1. Lead from the front Texas Nodal http://nodal.ercot.com 1 Texas Nodal Load Frequency Control (LFC) EDS 3 Release 6 - Handbook EDS 3 Release 6 MP Planning Workshop September 12, 2007

2. Lead from the front Texas Nodal http://nodal.ercot.com 2 EDS - Early Delivery System Agenda: –Release 6 (R6) LFC Overview –LFC - R6.1: ACE Calculation and Pre-condition Validation –LFC - R6.2: Load Frequency Control Individual QSE –LFC - R6.3: Load Frequency Control Total System –Next Steps –Discussion / Questions?

3. Lead from the front Texas Nodal http://nodal.ercot.com 3 LFC EDS3 R6 Overview: –Release 6 will consist of 3 steps: LFC - R6.1: ACE calculation and Pre-condition Validation LFC - R6.2: Load Frequency Control Individual QSE LFC - R6.3: Load Frequency Control Total System –LFC – R6.1 starting January 2008 –LFC – R6.2 scheduled starting March 2008 –LFC – R6.3 scheduled June 2008 and completed before the 168 hour test in August 2008

4. Lead from the front Texas Nodal http://nodal.ercot.com 4 LFC – R6.1: ACE Calculation and Pre-condition validation Overview – –Compare continuously for 7 days Nodal ACE results with Zonal ACE results for accuracy –Verify RLC calculations of High and Low Ancillary Service Limit HASL, LASL, SCED Up and Down Ramp SURAMP, SDRAMP, High and Low Dispatch Limit HDL, LDL –Verify ability to calculate and issue Emergency Base Points to QSEs –Verify Ancillary Service Capacity Monitor results Market Participant Involvement – –Modify data in MP Nodal Systems for verification of calculations in ERCOT Nodal systems (full integrated test) –Verify the receipt of Emergency Base Points from ERCOT Market and Settlements – –Physical Resources continue to be controlled by the Zonal system –No impact to Zonal market or settlements

5. Lead from the front Texas Nodal http://nodal.ercot.com 5 LFC – R6.1: ACE Calculation and Pre-condition validation

6. Lead from the front Texas Nodal http://nodal.ercot.com 6 LFC – R6.2: LFC Testing for Individual QSEs Overview – –ERCOT will verify that each QSE and Resource has the ability to receive Nodal deployment signals and provide Regulation Control on their Nodal Systems. –ERCOT will verify Resources follow the QSE provided Regulation Participation Factor –Test Period for Regulation verification will be at least 1 hour. –Verify for each QSE the ability to operate on constant frequency control when requested by ERCOT. –Test Period for constant frequency control is approximately 15 minutes

7. Lead from the front Texas Nodal http://nodal.ercot.com 7 LFC – R6.2: LFC Testing for Individual QSEs cont.. Market Participant Involvement – –All QSE Resources to provide Regulation at the commencement of Nodal should participate in the test –QSE shall provide 5 minute Resource specific schedules to ERCOT prior to the test. The 5 minute schedules represent a Resource specific allocation of the 15 minute Zonal Schedules. –During the test, Resources should follow the Nodal dispatch of Regulation and the LFC 4 second Updated Desired Base Points. –Each Resource under test must deploy Regulation during the test period (Participation Factor > 0).

8. Lead from the front Texas Nodal http://nodal.ercot.com 8 LFC – R6.2: LFC Testing for Individual QSEs cont.. Market and Settlements – –QSE may participate in the Zonal Ancillary Service Market as normal –QSE Resource’s under test can not participate in the Zonal Real- Time Balancing Market during the test period –Ratio of the Regulation obligation of the QSE under test to the total ERCOT requirement will be based on the outcome of the Zonal Ancillary Service Market. –QSE’s can also Self-arrange Resources for the test –QSE’s under test will not be subjected to Uninstructed Resource Charges (URC) for the hour before the test period, during the test period and the hour following –VDI’s records will be sent to ERCOT Settlement group for the hours the QSE participated in LFC Regulation testing. –For periods not covered by the VDI, all URC will apply

9. Lead from the front Texas Nodal http://nodal.ercot.com 9 LFC – R6.2: LFC Testing for Individual QSEs cont..

10. Lead from the front Texas Nodal http://nodal.ercot.com 10 LFC – R6.3: LFC Testing for the Total System Overview – –ERCOT to verify the ability to control system frequency with LFC with all QSE and Resources (total system) providing Regulation in Nodal. –Verify LFC’s ability to meet NERC control systems performance criteria –Will require three tests of approx. 2, 8 and 48 hours. –A Resource must complete EDS 3 R6.2 testing to provide Regulation in EDS 3 R6.3.

11. Lead from the front Texas Nodal http://nodal.ercot.com 11 LFC – R6.3: LFC Testing for the Total System cont.. Market Participant Involvement – –All QSE’s providing Regulation will be required to follow the Regulation deployment signal from Nodal (LFC). –Each Resource obligated to provide Regulation must deploy Regulation during the test period as per the Nodal Regulation signal and the telemetered Participation Factor. –Ratio of the Regulation obligation of the QSE under test to the total ERCOT requirement will be based on the outcome of the Zonal Ancillary Service Market –All QSE’s must follow SCED calculated 5 minute Base Points and the LFC 4 second Updated Desired Base Point. –All QSE’s must provide Energy Offer Curves and Output Schedules for SCED representative of the same QSE portfolio Balancing Energy Service submitted in the Zonal system.

12. Lead from the front Texas Nodal http://nodal.ercot.com 12 LFC – R6.3: LFC Testing for the Total System cont.. Market and Settlements – –During the test period, ERCOT will settle transactions based on the Zonal Protocols using MCPEs calculated in the Zonal Market. –MPs will continue to update their Resource Plans, Base Power Schedules and Zonal Port Folio Offers during the test periods. The constraints activated in Zonal RTCAM will also be active in Nodal TCM. MPs shall continue to update their Zonal schedules and Balancing Energy Service offers. –During the test, QSEs should follow the SCED Base Points and the LFC 4 second Updated Desired Base Point provided by the Nodal system and ignore the OOME Dispatch Instructions from the Zonal system. –Units deployed by the Zonal Market for OOME and Local Balancing Energy will have their instructed output levels replaced with weighted average SCED Base Point instructions.

13. Lead from the front Texas Nodal http://nodal.ercot.com 13 LFC – R6.3: LFC Testing for the Total System cont.. Market and Settlements – –QSEs will not be subject to Uninstructed Resource Charges (URC) for the hour before the test period, during the test period and the hour following the test period. –Verbal Dispatch Instructions (VDI) records will be sent to the ERCOT Settlement group for the hours the QSE participated in LFC Regulation testing. –If the test is discontinued and Resources are returned to Zonal control, then URC will apply following the first full hour of resumed zonal operations.

14. Lead from the front Texas Nodal http://nodal.ercot.com 14 LFC – R6.3: LFC Testing for the Total System cont..

15. Lead from the front Texas Nodal http://nodal.ercot.com 15 LFC EDS3 R6 Next Steps: –Execution dates LFC – R6.1: Jan 14 th LFC – R6.2: Mar 17 th LFC – R6.3: June to Aug 2008, before 168 hour test –Handbook release and approval targets Sept 12 th : Release draft of LFC Market Participant handbook to MP and TPTF Sept 20 th : TPTF comments expected Sept 25 th : Present at TPTF - Discussion on comments Oct 4 th : Forward Redline with disposition sheet to TPTF Oct 9 th : TPTF Vote on LFC Handbook –What do MPs need to do Review LFC handbook and provide comments before Thursday September 20 th. Email comments to EDS3@ercot.com Continue implementing EMS Nodal system changes to support LFC Preparation for involvement in LFC – R6.1 ACE calculation and Pre-condition Validation testing –What ERCOT is doing Continue systems implementation Develop detailed test procedure for LFC – R6.1 ACE calculation and Pre-condition Validation testing

16. Lead from the front Texas Nodal http://nodal.ercot.com 16 LFC EDS3-R6 – Questions? Discussion and Questions? EDS3@ercot.com