1. ERCOT Pilot Project for Fast Responding Regulation Service (FRRS) August 8, 2012 PDCWG August 9, 2012 ETWG/QMWG

2. 2 Agenda 1.Previously, we presented (previous presentation available as an appendix at the end) Purpose of Pilot Program Purpose of FRRS FRRS Qualification and Performance Criteria (for pilot project) 2.What is FRRS? 3.Use of FRRS for frequency regulation 4.Use of FRRS to help arrest sudden frequency decay caused by large unit trips 5.FRRS qualification and performance criteria 6.Examples of deployments concept and variables subject to change 7.How will FRRS be procured (priced and paid for) in the Pilot? 8.Implementation Schedule for the Pilot 9.Questions ERCOT Public

3. 3 What is Fast Responding Regulation Service (FRRS)? 1.FRRS is intended to complement current regulation service 2.FRRS can be ramped to its full output within 60 cycles 3.FRRS is intended to respond first and help slow down the frequency decay while other resources starts to respond 4.FRRS is intended to respond to large frequency drops to promptly help arrest the frequency decay 5.California ISO, New York ISO, PJM, ISO New England and MISO will have or already has Fast Responding regulation. ERCOT Public

4. 4 Example: FRRS Deployment Logic and Expected Impact Deploy current Reg-Down Recall Reg-Down and Deploy Reg-Up Deploy FRRS-Up

5. 5 ERCOT Public Simulation: Effect of FRRS on sudden large Frequency decay FRRS-Up Full Deployment with 1 second delay after 59.91 Hz

6. 6 FRRS-pilot Qualification Criteria 1.Resources providing FRRS must be able to follow FRRS signal 2.Resources requesting FRRS-up qualification a)Must be able to respond to large frequency decay triggered by loss of generation. b)Resources providing FRRS must provide full MW response within 60 cycles after frequency hits 59.91 Hz trigger. c)This capability must be demonstrated by the Resource Entity using high speed Frequency and MW data with resolution no less than 32 samples per second. d)For the purpose of demonstration, the Resource Entity may use off-set of -0.2 Hz to demonstrate the MW response. ERCOT Public

7. 7 Pilot FRRS Qualification Criteria (continued) 3.Resources requesting FRRS-down qualification a)Must be able to respond to high frequency. b)Resources providing FRRS must provide full MW response within 60 cycles after frequency hits 60.09 Hz trigger. c)This capability must be demonstrated by the Resource Entity using high speed Frequency and MW data with resolution no less than 32 samples per second. d)For the purpose of demonstration, the Resource Entity may use off-set of +0.2 Hz to demonstrate the MW response. 4.Resources providing FRRS (Up and Down) must be able to continuously remain deployed for up to 8 minutes with 95% or more of the requested MW for successful qualification. 5.Resources that successfully demonstrate the requirement above will be qualified as FRRS capable Resources for the capacity that was requested for qualification. ERCOT Public

8. 8 FRRS Performance Criteria Resources providing Fast Responding Regulation Service shall meet the following performance criteria 1.MW response provided by Resources carrying FRRS in response to ERCOT FRRS signal shall be at least 95% and less than 110 % of the ERCOT deployment instruction for that Resource. 2.Resources must meet the requirement stated in (1) for 95% of all deployments within a month. 3.When FRRS-up is not fully deployed, for sudden frequency decay where frequency declines lower than 59.91 Hz, Resources providing FRRS-up shall within 60 cycles appropriately respond to the declining frequency. 4.When FRRS-down is not fully deployed, for sudden frequency deviation that may cause frequency to exceed 60.09 Hz, Resources providing FRRS-down shall within 60 cycles appropriately respond to frequency. 5.FRRS Resource must provide high speed data with resolution no less than 32 samples per second to demonstrate their performance for (3) and (4) above. ERCOT will also review randomly selected deployments during deviations of lower magnitude to verify compliance. 6.Failure to meet the requirement in paragraph (2) will lead to reduction in capacity payment ERCOT Public

9. 9 FRRS Deployment logic and Parameters 1.During the FRRS pilot, some of the FRRS deployment parameters listed below are subject to change within the defined range 2.Initial trigger limit may be lowered up to 59.98 Hz 3.Initial FRRS MW deployment may be changed 4.Duration of FRRS deployment may be lowered from current 2 minutes duration for any single band deployment 5.FRRS deployments may be done proportionally over increments of 0.01 Hz or 0.005 Hz between 59.98 Hz and 59.95 Hz. ERCOT Public

10. 10 Scenario 1: Frequency below 59.97 Hz Meeting Title (optional)Date

11. 11 Scenario 2: Frequency below 59.95 Hz Meeting Title (optional)Date

12. 12 Scenario 3: Frequency below 59.91 Hz (on slow decline) Meeting Title (optional)Date

13. 13 Scenario 4: Frequency below 59.91 Hz (Unit trip) Meeting Title (optional)Date

14. 14 Meeting Title (optional)Date FRRS-Up Recall (Always based on duration or frequency)

15. 15 How is FRRS Procured during the Pilot? 1.FRRS-up and FRRS-down amounts are specified in advance for each hour. For the pilot, ERCOT will procure up to 65 MW per hour for FRRS-up and will procure up to 35 MW per hour for FRRS-down. No changes are made to the existing REGUP and REGDN requirements. 2.ERCOT has a list of “Qualified” FRRS Pilot Resources. Each Wednesday QSEs inform ERCOT of the amounts available for Saturday through Friday. 3.ERCOT prorates amounts to Pilot Resources as necessary. Final quantities sent to QSEs (for the upcoming week). 4.COPs for Pilot Resources shall reflect the final schedule as REGUP and REGDN. ERCOT Public

16. 16 How is FRRS is Priced and Paid for during the Pilot? 1.ERCOT Settlements performs settlement by creating appropriate SASM data cuts. Current REGUP and REGDN bill determinants are used. A SASM is NOT executed by the operators. 2.DAM clearing prices shall be used to price the FRRS awards. 3.The cost for pilot MWs procured are paid for similar to other AS. 4.Adjustments can be made depending on actual availability and performance. ERCOT Public

17. 17 Pilot Schedule 1.Present updated power point presentation at WMS, ROS, PDC and ETWG in August. (Review ERCOT’s response to submitted questions and comments.) [WMS 14 th, ROS 15 th ] 2.ERCOT to post draft Governing Document - mid August. 3.Comments on Draft Governing Document due a week from posting 4.Post updated Governing Document 8-30-12 (7 days before TAC meeting) 5.ERCOT presents Pilot Project to TAC at 9/6/12 TAC meeting. 6.Request approval for Pilot at the 9/18/12 BOD meeting. 7.Qualify Pilot Resources 9/18/12 through 4/30/13 (end of pilot). [6 month Pilot] 8.Begin procurements with Operating Day 11-1-12. Continue for 6 months unless stopped early by ERCOT. Extensions of pilot may be considered during first 6 months. ERCOT Public

18. 18 Other Info 1.Regular updates to be provided to TAC/ETWG/PDCWG during Pilot Project. 2.It is expected that ERCOT will need to engage a contractor equivalent to.5 to 1 FTE for the duration of the Pilot Project. 3. The average cost for REGUP over the last 6 months has been about $9/MW and for REGDN has been about $6/MW. The estimated cost for 6 months of FRRS procurement from pilot resources is estimated to be about $3.4 Million. ERCOT Public

19. 19 Questions? Please send suggestions and comments to Pilotprojects@ercot.com Pilotprojects@ercot.com ERCOT Public

20. 20 Appendix June 2012 Presentation at WMS/ROS/ETWG/PDCWG ERCOT Public

21. ERCOT Pilot Project for Fast Responding Regulation Service (FRRS) June 13, 2012 WMS and June 14, 2012 ROS

22. 22 Agenda 1.Declining Grid Inertia of ERCOT Interconnection 2.ERCOT Frequency Profile Jan 2011 through Feb-2012 ERCOT Frequency Profile – 4 second data ERCOT CPS1 Score 3.Qualifications and Performance Criteria 4.Purpose of FRRS Pilot Program What is FRRS? Why do we need it? 5.Fast Regulation Deployment Logic Fast regulation to complement the traditional regulation 6.Expected benefits of Fast Responding Regulation 7.How will FRRS be procured (priced and paid for) in the Pilot? 8.Implementation Schedule for the Pilot 9.Questions ERCOT Public

23. 23 Declining Inertial Frequency Response in ERCOT ERCOT Public http://www.ercot.com/content/gridinfo/etts/keydocs/System_Inertial_Frequency_Response_Estimation _and_Impact_of_.pdf

24. 24 ERCOT Public ERCOT Frequency Profile Jan 2011 through Feb-2012

25. 25 ERCOT Public

26. 26 Pilot FRRS Qualification Criteria 1.Resources providing FRRS must be able to follow FRRS signal 2.Resources requesting FRRS-up qualification a)Must be able to respond to large frequency decay triggered by loss of generation. b)Resources providing FRRS must provide full MW response within 60 cycles after frequency hits 59.91 Hz trigger. c)This capability must be demonstrated by the Resource Entity using high speed Frequency and MW data with resolution no less than 32 samples per second. d)For the purpose of demonstration, the Resource Entity may use off-set of -0.2 Hz to demonstrate the MW response. ERCOT Public

27. 27 Pilot FRRS Qualification Criteria (continued) 3.Resources requesting FRRS-down qualification a)Must be able to respond to high frequency. b)Resources providing FRRS must provide full MW response within 60 cycles after frequency hits 60.09 Hz trigger. c)This capability must be demonstrated by the Resource Entity using high speed Frequency and MW data with resolution no less than 32 samples per second. d)For the purpose of demonstration, the Resource Entity may use off-set of +0.2 Hz to demonstrate the MW response. 4.Resources providing FRRS (Up and Down) must be able to continuously remain deployed for up to 8 minutes with 95% or more of the requested MW for successful qualification. 5.Resources that successfully demonstrate the requirement above will be qualified as FRRS capable Resources for the capacity that was requested for qualification. ERCOT Public

28. 28 FRRS Performance Criteria Resources providing Fast Responding Regulation Service shall meet the following performance criteria 1.MW response provided by Resources carrying FRRS in response to ERCOT FRRS signal shall be at least 95% and less than 110 % of the ERCOT deployment instruction for that Resource. 2.Resources must meet the requirement stated in (1) for 95% of all deployments within a month. 3.When FRRS-up is not fully deployed, for sudden frequency decay where frequency declines lower than 59.91 Hz, Resources providing FRRS-up shall immediately and appropriately respond to the declining frequency. 4.When FRRS-down is not fully deployed, for sudden frequency deviation that may cause frequency to exceed 60.09 Hz, Resources providing FRRS-down shall immediately and appropriately respond to frequency. 5.Failure to meet the requirement (2) will lead to reduction in capacity payment. ERCOT Public

29. 29 Purpose of the FRRS pilot program 1.Gather and analyze data to assist in determining the potential improvements in ERCOTs ability to arrest frequency decay during unit trips due to the presence of FRRS 2.Gather and analyze data to assist in determining the potential reductions of current regulation that would be appropriate due to the presence of FRRS 3.Assess the operational benefit and challenges of procuring and deploying FRRS 4.Gather and analyze data to assist ERCOT in developing settlement methodologies for FRRS and current regulation that use a pay for performance approach similar to what is specified in FERC Order 755; ERCOT Public

30. 30 FRRS-Up and FRRS-Down Deployment Logic Deadband for FRRS trigger (±0.03 Hz) Deployment period Deployment period when frequency degrades further Recalling Maximum continuous deployment duration Apply similar logic for Down-Regulation for high frequency ERCOT may make additional parameter changes during pilot as needed FRRS deployment signal logic will be shared with the pilot Resources ERCOT Public

31. 31 ERCOT Public

32. 32 Frequency Decay Slope ERCOT Public

33. 33 Potential benefits of FRRS 1.Promptly arrest frequency decay during unit trips 2.Diminishing use of traditional regulation 3.Reduction in Regulation capacity procurement 4.Better frequency control at a lower overall cost ERCOT Public

34. 34 How is FRRS Procured during the Pilot? 1.FRRS-up and FRRS-down amounts are specified in advance for each hour. For the pilot, ERCOT will procure up to 65 MW per hour for FRRS-up and will procure up to 35 MW per hour for FRRS-down. No changes are made to the existing REGUP and REGDN requirements. 2.ERCOT has a list of “Qualified” FRRS Pilot Resources. Each Wednesday QSEs inform ERCOT of the amounts available for Saturday through Friday. 3.ERCOT prorates amounts to Pilot Resources as necessary. Final quantities sent to QSEs (for the upcoming week). 4.COPs for Pilot Resources shall reflect the final schedule as REGUP and REGDN. ERCOT Public

35. 35 How is FRRS is Priced and Paid for during the Pilot? 1.ERCOT Settlements performs settlement by creating appropriate SASM data cuts. Current REGUP and REGDN bill determinants are used. A SASM is NOT executed by the operators. 2.DAM clearing prices shall be used to price the FRRS awards. 3.The cost for pilot MWs procured are paid for similar to other AS. 4.Adjustments can be made depending on actual availability and performance. ERCOT Public

36. 36 Pilot Schedule 1.Power point presentations at WMS, ROS and ETWG in June and July. 2.Suggestions and comments due to ERCOT 6-27-12 3.ERCOT plans to present updates at July WMS and ROS meetings (7/11 and 7/12). 4.Draft Governing Document to be posted by 7-26-12. (7 days before TAC) 5.ERCOT plans to present at 8/2/12 TAC meeting. 6.Request approval for Pilot at the 9/18/12 BOD meeting. 7.Qualify Pilot Resources 9/18/12 through 4/30/13 (end of pilot). [6 month Pilot] 8.Begin procurements with Operating Day 11-1-12. Continue for 6 months unless stopped early by ERCOT. Extensions of pilot may be considered during first 6 months. ERCOT Public

37. 37 Other Info 1.Regular updates to be provided to TAC during Pilot Project. 2.It is expected that ERCOT will need to engage a contractor equivalent to.5 to 1 FTE for the duration of the Pilot Project. 3. The average cost for REGUP over the last 6 months has been about $9/MW and for REGDN has been about $6/MW. The estimated cost for 6 months of FRRS procurement from pilot resources is estimated to be about $3.4 Million. ERCOT Public

38. 38 Questions? Please send suggestions and comments to WMS or ROS exploder or ssharma@ercot.com kragsdale@ercot.com before COB 6-27-12ssharma@ercot.com kragsdale@ercot.com ERCOT Public