1. STANDARD & GENERIC COSTS FOR WOOD FIRED BIOMASS PLANTS H.BASARAN/B.CHAKKA AUSTIN ENERGY RCWG MEETING SEPTEMBER 21, 2012 1

2. BACKGROUND Austin Energy has a 20 year PPA to purchase 100-megawatt of output from the Nacogdoches Generating Facility, the largest U.S. biomass plant Per 5.6.1 (8), July 16, 2008 is the cut off date after which PPA data for verifiable costs cannot be used. This PPA was signed after the cut off. Nacogdoches plant is fueled by wood waste such as – Forest residue (thinnings / slash) – Mill residue (reject lumber, end cuts, sawdust / shavings) – Urban wood waste (clearing / trimming, pallets / packaging wood) Firm renewable resource – base load similar to coal or nuclear Current protocols do not have a category for wood fired biomass plants. ERCOT assigns this type of plant to an “other” category which has zero $ offer cap for startup and minimum energy. It results in ERCOT RUC’ing this unit due to it looking like the cheapest unit. AE has developed a draft NPRR to address this issue. 2

3. PROTOCOL SECTIONS REQUIRING REVISIONS 4.4.9.2.3 Startup Offer and Minimum-Energy Offer Generic Caps 4.4.9.3.3 Energy Offer Curve Caps for Make-Whole Calculation Purposes 7.9.1.3 Minimum and Maximum Resource Prices 5.6.1 Verifiable Costs 3

4. DRAFT NPRR DISCUSSION POINTS There is not much public data available for this type of plant. Wood fired biomass plants are base load. Draft NPRR has same values as Nuclear, Coal and Lignite currently in the protocols as a starting point. Report developed by California Energy Commission has some data for different type of Biomass plants (Slides # 7-10) Do we use different values for different sub categories of biomass plants or do we use only one average for all type of biomass plants? Plant in question is Biomass Combustion – Bubbling Fluidized Bed Boiler. 4

5. Proposed Standard Cost Values 5.6.1 Resource CategoryCold Startup ($/start) Intermediate Startup ($/start) Hot Startup ($/start) Variable O&M ($/MWh) Start Year = 2009 Nuclear, coal, lignite hydro and wood-fired biomass for 2012 5,760.004,320.002,160.004.02 Nuclear, coal, lignite hydro, and wood-fired biomass for 2013 and beyond 6,480.004,860.002,430.004.52 4.4.9.2.3 Generic Costs-Proposed Wind generation Resources0 Wood-fired biomass$7,200 Any Resources not defined above0 5

6. SANITY CHECK CA REPORT 2007 Variable O&M per mwh 2012 Escalation factor from ERCOT VC Template 2012 $3.81 mwh (Merchant)1.316$5.01 $3.97 mwh (IOU)1.316$5.22 $4.31 mwh (Public)1.316$5.67 Variable O&M $/mwh values from CA report are from base year 2007 and are above the proposed values for 2012 and 2013 when adjusted for inflation. 6

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11. QUESTIONS/COMMENTS 11