1. Loads in SCED Version 2 Proxy G Proposal

2. This is a proposal from Carl Raish as an individual … it has not been vetted internally at ERCOT and should not be construed in any way as an ERCOT proposal or endorsed by ERCOT. Disclaimer

3. Three Methods for LMP - G I would recommend retaining current Bid-to-Buy method – LSE can participated but can only represent their own customers – Customers could be price responsive or not LMP - Volumetric G – I would recommend allowing this if all ESIIDs could be accurately base- lined by ERCOT – ERCOT would disaggregate load reductions to ESIID-level and pass those to the respective LSE QSE – I would recommend requiring one or more ESIIDs in the resource to be price responsive LMP - Proxy G – No price responsive ESIIDs allowed – OK if LSE-level load can be accurately base-lined by ERCOT – Would not require ESIID-level load reduction estimation

4. ERCOT Price Responsive Load Survey On 2013 survey REPs identified 25,229 ESIIDs as being on price responsive products – 22,947 on Block and Index – 4,105 on Real Time Pricing – 1,877 on Peak Rebate Residential price response participation – 1,816 customers – 5.9 million competitive residential customers Non-residential price response participation – 23,413 customers – 51 (out of 199) Load Resource ESIIDs were reported by REP as being on price responsive rate – 863,904 competitive non-residential customers reported on fixed price rates

5. ERCOT Price Responsive Load Survey My biggest concern with LMP-Volumetric G is estimating load reduction at the ESIID-level This graph illustrates the concern … the average load is for 1,652 customers reported on RTP rates, the two customer loads are for randomly chosen customers for the same date

6. Comparison of Volumetric G to Proxy G Volumetric G Proxy G

7. 1.DR QSE registers a resource as a third-party DR provider a.Signs up customers without regard to LSE (competitive) b.Sends list via NAESB or TX Set to ERCOT for validation c.Invalidated ESIIDs are removed d.Regularly submits updates to add/remove ESIIDs Same for both Volumetric and Proxy G Comparison of Volumetric G to Proxy G

8. 2.LSE QSEs provide lists of ESIIDs to ERCOT that are on price-responsive rates a.Sends list via NAESB or TX Set to ERCOT for validation b.Valid and active ESIID in ERCOT settlement system c.LSE QSE represents the REP that owns the ESIID d.ERCOT periodically validates submissions to confirm price- responsiveness e.This activity is already being done by ERCOT on a periodic basis … would change to continuous update process Comparison of Volumetric G to Proxy G

9. 3.ERCOT validation of DR QSE lists a.Applicable to Volumetric and Proxy G a.Valid and active ESIID in ERCOT settlement system b.Consistent profile code (Res only or Non-Res only) c.Interval metering with sufficient history to support accurate base-line d.Base-line analysis performed to establish that accuracy standards are met … resource is rejected if base-line fails standards e.As updates are submitted, ERCOT confirms baseline is still accurate … otherwise updates are rejected b.Applicable to Proxy G only a.ERCOT compares DR QSE list to LSE list of price-responsive ESIIDs … if any are found, they are rejected from the resource b.ERCOT periodically validates DR QSE list to confirm absence of price- responsiveness … if significant price-responsiveness is evident, ERCOT checks at LSE-level to identify compliance failures Comparison of Volumetric G to Proxy G

10. 4.DR QSE submits offers to sell DR capacity a.Volumetric G - if offer is cleared, DR QSE is paid LMP b.Proxy G - if offer is cleared, DR QSE is paid LMP – G p c.In both cases, might pay based on telemetered load reduction with claw- back if ERCOT finds discrepancy d.Proxy G could be a rolling average LZ_SPP, perhaps seasonally adjusted e.Average by interval / day-type or perhaps average across intervals? Comparison of Volumetric G to Proxy G

11. 120 Day Rolling Average LZ_SPP

12. 5.Settlement – Volumetric G a.DR QSE provides ESIID-level load reduction to ECOT b.ERCOT validates DR QSE telemetry against aggregated interval data c.ERCOT validates ESIID-level load reduction against ESIID-level interval data d.ERCOT passes ESIID-level load reductions to respective LSE QSEs e.ERCOT settles LSE QSE with load reductions added on to its load f.LSE QSE bills customers for unused energy … presumably for the energy only does not bill for TDSP charges or ERCOT fee g.ERCOT includes cost of load reduction in RTM settlement h.Since customer has to pay for unused energy, they are not over-paid for reduction i.Since LSE QSE is settled for the unused energy, they do not profit by being long in RTM Comparison of Volumetric G to Proxy G

13. 5.Settlement – Proxy G a.DR QSE provides ESIID -level load reduction to ECOT b.ERCOT validates DR QSE telemetry against aggregated interval data and disaggregates load reductions to the LSE QSE-level c.ERCOT validates ESIID-level load reduction against ESIID-level interval data d.ERCOT passes ESIID-level load reductions to respective LSE QSEs e.ERCOT settles LSE QSE with load reductions added on to its load f.LSE QSE bills customers for unused energy … presumably for the energy only does not bill for TDSP charges or ERCOT fee g.ERCOT includes cost of load reduction in RTM settlement h.Since ERCOT withheld Proxy G × load reduction from DR QSE customer has to pay for unused energy, they and their customers are not over-paid for reduction i.Since LSE QSE is settled for the unused energy, they do not profit by being long in RTM j.ERCOT pays LSE for their share of load reduction at Proxy G × load reduction (so they don’t have to bill their customer for that energy) Comparison of Volumetric G to Proxy G

14. Scenario: Generator A producing 96 MW and selling into RTM Generator B producing 10 MW and selling 6 MW into RTM CSP B producing 4 MW of load reduction and selling into RTM Load A (owned by REP A) consuming 100 MW from RTM (96 from A 4 from B) Load B (owned by REP B) consuming 6 MW from RTM (0 from A 6 from B) has a contract with Generator B for 4 MW at $60/MWh typically consumes 10 MW … 6 MW from RTM and 4 MW from generator B deployed by CSP B down to 6 MW LMP = $3000/MWh Proxy G = $70/MWh REP A pays ERCOT $300,000. ([load(100) + curtailed load(0)] * 3000 LMP) REP B pays ERCOT $18,240. [load(6) * 3000 LMP] + [curtailed load(4) * 60 contracted price] ERCOT pays Generator A $288,000.00 (3000 LMP * 96 Gen) ERCOT pays Generator B $18,240. [RTM(6) * 3000 LMP] + [contracted(4) * 60 contracted price] ERCOT Pays CSP B (the CSP representing load B) $11,720 (4 curtailed load * [2930 LMP- Proxy G]) Presumably the CSP would then relay the $11,720 (less any fee) to the customer associated with load B. ERCOT pays REP B $280 (4 curtailed load * 70 G proxy) ERCOT receives $318,240 and pays $318,240 Proxy G Example

15. Scenario: Generator A producing 96 MW and selling into RTM Generator B producing 10 MW and selling 6 MW into RTM CSP B producing 4 MW of load reduction and selling into RTM Load A (owned by REP A) consuming 100 MW from RTM (96 from A 4 from B) Load B (owned by REP B) consuming 6 MW from RTM (0 from A 6 from B) has a contract with Generator B for 4 MW at $60/MWh typically consumes 10 MW … 6 MW from RTM and 4 MW from generator B deployed by CSP B down to 6 MW LMP = $3000/MWh Proxy G = $70/MWh REP A pays ERCOT $300,000. ([load(100) + curtailed load(0)] * 3000 LMP) REP B pays ERCOT $18,240. [load(6) * 3000 LMP] + [curtailed load(4) * 60 contracted price] ERCOT pays Generator A $288,000.00 (3000 LMP * 96 Gen) ERCOT pays Generator B $18,240. [RTM(6) * 3000 LMP] + [contracted(4) * 60 contracted price] ERCOT Pays CSP B (the CSP representing load B) $12,000 (4 curtailed load * [30000 LMP]) Presumably the CSP would then relay the $12,000 (less any fee) to the customer associated with load B. ERCOT reports 4 MW reduction for Load B to LSE QSE … REP B bills customer for unused energy ERCOT receives $318,240 and pays $318,240 Volumetric G Example