1. Long Term Study Task Force Update ERCOT Long-Term Study Scenarios January 13, 2012

2. Introduction The Long Term Study Task Force has been discussing scenarios since August, 2010. –Some potential scenarios were proposed by ERCOT staff. –Some were discussed in the context of a matrix of scenarios developed with stakeholders input. We would like to focus on scenarios that are likely to display different transmission system needs Now is the time to finalize our scenario decisions, and we need your assistance. January 13, 2012 2

3. Current Scenarios and Status Business as Usual (BAU) Scenario –Resource Expansion (based on economic analysis) – DONE –Analysis of transmission needs for system reliability – DONE –Analysis of economic transmission projects – In Progress BAU with Production Tax Credit (PTC) –Resource Expansion (based on economic analysis) – First Cut completed –We will not pursue further until we have new operational reliability tools available Draft RFP is discussed in another presentation today January 13, 2012 3

4. Extreme Drought Scenario January 13, 2012 ERCOT is working with Sandia National Labs to develop a scenario that reflects the impact of a prolonged drought Sandia is anticipating having a final list of potential resources at risk by June 2012 We are also working with Sandia to reflect impacts to system load from drought conditions in this scenario 4

5. Renewable Resources Scenario To bound the analysis of potential grid impacts from future resources, we would like to include a scenario with a significant build-out of renewable resources. Expansion of renewable resources would likely result from: –Continuation of Production Tax Credit –Higher natural gas prices –National CO 2 tax –Renewable Portfolio Standards (RPS) (state or national) –or a combination of these or other factors. Thoughts/opinions? ERCOT staff will incorporate stakeholder input, develop a proposal for this scenario and send to the LTSTF email list for comments. January 13, 2012 5

6. Additional Scenarios ERCOT is working with the Demand-Side Working Group (DSWG) and the Emerging Technologies Working Group (ETWG) to develop one or two scenarios with a significant build-out of other system resources, including: –Demand response –Energy efficiency –Distributed generation –Energy storage (Compressed Air Energy Storage, pumped storage, batteries, etc.) –If you want to participate in these scenario developments, please attend the next meetings of DSWG and ETWG (both on January 27) In addition to these scenarios, ERCOT will continue to work with stakeholders to develop sensitivities (changing one input assumption in any given scenario) for further analysis. ERCOT will work with transmission owners to develop sensitivities that will indicate potential costs and benefits of using emerging transmission technologies to meet system needs. January 13, 2012 6

7. QUESTIONS? QUESTIONS/COMMENTS? January 13, 2012 7