2. ERCOT 2003 UFE ANALYSIS By William Boswell & Carl Raish AEIC Load Research Conference July 13, 2005

3. ERCOT SETTLEMENT PROCESS

4. CURRENT PROFILE GROUPS AND SEGMENTS Residential Low Winter Ratio Residential High Winter Ratio Business Non-Demand Business Low Load Factor (< 40%) Business Medium Load Factor (40% - 60%) Business High Load Factor (> 60%) Business IDR Default Non-Metered Lighting (street lights, security lights, etc) Non-Metered Flat (traffic signals, communication equipment, etc)

5. ERCOT WEATHER ZONES

6. 1 Flat Profile 65 Unique Profiles Daily 8 Adjusted Static Profile Types 8 Weather Zones ERCOT HAS 65 UNIQUE PROFILES

7. LOAD PROFILING METHODOLOGY Adjusted Static Models for metered Load Profiles Engineering estimates for non-metered loads Scaled profiles based on meter readings spanning the trade day or if unavailable previous meter readings Proxy day profiles for IDR premises if trade day data unavailable Un-scaled profiles for both IDR and NIDR premises when individual meter data is unavailable Supplemental Load Profiling –Time-Of-Use (chunking) –Direct Load Control (lagged dynamic)

8. LOAD AND UFE – ERCOT 2003 PEAK Based on True-up Settlement This is a graph of load and UFE on the Peak Day in 2003.

9. UFE Basics Sources of UFE include: ■ Generation Measurement Errors ■ Load - Missing/Erroneous Usage Data - Model Error - Load Profile ID Assignment Error ■ Losses -Model Error - Loss Code Assignment Error  Negative UFE indicates load/losses are overestimated  Positive UFE indicates load/losses are underestimated  UFE (unaccounted for energy) is computed as follows: UFE = Generation – (Load + Losses)

10. UFE Basics Net Generation for Settlement Interval Interval Data Energy Usage Profiled Energy Usage Non-Interval Data Non-Metered Accounts Losses: Transmission & Distribution UFE GAP - - - - - - > Net Generation Compared to Load Buildup

11. DATA VERIFICATION IN THE SETTLEMENT PROCESS UFE is computed for each 15-minute interval of a settlement run. Initial Final Settlement True-Up Initial Settlement (17 days after the trade day) Final Settlement (59 days after the trade day) True-up and Resettlement (6 months to up to several years after the trade day.) The latest resettlement in each interval is used in the analysis for Initial, Final and True-Up.

12. 2003 UFE Mwh by Month SR01 Annual Total = 1,673,000 MWh

13. STATISTICAL RESULTS SR03

14. STATISTICAL RESULTS (CONTINUED) 2002 UFE has a negative bias across all settlements. 2003 UFE has a negative bias for Initial and final Settlement, positive bias for True-up. 2003 UFE for True-up has a mean of 0.5% and a median of 0.2% as compared to -1.6% and -1.8% respectively for 2002. Mean and Median UFE values are similar indicating the UFE distributions are not skewed. From Initial to Final thru True-Up settlements, UFE gets closer to 0 indicating more complete usage data improves UFE. SR04

15. Generation Differences Between Initial and Final Settlements 8.4% of the intervals had Initial to Final differences greater than 100 MW Differences greater than 300 MW occurred for 1.0 % of the intervals GDF01

16. Generation Differences Between Final and True-Up Settlements GDF02 5.5% of the intervals had Final to True-Up differences greater than 100 MW Differences greater than 300 MW occurred for 0.1 % of the intervals

17. GDF04 Change in Generation between Settlements

18. 2003 Distribution of UFE as Percent of ERCOT Load The UFE percent moves in a positive direction from Initial to Final thru True-Up. UFD03

19. Initial Settlement with 95% Confidence Interval CIP01

20. Final Settlement with 95% Confidence Interval CIP02

21. True-Up Settlement with 95% Confidence Interval CIP03

22. CIP04 Median Comparison By Settlement Type

23. UFE by Weekday General Observations The UFE Percent of ERCOT Load graphs indicate UFE as a percent of load varies over a wide range between the Median, the 5 th Percentile and 95 th Percentile. The difference between the Median, the 5 th Percentile and 95 th Percentile decreases from Initial to Final through True-Up settlements. For all settlements there is a well-defined cyclical component across all days of the week. UFE is negative during the off-peak hours and positive during on-peak hours. Median values move in a positive direction from Initial to Final through True-Up settlements across all days of the week indicating settlements based on more complete usage data result in a reduction in the over-estimation of load. CIP05

24. UFE Percent of ERCOT Load and ERCOT Load - Spring 2003 SEA01

25. UFE Percent of ERCOT Load and ERCOT Load - Summer 2003 SEA02

26. UFE Percent of ERCOT Load and ERCOT Load - Fall 2003 SEA03

27. UFE Percent of ERCOT Load and ERCOT Load - Winter 2003 SEA04

28. SEA05 Seasonal Comparison of Medians Initial Settlement

29. SEA06 Seasonal Comparison of Medians Final Settlement

30. SEA07 Seasonal Comparison of Medians True-Up Settlement

31. Percent UFE vs ERCOT Load Initial Settlement MPL01

32. Percent UFE vs ERCOT Load Final Settlement MPL02

33. Percent UFE vs ERCOT Load True-Up Settlement MPL03

34. Comparison of Median Percent UFE By Settlement Type MPL04

35. General Observations Percent UFE vs ERCOT Load UFE = Generation – (Load + Losses) There is a statistically significant relationship between load and UFE. There is wide variability between the median, 5th and 95th percentiles of percent UFE for initial and final settlements. Variability decreases dramatically for the true up settlements. As load increases, median UFE for all settlements moves in a positive direction indicating (Load + Losses) are over estimated at low load intervals and are progressively more under estimated as load increases. MPL05

36. General Observations Percent UFE vs ERCOT Load UFE shifts in a positive direction from initial to final thru true-Up settlements indicating settlements based on more complete usage data result in a reduction in the over- estimation of load. UFE is closest to zero between 30,000 to 40,000 MW. UFE for Initial settlement becomes worse than UFE for Final settlement at approximately 38,000 MW of ERCOT load. Similarly, UFE for Final settlement becomes worse than UFE for True-Up at approximately 34,000 MW of ERCOT load. There is a well-defined cyclical component across all days of the week however the UFE cycles are out of phase with the load cycles MPL05

37. Transmission Plus Distribution Loss versus Total Load MPL07

38. MPL08 Distribution Loss versus Distribution Load

39. MPL09 Transmission Loss versus Total Actual Load

40. UFE costs are calculated by multiplying the UFE (MWH) times the Market Clearing Price for Load (MCPEL)($/MWH) for each 15-minute interval in 2003. MCPEL is a function of Congestion Zone. MCPEL is the same across all Congestion Zones if there is no congestion. The CM Zones for 2003 are: Houston, North, South and West UFE Cost Analysis by Congestion Management Zone UCT01

41. UFE cost values per interval are calculated for: positive and negative UFE the absolute value of UFE the net value of UFE. Median UFE cost analyses include: Seasonal as defined in the Profile Assignment Decision Tree Spring: March 1 – April 30 Summer: May 1 – September 30 Fall: October 1 – November 30 Winter: December 1 – February 28 Monthly Hour of the week. UFE Cost Analysis by Congestion Management Zone UCT01

42. UFE Cost by Month across all CMZones UCT03

43. Absolute Value UFE Cost by Month and CMZone UCT04

44. Net UFE Cost by Month and CMZone UCT05

45. SUM of UFE Dollars – Spring Absolute Value and Net UFE UCT17

46. UCT18 SUM of UFE Dollars – Summer Absolute Value and Net UFE

47. UCT19 SUM of UFE Dollars – Fall Absolute Value and Net UFE

48. UCT20 SUM of UFE Dollars – Winter Absolute Value and Net UFE

49. RESULTS and CONCLUSIONS The total dollars for the absolute value of UFE in 2003 amounted to $307 million. The net UFE amounted to $157 million. During 2003, there was a strong daily cyclical component to median UFE (related to load). Median UFE tends to be negative during the off-peak intervals and positive during on-peak intervals. This pattern is similar for all days of the week. Median UFE tends to be negative during low load intervals and moves in a positive direction as load increases. Median UFE values move in a positive direction from initial to final thru true-up indicating settlements based on more complete usage data result in a reduction in the over-estimation of load. There is less variance in UFE for true-up settlements when compared to initial and final settlements. The pattern of median UFE is significantly different across seasons.

50. Continue with Load Research Project (PUCT Project 25516) Improve Profile ID assignment process Continue to improve usage data loading accuracy and timeliness Increase the number of IDR’s Evaluate Lagged Dynamic sampling techniques and their application to the ERCOT System Continue to evaluate improvements to algorithms for missing IDR and NIDR data estimation Continue to make improvements to loss estimations Explore alternative methods for UFE allocation UFE Zones By Substation Assignment By Weather Zone RECOMMENDATIONS