1. CRR Auction Scope John Moseley

2. To outline aspects of the CRR market process to assure that these proposed CRR market protocols (as interpreted by ERCOT staff) produces the CRR market (as envisioned by the market participants), prior to writing finalized requirements documents. (Auction Engine/SFT/Interfaces, etc) Objective of Presentation

3. Presentation Outline CRR Characteristics/Types Auctioning Element Capacity (What amounts?/ When?) CRR Models CRR Models in relation to Auction Engine Insides of the Auction Engine Nodal Definitions ->Settlement Points -> CRR Paths CRR Auction Products

4. What are the characteristics of a CRR? Yes, it is a financial instrument, not a physical one. Quantity of 1 MW for a duration of 1 hour Defined source Settlement Point and defined sink Settlement Point. Can be a flowgate (bundle of directional elements) not discussed here.

5. Types of CRRs Point-to-Point Option –Weekday On-peak –Weekend On-peak –Off-peak –24x7 Point-to-Point Obligation –Weekday On-peak –Weekend On-peak –Off-peak –24x7

6. What’s being auctioned, when? Point-to-Point Transactions Weighed Against Element Capacity

7. Quick Annual Auction Timeline Annual Auction occurs first Tuesday in December Cases must be posted 20 Day Prior to Auction Each Case must : –Have outages and upgrades modeled –Voltage and stability limits (requires Dynamic Studies) –Remedial Action Plans (RAPs) modeled –Special Protection Schemes (SPSs) modeled –Have lines dynamically rated. This is not an automatic operation, each case is an engineering study, and will take approximately (BEST GUESS?) two weeks. »Hence the information on hand in October will be used to produce a case modeling a situation that will occur in a December - 14 months later.

8. Option 1 Option 2 Option 1: Use one case 24x7 representing Weekday On-Peak, Weekend On-Peak, Off Peak Option 2: Use three separate cases representing Weekday On-Peak, Weekend On-Peak, Off Peak How many models will be needed for each month? 2 options have been proposed:

9. Option 1: 12 modelsOption 2: 36 models Scaled for Yearly Auctions: 12 Months Auctioned Simultaneously

10. Monthly Auction Engine requires optimization of 4 Auction Spaces to maximize revenue. 24x7 Auction Product On-peak Weekday, On-peak Weekend Off-Peak Auction Products Annual Auction Engine requires (assuming annual and quarterly products) optimization of 68 Auction Spaces to maximize revenue. Inside Auction Engine

11. Number of CRR Paths: A CRR Path is point-to-point where each point is a Settlement Point. Settlement point – A Resource Node, Load Zone, or Hub. Resource Node – The Electrical Bus defined in the Network Operations Model at which a Resource's measured output is settled. For a Generation Resource that is connected to the ERCOT Transmission Grid only by one or more radial transmission lines that all originate at the Generation Resource and terminate in a single substation switchyard, the Resource Node is an Electrical Bus in that substation. For all other Generation Resources, the Resource Node is the Generation Resource's side of the Electrical Bus at which the Generation Resource is connected to the ERCOT Transmission Grid

12. Nodal Protocol Definitions: Resource - A term used to refer to both a Generation Resource and a Load Resource. “Resource” used by itself in these Protocols does not include a Non-Modeled Generator. Generation Resource - A generator that is capable of providing energy or Ancillary Service to the ERCOT System and is registered with ERCOT as a Generation Resource. “Generation Resource” used by itself in these Protocols does not include a Non-Modeled Generator. Load Resource - A load that is capable of providing Ancillary Service to the ERCOT System and is registered with ERCOT as a Load Resource.

13. Nodal Protocol Definitions: Load Zone - A group of Electrical Buses assigned to the same zone under Section 3.4, Load Zones. Every Electrical Bus in ERCOT with a Load must be assigned to a Load Zone for settlement purposes. A NOIE Load Zone is a type of Load Zone. Hub - A designated Settlement Point consisting of a group of Resource Nodes and other Electrical Buses, including transmission junction points, and the settlement price calculation methodology that is set out in the definition of the Hub in Section 3.5.2, Hub Definitions. Hubs may only be created by an amendment to Section 3.5.2, Hub Definitions. The list of Resource Nodes and other Electrical Buses and the settlement price calculation methodology that define a Hub can never be modified and a Hub, once defined, exists in perpetuity.

14. How Many CRR Paths Are There? 3 Settlement Point model A  B, B  C, C  A Since CRR are unidirectional, also have B  A, A  C, C  B

15. How Many CRR Paths Are There in ERCOT? Settlement Points: 4 Load Zones Up to 20 NOIE Load Zones 3 DC Tie “Zones” 6 Hubs ~180 Plants / ~ 550 Generation Resource Nodes Hence an Estimate of between 200-583 Settlement Points Therefore: Depending on interpretation between 19,900-169,653 combinations and since CRR are single directional. CRR Paths = combinations x 2 Total CRR Paths = 39,800-339,306

16. How many monthly CRR products will exist? For Monthly auction: –Auction Engine will maximize revenue for bids and offers on 39,800-339,306 CRR auction paths with 2 CRR types of 4 possible auction products per path while simultaneously conducting a security constrained feasibility test modeling 5000+ contingencies on one(1) or three(3) models containing 23,500+ Electrical Buses For a Grand total of: 318,400-2,714,448 Auction Products offered in the monthly auction.

17. How many yearly CRR products will exist? For Yearly auction: –Auction Engine will maximize revenue for bids and offers on 39,800-339,306 CRR auction paths with 2 CRR types of 68 possible auction products per path while simultaneously conducting a security constrained feasibility test modeling 5000+ contingencies on twelve (12) or thirty-six (36) models containing 23,500+ Electrical Buses For a Grand total of: 5,412,800-46,145,616 Auction Products offered in the annual auction.

18. As a side note : There is no 2-year auction, or 24 month auction. There are 2 nd year auction products which are valid in the year after the 1 st year auction products expire. The 2 nd year auction products are auctioned using the same models as the 1 st year auction models.

19. This is a very big problem (mathematically, programmatically, tracking, testing, etc.), and regardless of whether or not functionality is used, since it is called for in the protocols, it must be implemented in the design specifications. Is this much functionality needed? If its not feasible what aspects of the auction are you willing to give up? Is it useful to the market to have something so complex that just the names of the CRR Auction Products can’t fit into a standard Excel spreadsheet? Conclusion

20. Questions?