any MW cleared in the DA Market The cost of providing incremental Energy and OR products Facilitator Notes: The answer is A and B. The current MCR design does look at the cost of providing the incremental Energy and Operating Reserve (OR), but does not take that into account cost avoidance or additional cost incurred for any MW cleared in DA Market. Let’s take a look at how RR161 is different.

MCR RUC Energy and OR costs are incremental from DA Market
Overview How will we determine that cost? MCR RUC Energy and OR costs are incremental from DA Market Configuration 3 Configuration 2 Configuration 1 Facilitator Notes: If SPP overlaps a RUC commitment in a 2x1 over a DA commitment in a 1x1, the RUC Energy and OR costs are considered incremental from the DA Market. So the question is: How will SPP determine the actual incremental cost?

Cost Recovery for Energy Example
MCR: Committed for 100 MW in a 1x1 in DA Market Committed in 2x1 in RUC and dispatched to 175 MW in Real-Time Balancing Market (RTBM) Facilitator Notes: Let’s look at an example. What is the actual incremental cost of providing this Energy?

DA Offer Parameters for 1x1
DA Commitment: 100 MW in 1x1 Actual DA Incremental Energy Cost: $1,750 Facilitator Notes: Here is the DA Energy Offer Curve for our example. The area under the curve represents the cost to produce 100 MW in Configuration 1. There is a calculation to determine that cost. We are not going to review that calculation in this training. But after completing the calculation, the cost is $1,750.

RT Offer Parameters for 2x1
RUC Commitment in 2x1 Real-Time (RT): Dispatched to 175 MW; performed as expected Actual RT Incremental Energy Cost = $4,150 Facilitator Notes: Remember, RUC then committed the MCR to a 2x1 for the same time period. And in Real-Time (RT), it was dispatched to 175 MW and performed as expected. Note that the Offer Curve for Configuration 2 is different from Configuration 1. The area under the curve represents the cost to produce 175 MW in Configuration 2. Again, there is a calculation to determine that cost, which equals $4,150.

Total Incremental Energy Costs
Actual RT Incremental Energy Cost: $4,150 Actual DA Incremental Energy Cost: — $1,750 Total: = $2,400 DA 1x1 RT 2x1 Cost from 0-50 MW higher in 2x1 than 1x1; incurred addt’l. cost by being in 2x1 Cost from MW higher in 1x1 than 2x1; avoided cost by being in 2x1 Facilitator Notes: To determine the total incremental Energy cost, subtract the two costs, which equals $2,400. When you look at the two offer curves next to each other, you can see where additional costs were incurred and where costs were avoided. For example, the cost up to 50 MW was higher in Configuration 2 (at $18) vs. Configuration 1 (at $15). In other words, the MP incurred additional costs by being in a 2x1 instead of a 1x1 to produce those MW. But the cost from 50 MW to 100 MW was lower in Configuration 2 (at $23) vs. Configuration 1 (at $25). In other words, the MP avoided costs by being in a 2x1 instead of a 1x1 to produce those MW. Netted together, more cost was avoided from MW than incurred from 0-50 MW. The current MCR design, which only looks at the cost of providing the incremental Energy and OR does not take into account cost avoidance or additional cost incurred for any MW cleared in DA Market. RR161 wants the MP to make up any additional cost incurred for transitioning (in this example, transitioning into Configuration 2), but it also wants to consider any cost avoidance because of being in that same configuration. Current Market Design; does not evaluate additional costs incurred or costs avoided

RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $30,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $20,000 + DA to RUC Share Start-Up Offer + RT Non-Performance + Cancelled Transition Total: = $10,000 + No-Load + $$ + Energy + $2,400 + Operating Reserve + Potential Mileage MWP = Costs Eligible for RUC MWP + $$$ DA Commitment Cost Actual Start-Up $20,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $20,000 + No-Load + $$ + Energy + $1,750 + Operating Reserve + Potential Mileage MWP = Costs Eligible for DA MWP = $$$ Facilitator Notes: Assuming $20K is the DA Commitment Cost, we would add that to the No-Load cost, Energy cost (which we just figured is $1,750), the OR cost, and Potential Mileage MWP to determine the costs eligible for DA MWP. Assuming $10K is the RUC Commitment Cost, we would add that to the No-Load cost, Energy cost (which will be the total incremental cost of $2,400 that just determined), the OR cost, and Potential Mileage MWP to determine the costs eligible for RUC MWP. *one billing determinant

Cost Recovery for OR Example
DA OFFER PARAMETERS Spin Cost in Configuration 1: $10/MWh Cleared Spin: 20 MW RTBM OFFER PARAMETERS Spin Cost in Configuration 2: $9/MWh Cleared Spin: 25 MW Facilitator Notes: Assume we have a MCR that submitted a DA Offer for Spinning Reserve (Spin) at $10/MWh. It clears 20 MW and will be settled in the DA Market at $10/MWh x 20 MW = $200. Then the MP submits a RT Offer for Spin at $9/MWh. It clears 25 MW.

DA Offer Parameters for 1x1
Spin Cost in Configuration 1: $10/MWh Cleared Spin: 20 MW Actual DA Incremental Spin Cost: 20 MW x $10/MWh = $200/MWh Facilitator Notes: Remember, the Resource cleared 20 MW in the DA Market at $10/MWh. The DA cost would be $10/MWh x 20 MW = $200.

RT Offer Parameters for 2x1
Spin Cost in Configuration 2: $9/MWh Cleared Spin: 25 MW Actual RT Incremental Spin Cost: 25 MW x $9/MWh = $225/MWh Facilitator Notes: Remember, the Resource cleared 25 MW in RT at $9/MWh. The RT cost would be $9/MWh x 25 MW = $225.

Total Incremental OR Cost
RT Spin Cost: $225 DA Spin Cost: — $200 Total: = $25 Cost from MW in 2x1; addt’l. costs incurred Cost from 0-20 MW higher in 1x1 than 2x1; avoided cost by being in 2x1 Facilitator Notes: This slide shows both offer curves on top of each other. The green represents the cost to produce 25 MW of Spin in Configuration 2. The red represents the cost to produce 20 MW of Spin in Configuration 1. Subtract the two costs we determined on the previous two slides to get your total incremental OR cost of $25. When you lay the two cost curves on top of each other, you can see where additional costs were incurred and where costs were avoided. For example, the cost up to 20 MW was higher in Configuration 1 (at $10) vs. Configuration 1 ($9). In other words, the MP avoided costs by being in a 2x1 instead of a 1x1 to produce those MW. And the cost from 20 MW to 25 MW was additional cost incurred.

RUC MWP Distribution Charge Type
MCR Enhancements RUC MWP Distribution Charge Type

RUC MWP Deviations Of the eight (8) deviations that fund MWPs, four (4) are impacted by the Market Design for MCRs: Minimum Limit Deviation Maximum Limit Deviation Self-Commit Deviation in Real-Time RUC Commit Deviation

Minimum Limit Deviation
Assumptions: 120 MW cleared RT EcoMin = 120 MW 2X1 Configuration Current Design: MCRs would be charged for deviating beyond operating tolerance Proposed Design: MCRs would be exempt from deviation charge, unless self-committed in RT Assumptions: 100 MW cleared DA EcoMin = 100 MW 1X1 Configuration Facilitator Notes: Assume we have a Resource that cleared 100 MW in the DA Market in a 1x1 Configuration. The 100 MW also happens to be the Resource’s Minimum Economic Capacity Operating Limit (also known as EcoMin). That same Resource updates its Offer and EcoMin in RT to a 120 MW for Configuration 2. Effectively, the Resource’s EcoMin has changed from DA to RT, and consequently, if SPP dispatches the Resource to the RT EcoMin, there would be a deviation if it were more than the Resource’s Uninstructed Resource Deviation (URD) tolerance. But for MCRs, the EcoMin is likely different for different configurations. Therefore, MCRs will be charged for this deviation when they shouldn’t. RR161 exempts MCRs from this deviation charge, unless the Resource is self-committed in RT.

Maximum Limit Deviation
Assumptions: 120 MW cleared DA 2X1 Configuration Current Design: MCRs would be charged for deviating beyond operating tolerance Proposed Design: MCRs would be exempt from deviation charge, unless self-committed in RT Assumptions: 100 MW dispatched in RT 1X1 Configuration Facilitator Notes: Assume we have a Resource that cleared 120 MW in the DA Market in a 2x1 Configuration. The 120 MW also happens to be the Resource’s Maximum Economic Capacity Operating Limit (also known as EcoMax). That same Resource updates its Offer and EcoMax in RT to a 100 MW for Configuration 1. Effectively, the Resource’s EcoMax has changed from DA to RT, and consequently, if SPP dispatches the Resource to the RT EcoMax, there would be a deviation if it were more than the Resource’s URD tolerance. But for MCRs, the EcoMax is likely different for different configurations. Therefore, MCRs will be charged for this deviation when they shouldn’t. RR161 exempts MCRs from this deviation charge, unless the Resource is self-committed in RT.

Self-Commit Deviation in RTBM
Current Design: Self-commit in RT could cause MCRs to be charged more than one of the deviations that fund MWPs Proposed Design: If MCRs self-commit in RT, Minimum Limit and Maximum Limit Deviations would be captured Therefore, MCRs will be exempt from this separate deviation charge Facilitator Notes: Here is how the Self-Commit Deviation works in RT. Assume after the DA Market and DA RUC run, the MP self-commits its Resource for hours The MP submitted its RT Offer that provided the Resource’s limits and “Self” Commitment Status. SPP puts the Resource in its Current Operating Plan (COP). SPP now expects the Resource to be on for those hours. We will even dispatch the Resource economically whenever we can, knowing the Resource is going to run anyway. Let’s look at one of these hours – Assume from , SPP is able to dispatch the Resource economically. However, from , we do not need that Resource. At this time, the Resource is forcing uneconomic Energy on the Market because SPP must dispatch the Resource to its Min. When this happens, the Resource-owning MP will be charged the Self-Commit Deviation. But if a MCR self-commits in RT, we have already penalized them through the Min and Max deviations just reviewed on the previous slide. RR161 insures that SPP does not penalize the MCR twice.

RUC Commit Deviation 200 MW cleared RT 2X1 Configuration Today (RR112)
Outage Deviation for 100 MW DA commitment AND RUC Commit deviation for 200 RUC commitment RR161: AND RUC Deviation for any additional MW if it has DA position OUTAGE 100 MW committed DA 1X1 Configuration Facilitator Notes: In this example for the RUC Commit Deviation, a Resource is committed by the DA Market for 100 MW in a 1x1. It is also committed by RUC in a 2x1 for 200 MW. But in RT, the Resource is offline (on outage) during the commitment. Under RR112, the MCR would be penalized with the Outage Deviation for the 100 MW DA commitment and with the RUC Commit Deviation for the 200 MW RUC commitment. That would be a total of 300 MW of deviation, when the total should be no more than 200. With RR161, the MCR would be penalized with the Outage Deviation for the 100 MW DA commitment and with the RUC Commit Deviation for any ADDITIONAL MW if it has a DA position.

Out-of-Merit Energy (OOME) Charge Type
MCR Enhancements Out-of-Merit Energy (OOME) Charge Type

Out-of-Merit Energy (OOME)
SPP directed Resource to 1X1 Configuration 2X1 1X1 1X1 0800 0900 1200 Facilitator Notes: This change applies to decommits. If a MCR is decommitted from a particular configuration, the MP will be compensated through OOME Charge Type. When SPP issues a decommitment to a Resource from a particular configuration, the OOME Charge Type will be utilized for any MWP

MCR Enhancements Potential Mileage MWP

Regulation Compensation Consideration
DA Commitment Cost (Commitment #1) Actual Start-Up $5,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – DA to RUC Share Start-Up Offer + RUC Remainder + DA Non-Performance Total: = $5,000 + No-Load + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for MWP RUC Commitment Cost Either Cancelled Start-Up or $0 Actual Start-Up $5,000 + Actual Transition + $0 – Pre-Existing Start-Up* – $0 – Pre-Existing Transition* – All DA Commitment* – $10,000 + DA to RUC Share Start-Up Offer + $5,000 + RT Non-Performance + Cancelled Transition Total: = -$0 + No-Load + Energy + Operating Reserve + Potential Mileage MWP = Costs Eligible for MWP Why is Potential Mileage MWP considered a Recurring Cost?

Regulation Compensation Consideration (cont’d.)
MCRs could have DA and RUC overlapping commitments for same intervals Because of that, there is a need to capture the incremental cost of buying back any RT unused miles in a different configuration than the Resource was cleared for in DA Facilitator Notes: The Potential Regulation Potential Mileage MWP is included as a Recurring Cost for the purposes of buying back any unused mileage above the MP’s offer cost. Remember, buying back unused mileage above offer cost is a cost eligible for recovery (which essentially is what the Potential Mileage MWP is used for). If the Resource did not overcome the cost of buying back unused mileage above the offer cost with the revenue received through the Regulation Service Charge Types, it will receive a Regulation M MWP. This is true for all resources. Traditional Resources will have either a DA or a RUC commitment at one time, so while they are eligible for cost recovery via a MWP in either the DA or RT, they are eligible to be paid an unused Potential Mileage MWP which takes both markets into consideration. MCRs, however, may have a DA and a RUC commitment (in different configurations) at the same time (overlapping). So the cost of buying back unused mileage in RT (in a different configuration) has to be incremental to what it would have been if it were in the configuration it was committed to in the DA Market. GOAL: Ensure accurate costs are captured in the MWP calculation

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