1. December 2, 2004 Congestion Causes and Effects Presented to WMS January 14, 2005 Beth Garza

2. BGarza / January 14, 2005 / WMS 2 Issue Statement Transmission Outages on Dec 2 & 3 lowered the NE-N CSC limit to a level where TCRs became very valuable and payments to TCR holders exceeded congestion payments by over $6 M which was uplifted through BENA

3. BGarza / January 14, 2005 / WMS 3 Topics to Cover Day Ahead Info Prices Transmission Outages BENA/Uplift effects TCR Auction vs. Day Ahead Limit Pre-controlling CSC limits

4. BGarza / January 14, 2005 / WMS 4 Transmission Limits to Be Monitored For: Thursday 12/02/2004 The maximum total loading on the following Zonal and Local Constraint monitored elements should be maintained. Local constraints will be resolved with Real Time Contingency Analysis Time South to North SDSES– TMPSW __ Potential IROL Northeast to North (Sum of 2 Farmerville - Royse) __Potential IROL South to Houston (Sum of 3 STP-DOW & STP-WAP) __ Potential IROL West to North Graham – Parker/ Benbrook __ Potential IROL North to Houston Gibbons Creek – O’Brien Jewett – T.H. Wharton Jewett – Tomball RNS – Kuykendahl __ Potential IROL 00:00- 06:00 840 400 16606002460 06:00 - 12:00 840 100 16606001670 12:00 - 23:00 840 100 16606001670 23:00 - 24:00 840 400 16606002460 Northeast => NorthLoss of single 345 kV circuit Collin-Carrolton results in overloading of Krugerville-Denton Arco 138 kV line Above Zonal limitations are based on the following:

5. BGarza / January 14, 2005 / WMS 5 Transmission Limits to Be Monitored For: Thursday 12/02/2004 REVISED [1] [1] The maximum total loading on the following Zonal and Local Constraint monitored elements should be maintained. Local constraints will be resolved with Real Time Contingency Analysis Time South to North SDSES– TMPSW __ Potential IROL Northeast to North (Sum of 2 Farmerville - Royse) __Potential IROL South to Houston (Sum of 3 STP-DOW & STP-WAP) __ Potential IROL West to North Graham – Parker/ Benbrook __ Potential IROL North to Houston Gibbons Creek – O’brien Jewett – T.H. Wharton Jewett – Tomball RNS – Kuykendahl __ Potential IROL 00:00- 06:00 840 400 16606002460 06:00 - 11:00 840 100 16606001670 11:00- 12:00 840 270 16606001670 12:00 - 23:00 840 270 16606001670 23:00 - 24:00 840 400 16606002460 Northeast => North Loss of single 345 kV circuit Collin-Carrilton results in overloading of Krugerville-Denton Arco 138 kV line [1] [1] Revision was made to reflect a change in online units from the day-ahead study.

6. BGarza / January 14, 2005 / WMS 6 December 2, 2004

7. BGarza / January 14, 2005 / WMS 7 Interval Ending MCPE Results 02-Dec-04NORTHSOUTHWESTHOUSTON NORTH EAST 3:15$76.43$14.08$74.69$41.15$77.32 3:30$86.55$8.12$84.37$42.17$87.68 3:45$72.89$19.33$71.40$42.58$73.66 4:00$76.93$25.80$75.51$48.00$77.67 4:15$54.15$30.68$53.50$40.87$54.49 4:30$51.12$35.28$50.68$42.16$51.35 4:45$89.06$9.07$86.84$43.80$90.21 5:00$442.54$5.50$369.84$194.39$9.10 5:15$101.73$2.50-$223.75$41.06-$2240.71 5:30$459.19-$198.33-$298.20$46.00-$299.00 5:45$459.19-$11.40-$298.20$73.15-$299.00 6:00$459.19$35.00-$298.20$73.15-$299.00 6:15$459.19-$20.00-$289.00-$872.20-$299.00 6:30$41.88 Balancing Energy Information for Market Day:2-Dec-04

8. BGarza / January 14, 2005 / WMS 8 Zonal Shift Factors for NE-N CSC The most effective combination to relieve NE-N congestion is to Balance Down in the NE / Up in the North. –41.31% impact West +0.23% North -5.51% NE +35.8% South -3.76% Hou -4.44% Zone Marginal Cost MW deployed Shift Factor on NE-N MW impactCost Northeast9.1-2.4235.80%-0.867($22) North442.542.42-5.51%-0.1331072 0$1049

9. BGarza / January 14, 2005 / WMS 9 Shadow price and Northeast MCPE calculation for December 2 / 05:15 Zone Marginal Cost MW deployed Shift Factor on NE-N MW impactCost Houston41.06107.34-4.44%-4.766$4407 West-223.75-6.750.23%-0.016$1510 South2.50-100.64-3.76%3.784($252) North101.73.05-5.51%-0.003$ 5 0$5670 Shadow Price Power balance is maintained while reducing flow on NE-N CSC Once Down Balancing in the Northeast is exhausted, the system looks to other zones MCPE for the Northeast is now determined from its relation to these costs MCPE z – MPCE NE = SP*(SF NE – SF z ) MCPE z – SP*(SF NE – SF z ) = MCPE NE = $2241

10. BGarza / January 14, 2005 / WMS 10 HourPriceMW HourPriceMW HourPriceMW 740270 5143661436714313 5137161371713356 512107612107712399 511143611143711441 510179610179710484 5921469 79527 5825068 78570 5727867 77592 5630666 76614 5533365 75637 5436164 74659 5338963 73681 5241762 72703 5144461 71726 5047260 70748 550065007770 5-2995056-2995057-299775 5-10005056-10005057-1000775 Aggregated Balancing Energy Down Bids Northeast Zone - December 2, 2004 Hour Generation Scheduled MW % Offered as DBES 5 2148 – 2222 22-23% 6 2482 – 2924 17-20% 7 3388 23%

11. BGarza / January 14, 2005 / WMS 11 Key Transmission Outages ElementRequestedStartEnd Olinger – Ben Davis /138kV10/1312/1 07:00 12/1 06:50 12/2 17:00 12/1 17:13 Olinger – Firwheel /138kV10/1312/3 07:00 12/3 06:50 12/4 17:00 12/4 17:23 Collin SES – Bridges /138kV Updated 11/12 11/23 11/15 00:15 11/20 08:03 12/3 12:00 12/4 20:00 Royse Switch CB_4620 Removes Royse SW – Allen SW /345kV 11/16 11/29 07:00 11/29 08:55 12/12 20:00 12/11 13:33 Dalrock Road – Rockwall Tap Rowlett Tap – Rowlett Rowlett Tap – Rockwall Rowlett Tap – Garland /138kV 11/2412/1 18:1512/15 19:00 Roanoke – West Denton /345kV Removes Denton AT 11/28 12/1 06:30 12/1 07:33 12/4 16:00 12/4 15:50 McKinney SW – McKinney White St McKinney SW – McKinney 11/2912/2 06:00 12/2 06:06 12/3 20:00 12/3 15:17/15:05 Forney Switch – Rockwall South / 138kV Cancelled 11/29 12/2 05:12 12/2 06:0012/9 19:00

12. BGarza / January 14, 2005 / WMS 12

13. BGarza / January 14, 2005 / WMS 13

14. BGarza / January 14, 2005 / WMS 14 Northeast - North 12/2/04 Interval endingLimitCSCI Shadow Price Zonal Congestion ChargeTCRs Payment to TCR holders Zonal Congestion Shortfall Collected Through BENA 3:009999474.47130$0.001851$0.00 3:159999477.16530$0.001851$0.00 3:309999473.21880$0.001851$0.00 3:459999460.95520$0.001851$0.00 4:009999439.380$0.001851$0.00 4:159999360.07790$0.001851$0.00 4:30610340.20080$0.001851$0.00 4:45590336.69250$0.001851$0.00 5:00530348.62491063.8$92,716.791851($492,273.45)($399,556.66) 5:15530446.25235670.4$632,607.261851($2,623,977.60)($1,991,370.34) 5:30500460.32591835.37$211,217.091851($849,317.47)($638,100.38) 5:45500463.96671835.37$212,887.641851($849,317.47)($636,429.83) 6:00525458.02231835.37$210,160.101851($849,317.47)($639,157.37) 6:15650828.78121835.37$380,280.041851($849,317.47)($469,037.43) 6:309999818.67160$0.001851$0.00 $1.7 million($6.5 million)($4.8 million)

15. BGarza / January 14, 2005 / WMS 15 Zonal Congestion Charge ($000) Payment to TCR Holders ($000) Zonal Congestion Shortfall Collected Through BENA ($000) Dec 2NE-N $1,740($6,514)($4,774) Dec 2S-N$156($245)($89) Dec 2Total$1,896($6,759)($4,863) Dec 3NE-N$1,589($3,155)($1,566) Dec 3S-N$337($585)($248) Dec 3Total$1,926($3,740)($1,814) 2 DayNE-N$3,329($9,669)($6,340) 2 Day Total$3,822($10,499)($6,677) Summary of 2 Day Congestion Costs

16. BGarza / January 14, 2005 / WMS 16 Daily CSC limits vs TCRs Annual TCRs include PCRs

17. BGarza / January 14, 2005 / WMS 17 Possible reasons for discrepancy between the Monthly TCR calculation and the Daily CSC limits calculation : Monthly TCR calculation occurs 45 days in advance –TSPs only required to submit outages 3 days in advance There were several line-ratings changes that occurred in November not considered in the monthly calculation No generator outages are considered in the monthly calculation No dynamic ratings are used in the monthly calculation Operations case vs. SSWG case Generators not adjusted individually in monthly calculation Overloads on lines with PTDF’s of less than 4.0% are ignored Settlement Adjustment consideration differences

18. BGarza / January 14, 2005 / WMS 18 December NE – N TCR Calculation with Actual Transmission Outages Line Outages: December TCR study included 33 line outages. 130 line and transformer outages actually occurred on December 2. Using a 5-day outage criteria, there were 67 line and transformer outages on December 2. Variables considered: Line Outages (All, 5-Day window) Updated Ratings (with and without the 11/12/2004 update) Normally, the limiting contingency is chosen by MUST. One case using the 5-day window outages was run using the contingency chosen by operations.

19. BGarza / January 14, 2005 / WMS 19

20. BGarza / January 14, 2005 / WMS 20 2.2.2OC1 Limits for Outage Support Step #Procedural Steps NOTE:If step 1.2 is required, use the MIS and post that ERCOT is controlling to a limit other than the one posted. Typical Script: The “CSC Name” limit will change to “MW Amount” at “Time”. ERCOT will start controlling to this limit in accordance with Section 2.2.2 of the Transmission Security Desk procedures. 1Adjust OC1 limits as required to support an outage. 1.1 If flow across a CSC is already below the limit required to support an outage, then it is permissible to wait and adjust the OC1 limit at the scheduled start time of the outage. 1.2 IF flow across a CSC is above the limit required to support an outage, then adjust the OC1 limits for intervals preceding the scheduled outage start time such that flow across the constraint is gradually reduced to at or below the limit required to support the specific outage.  While this action might result in over-constraining for a brief period, it is preferable to the negative effects of a sudden reduction in the OC1 limit. 2When a CSC limit changes, immediately change the limit in RTMONI. Record this event in the Transmission Security log. ERCOT Operating Procedure Manual Transmission & Security Desk Procedures Version 3 Rev 32 – December 20, 2004Page 11

21. BGarza / January 14, 2005 / WMS 21 Additional background slides

22. BGarza / January 14, 2005 / WMS 22 Transmission Limits to Be Monitored For: Wednesday 12/01/2004 The maximum total loading on the following Zonal and Local Constraint monitored elements should be maintained. Local constraints will be resolved with Real Time Contingency Analysis Time South to North SDSES– TMPSW __ Potential IROL Northeast to North (Sum of 2 Farmerville - Royse) Potential IROL South to Houston (Sum of 3 STP-DOW & STP-WAP) __ Potential IROL West to North Graham – Parker/ Benbrook __ Potential IROL North to Houston Gibbons Creek – O’Brien Jewett – T.H. Wharton Jewett – Tomball RNS – Kuykendahl __ Potential IROL 00:00- 08:00 830 520 18406002200 08:00 - 12:00 830 520 18406001900 12:00 - 18:00 830 520 18406001900 18:00 - 24:00 830 520 18406002200 South => North Loss of Double Austrop-Sandow 345 kV circuit overloads Austrop Auto. Northeast => North Base case activation of an SPS (ALNSW-BNDVS) and post-contingency overload of Collin- Frisco 138 kV line on the forced outage of Carrollton-Collin 345 kV. South => Houston Loss of Dbl STP – DOW 345kV Lines loads Blessing – Lane City. West => North Loss of MGSES - SWCOG loads multiple underlying 69kV lines. North=> Houston Loss of Double circuit Gibbons Creek-Twin Oak overloads Jewet-Watson Chapel Above Zonal limitations are based on the following:

23. BGarza / January 14, 2005 / WMS 23 Transmission Limits to Be Monitored For: Friday 12/03/2004 The maximum total loading on the following Zonal and Local Constraint monitored elements should be maintained. Local constraints will be resolved with Real Time Contingency Analysis Time South to North SDSES– TMPSW __ Potential IROL Northeast to North (Sum of 2 Farmerville - Royse) Potential IROL South to Houston (Sum of 3 STP-DOW & STP-WAP) __ Potential IROL West to North Graham – Parker/ Benbrook __ Potential IROL North to Houston Gibbons Creek – O’brien Jewett – T.H. Wharton Jewett – Tomball RNS – Kuykendahl __ Potential IROL 00:00- 06:00 840 650 19906002100 06:00 - 12:00 840 300 19906002100 12:00 - 23:00 840 300 19906002100 23:00 - 24:00 840 650 19906002100 South => North Loss of Double Sandow – Temple 345kV lines overloads Sandow – Rogers 138kV Line. Northeast => North Base case activation of NE SPS Allen Switch – Ben Davis above trigger point. Offpeak – outage of NW Carrillton-Collin overloads Krugerville-Denton Arco & South => Houston Loss of Double Sandow – Temple 345kV lines overloads Sandow – Rogers 138kV Line. West => North Loss of MGSES - SWCOG loads multiple underlying 69kV lines. North=> Houston Loss of Double circuit GIBBON CRK - O’BRIEN & - ROANS PRAIRIE results in overload of 345kv line Jewett –T.H. Wharton. Above Zonal limitations are based on the following:

24. BGarza / January 14, 2005 / WMS 24 Transmission Limits to Be Monitored For: Saturday 12/04/2004 The maximum total loading on the following Zonal and Local Constraint monitored elements should be maintained. Local constraints will be resolved with Real Time Contingency Analysis Time South to North SDSES– TMPSW __ Potential IROL Northeast to North (Sum of 2 Farmerville - Royse) Potential IROL South to Houston (Sum of 3 STP-DOW & STP-WAP) __ Potential IROL West to North Graham – Parker/ Benbrook __ Potential IROL North to Houston Gibbons Creek – O’brien Jewett – T.H. Wharton Jewett – Tomball RNS – Kuykendahl __ Potential IROL 00:00- 07:00 830 1190 20906002220 07:00 - 12:00 830 1190 20906002150 12:00 - 16:30 830 1190 20906002150 16:30 - 24:00 830 1190 20906002220 South => North Loss of Double Sandow – Temple 345kV lines overloads Sandow – Rogers 138kV Line. Northeast => North Loss of NW Carrollton-Collin 345 kV overloads Collin – Frisco 138 kV (Adjusted Forney Generation for overload of Royse – Ben Davis 345 kV) South => Houston Loss of Dbl STP – Dow 345 kV overloads Waller – Prairie View 138 kV West => North Loss of MGSES - SWCOG loads multiple underlying 69kV lines. North=> Houston Loss of Double circuit GIBBON CRK - O’BRIEN & - ROANS PRAIRIE results in overload of 345kv line Jewett –T.H. Wharton. (07:00 – 16:30) Loss of Dbl THW-Jewett / Obrien—Gibbons Creek 345 kV overloads Waller – Prairie View 138 kV (00:00 – 07:00 and 16:30 –24:00) Above Zonal limitations are based on the following:

25. BGarza / January 14, 2005 / WMS 25 Northeast DBES Bids December 2, 2004

26. BGarza / January 14, 2005 / WMS 26 December 2, 2004

27. BGarza / January 14, 2005 / WMS 27 Interval Ending BES Deployments (MW) 02-Dec-04NORTHSOUTHWESTHOUSTON NORTH EAST 3:15222-382476570 3:30355-409478480 3:45336-365478870 4:00336-340479430 4:15309-348831770 4:30264-345953840 4:45469-4081976370 5:00582-4795311022-215 5:15986-87468150-501 5:301319-1316-14579-505 5:451372-1462-74883-505 6:001424-974-74883-505 6:151802-2028-216-741-675 6:300-84283-60-274 Balancing Energy Information for Market Day:2-Dec-04

28. BGarza / January 14, 2005 / WMS 28 Net Balancing Energy Deployed December 2, 2004

29. BGarza / January 14, 2005 / WMS 29 South - North 12/2/04 Interval endingLimitCSCI Shadow Price Zonal Congestion ChargeTCRs Payment to TCR holders Zonal Congestion shortfall collected through BENA 3:009999296.13460$0.00513$0.00 3:15399319.0686152.07$12,130.19513($19,502.98)($7,372.79) 3:30380319.0061191.31$15,257.26513($24,535.51)($9,278.24) 3:45380316.4442130.64$10,335.07513($16,754.58)($6,419.51) 4:00400314.0429124.72$9,791.86513($15,995.34)($6,203.48) 4:15400342.653257.23$4,902.51513($7,339.75)($2,437.24) 4:30410340.218538.63$3,285.66513($4,954.30)($1,668.64) 4:45390336.5086195.11$16,414.05513($25,022.86)($8,608.81) 5:00370328.4661020.52$83,801.53513($130,881.69)($47,080.16) 5:15370497.0310$0.00513$0.00 5:30400484.78680$0.00513$0.00 5:45450469.64840$0.00513$0.00 6:00450450.86540$0.00513$0.00 6:159999402.56510$0.00513$0.00 6:309999388.36980$0.00513$0.00 $155,918.13($244,987.00)($89,068.87)

30. BGarza / January 14, 2005 / WMS 30 2004 AuctionTotal RevenuesW-NS-NS-HN-HE-N Annual $18,266,528.01$493,362.14$5,066,699.92$6,597,486.72$2,901,444.53$3,207,534.70 January$839,550.13$20,811.54$209,008.81$213,698.58$129,084.00$266,947.20 February$577,990.44$11,575.37$168,512.91$174,072.73$0.00$223,829.42 March $1,284,884.09$65,498.78$0.00$352,844.98$0.00$866,540.33 April$1,540,363.60$30,344.68$108,543.84$508,367.15$149,114.49$743,993.45 May$2,028,690.98$12,547.77$295,080.89$553,266.67$24,362.14$1,143,433.51 June$1,405,099.01$24,356.51$301,527.36$963,827.41$84,200.76$31,186.97 July$2,827,311.04$24,918.17$671,374.55$1,432,122.62$568,917.83$129,977.87 August$1,693,186.18$45,083.16$312,693.16$814,746.34$383,068.33$137,595.19 September$731,937.19$20,959.56$0.00$546,395.03$164,582.60$0.00 October$1,064,492.31$23,388.25$0.00$828,435.16$176,275.99$36,392.91 November$1,221,575.75$41,726.70$0.00$777,077.68$284,077.81$118,693.56 December$1,036,694.42$39,793.29$127,649.53$575,084.70$253,623.19$40,543.72 Total$34,518,303.16$854,365.92$7,261,090.96$14,337,425.77$5,118,751.68$6,946,668.83 2004 ERCOT TCR Auctions Year to Date Revenues

31. BGarza / January 14, 2005 / WMS 31 Daily CSC limits vs TCRs Annual TCRs include PCRs