1. ERCOT Ancillary Services Workshop

2. Legal Disclaimers and Admonitions ANTITRUST ADMONITION ERCOT strictly prohibits market participants and their employees, who are participating in ERCOT activities, from using their participation in ERCOT activities as a forum for engaging in practices or communications that violate antitrust laws. The ERCOT Board has approved Guidelines for Members of ERCOT Committees, subcommittees, and working Groups to be reviewed and followed by each market participant attending ERCOT meetings. If you have not received a copy of these Guidelines, please take one now, review it at this time, and remember your ongoing obligation to comply with all applicable laws, including antitrust laws.Guidelines for Members 2

3. Legal Disclaimers and Admonitions PROTOCOL DISCLAIMER This presentation provides a general overview of the Texas Nodal Market Implementation and is not intended to be a substitute for the ERCOT Nodal Protocols (available at http://nodal.ercot.com/protocols/index.html), as amended from time to time. If any conflict exists between this presentation and the ERCOT Nodal Protocols, the ERCOT Nodal Protocols shall control in all respects.http://nodal.ercot.com/protocols/index.html The presentation materials, including any statements by ERCOT, its employees or contractors is intended for the general education of its audience and should not be considered a recommendation of ERCOT, its employees or contractors of any particular operating strategy or statement of fact. All Market Participants and public consultants assisting Market Participants are encouraged to read and understand the approved protocols, ERCOT operating guides, interface and communication guides and any other ERCOT procedures which may be applicable to the topics presented.. 3

4. Target Audience This presentation is intended for: Market Participants who intend to provide Ancillary Services to ERCOT for use in managing the reliability of the ERCOT System Including: System Operators Traders QSE Operators Resource Entities TSPs Load Serving Entities 4

5. Objectives Using the information in this presentation… …you will be able to Understand the Ancillary Services (AS) ERCOT uses in the Nodal Market Offer Ancillary Services in the Day Ahead Market Manage AS Resource Responsibility in Real Time Monitor System Reserve Postings in ERCOT Respond to requests to deploy AS Capacity Qualify Resources to provide Ancillary Services Understand the two types of performance measures for providers of Ancillary Services 5

6. Agenda TOPICPresenterTIME Overview: Ancillary ServicesFloyd Trefny9:30 am Market Notices and ReportsJake Jacobs9:40 am Day-Ahead MarketJake Jacobs9:50 am COP & AS AllocationJake Jacobs10:45 am Ancillary Services in RUC ProcessesJake Jacobs11:00 am Managing AS Resource ResponsibilityDavid Maggio11:15 am Supplemental AS MarketsMark Patterson11:40 am LUNCH12:00 pm Monitoring AS Reserve Postings in ERCOTFloyd Trefny1:00 pm DeploymentMark Patterson1:20 pm Ancillary Services QualificationMark Patterson2:15 pm Ancillary Service Capacity Performance MeasuresDavid Maggio2:45 pm Ancillary Services Energy Deployment PerformanceDavid Maggio3:00 pm Wrap UpFloyd Trefny3:45 pm 6

7. Introduction: Ancillary Services Floyd Trefny

8. Introduction: Ancillary Services Nodal Ancillary Services A service necessary to support the transmission of energy to Loads while maintaining reliable operation of the Transmission Service Provider’s (TSP’s) transmission system using Good Utility Practice Regulation Up Regulation Down Responsive Reserve Non-Spin Reserve Voltage Support Services Black Start Service* 8 May be Self Provided, traded with other QSEs, or purchased in Day Ahead Market May be provided by Generation or Qualified Load Resources Purchased by ERCOT and uplifted to all Load *- not covered in this presentation

9. Introduction: Ancillary Services Regulation Up and Down Five Minute Service to increase or decrease energy production in response to control signals from ERCOT provided every 4 seconds Used to manage changes in system frequency On receipt of a new SCED Base Point, the energy deployment resets to the current actual generation or load being consumed DEFINITION 9

10. Introduction: Ancillary Services Reserve Services Provides capacity reserves to ERCOT to use during shortages; energy dispatched by SCED or automatic action Responsive Reserve (RRS) Ten minute reserve product Arrest frequency decay using governor response and interruptible Load Must be provided by on-line Generation or Load Resources Non-Spin Reserve (Non-Spin) Thirty minute reserve product Provided by both on-line generation or load and by off-line generation such as fast start Gas Turbines 10

11. Introduction: Ancillary Services Voltage Support Services (VSS) Used to maintain transmission and distribution voltages on the ERCOT Transmission Grid within acceptable limits All Generation Resources greater than 20 MVA injection to the Grid must provide VSS Generation* must provide sufficient reactive power (up to 0.95 power factor) at max generation to meet Voltage Profile set by ERCOT; Establishes the Generator Unit Reactive Limit (URL) If ERCOT issues a Verbal Dispatch Instruction (VDI) to reduce generation output to facilitate increases beyond the URL, then the Generator may be eligible for additional lost opportunity payments *- some exceptions for Renewable Generation DEFINITION 11

12. Introduction: Ancillary Services QSE Settlements for Ancillary Services Providers Paid the MCPC of the DAM/SASM Amount determined by DAM/SASM Awards, Trade Obligations QSEs that fail to provide will be charged the max of DAM or SASM clearing prices Loads Charged a calculated price based on total payments to providers of the DAM/SASM Amount determined by AS Obligation less self provision Trades for AS considered as part of self-provision 12

13. 6:00 AM Market Notices and Reports Jake Jacobs

14. Day-Ahead Market Postings By 0600 ERCOT publishes Ancillary Services (AS) Plan for the next Operating Day Load Ratio Share (LRS) from 14 days prior QSE AS Obligations (AS Plan * LRS) Percentage Load Resources allowed to provide RRS ERCOT also publishes: –Wind Forecasts and Production Potential – used by QSEs to estimate COP Resource limits for Wind Generation Resources –ERCOT System, Weather Zone, and Load Zone Load forecasts, by hour for the next seven days –Weather assumptions used by ERCOT to forecast ERCOT System conditions and Dynamic Ratings –Any weather-related changes to the transmission contingency list; –List of transmission constraints that have a high probability of binding in SCED or DAM –Competitive Constraints –Redacted Network Operations Model –Network Operations Model (not redacted) for TSPs –Differences between Redacted Network Operations Model and the previous day’s Model –Names and parameters of all Transmission Elements to Market Participants –Load forecast Electrical Bus distribution factors by hour for the next seven days; –Load Profiles for non-Interval metered Customers; –Distribution Loss Factors (DLFs) and forecasted ERCOT-wide Transmission Loss –Transmission Loss Factors (TLFs) for each Settlement Interval of the Operating Day; –List of all Settlement Points –Mapping of Settlement Points to Electrical Buses –Shift Factors by Resource Node 14

15. Day-Ahead Market Postings More information On AS Plan Calculation Regulation- 98.8 percentile of the amounts of deployed regulation up/down During initial Nodal Operations, use adjusted historical requirements May be different for each hour of the day Non-Spin 95th percentile of the observed hourly Net Load uncertainty from the previous 30 days from when the study is performed and from the same month of the previous year Responsive Reserve Minimum RRS requirement at 2300MW for all hours, can be increased according to hourly forecast temperatures Load Resources procured fro RRS for any hour limited to 50% or less if specified by ERCOT 15

16. Day-Ahead Market Jake Jacobs

17. Day-Ahead Market DAM is: Financial market for Energy, Ancillary Services(AS), and CRRs Voluntary market for Energy and CRRs ERCOT requires and procures Ancillary Services in DAM to meet daily AS Plan DAM solution co-optimized between Energy, Ancillary Services, and CRRs 17

18. Day-Ahead Market All Day-Ahead Transactions QSE submissions before 10 AM AS Self-Arrangement Three-part Supply Offer AS Offer Energy-Only Offers and Bids Congestion Revenue Rights (CRR) Offer Point-to-Point Obligation Bid Trades (can be made during the Adjustment Period) Capacity Trade AS Capacity Trade Current Operating Plan Establishes LSL/HSL for use in DAM Awards 18

19. AS-related transactions by 10am AS Self-Arrangement submitted to ERCOT by QSE Sum of trades (purchased) and self-arranged from QSE Gen Separate for Load Resources and Generation Resources ERCOT procures amount needed in AS Plan requirement for each hour (Requirement – Self Arrangement = ERCOT Procured amount) If self -arrangement is greater than the QSE obligation, then all self- arranged submissions are canceled 19

20. Day-Ahead Market Three-part Supply Offer Inclusive: both energy and ancillary services can be cleared simultaneously Exclusive: either the energy can be cleared or ancillary services can be cleared, but not both 20

21. Day-Ahead Market AS Offers On-Line Resources can be offered simultaneously (Reg-up, RRS, Non-Spin) Reg-Down and Of-Line Non-Spin are individually offered Fixed/Variable Quantity Block - Load Resources: Generators are only Variable Multi-hour - Offer cleared for all hours of the multi-hour block or not cleared at all 21

22. Day-Ahead Market AS Trade Subject to validation and confirmation process Stored as individual one hour trades AS type is specified Specify Load Resource on UFR, Controllable Load Resource or Generation Resource 22

23. Day-Ahead Market = ERCOT AS Plan * QSE Load Ratio Share QSE AS Obligation in DAM = QSE AS Obligation - Self-Arranged AS submitted AS amount ERCOT buys in DAM for QSE = ERCOT AS Plan - SUM of Self- Arranged AS Submitted by QSEs Total AS ERCOT buys In DAM from AS Offers 23

24. Day-Ahead Market Clearing Process – Co-optimization DAM simultaneously clears Energy Offers and Bids, AS Offers, and CRR Offers/Point to Point (PTP) Obligation Bids. DAM Clearing Engine Co-Optimization Energy Offers/Bids AS Offers Resource and Network Constraints Energy Awards AS Awards CRR Offers/ PTP Bids CRR/PTP Awards 24

25. Co-Optimization of Ancillary Services 25 Assumptions Generation Resources Offer Curves (below) Total Energy Bid = 250 Mw AS Offers = Gen A - $10.00/Mw, Gen B - $10.00/Mw; Gen C - $5.00/Mw; maximum offered 20 Mw each gen AS Required = 25 Mw Ramp rates not considered Solution Awards Gen C - 100 energy; AS = 0 Gen A - 55 energy; AS= 20 Mw Gen B - 95 energy; AS= 5 Mw How/ Why? Gen C must be 100 energy award since it is the lowest price for energy by more than ∆ in AS offers Gen A awarded 55 energy; AS= 20, AS = 20% HSL Gen B awarded balance of energy 95 Mw lowest price and AS same price as Gen A; AS= 5 Mw 140 100 $/ Mw Mw 100 20 Gen A Gen B Gen C Energy Offer Curves 20 60 Example for only one hour, actual co-optimization occurs over all Day-Ahead Hours

26. Load Resource Grouping Grouping for Responsive Reserve* ERCOT shall post a list of Load Resources on the MIS Certified Area immediately following the DRUC for each QSE with a Responsive Reserve obligation provided from a Load Resource for the next Operating Day ERCOT procedures places Load Resources in Group 1 and Group 2 based on a random sampling of individual Load Resources approximately balancing the amount in each group Groups may be deployed individually or at ERCOT’s discretion, both Groups (all Load Resources) at any given time during EEA Level 2A. *Protocol 6.5.9.4.2 (4) 26

27. COP & AS Allocation Matt Mereness

28. COP & AS Allocation Ancillary Service Resource Responsibility The MW of an Ancillary Service that each Resource is obligated to provide in Real-Time Ancillary Service Schedule The MW of each Ancillary Service that each Resource is providing in Real-Time and the MW of each Ancillary Service for each Resource for each hour in the Current Operating Plan (COP) Ancillary Service Supply Responsibility The QSE TOTAL amount of Ancillary Service the QSE is obligated to deliver to ERCOT, by hour and service type, from Resources represented by the QSE DEFINITION Example: 100 Mw generator providing 20 Mw of RRS QSE is providing total of 45 Mw of RRS Before Deployment Unit AS Resource Responsibility is 20 Mw Unit AS Schedule is 20 Mw AS Supply Responsibility is 45 Mw After Deployment: 30 Mw of RRS for the QSE Unit AS Resource Responsibility is 20 Mw Unit AS Schedule is 0 Mw AS Supply Responsibility is 45 Mw 28

29. COP & AS Allocation Current Operating Plan QSE’s means of notifying ERCOT of the specific Resource providing AS Sum of AS Resource Responsibility must meet total QSE AS Supply Responsibility 29

30. COP & AS Allocation Post-DAM Activities After DAM, QSEs have at least one hour (by 2:30 pm) to: 2:30 Note that Three- Part Supply Offers updates are not allowed during this period Update Current Operating Plans to reflect commitment of resources, AS capacity awarded Submit additional Energy or Capacity Trades to be considered in time for the RUC process 30

31. COP & AS Allocation For each QSE and for each type of AS: If your QSE AS Supply Responsibility >0, ERCOT checks that the Sum of AS capacity in COPs for all QSE’s Resources = QSE AS Resource Responsibility QSE AS Supply Responsibility = Self-Arranged AS + AS sold in Trades - Total DAM AS Offer awards RUC Commitments For AS + Total SASM AS Offer awards + AS bought in Trades + 31

32. Ancillary Services in RUC Processes Jake Jacobs

33. Reliability Unit Commitment Reviews Resource commitments and security constraints Ensures enough Capacity committed In the right locations To serve the Forecasted Load In addition to Ancillary Services RUC Commitments are: Physical, and Financial –Make Whole Payments –Claw back Charges Load Forecast ? System Capacity A/S Capacity 33

34. AS procurement in DAM and DRUC Ancillary Services DAM awards AS as part of the co-optimized solution If AS Insufficiency exists after DAM, DRUC process is used to procure needed AS capacity RUC instruction specifies commitment for AS (part of RUC instruction reason code) –QSE Supply Responsibility increased by the amount of RUC AS Capacity RUC Resources show Resource Status “ONRUC” in COP and RT when committed generation is On-Line Telemetry should reflect A/S Schedule See COP Expectations Business Practices document for more details 34

35. Protecting AS Capacity on Proxy Energy Curve AS Capacity is protected with cost penalties RUC will only use the capacity reserved for AS if no other dispatch can be determined 35

36. Managing AS Resource Responsibility David Maggio

37. Managing AS Resource Responsibility Resource Status Telemetry QSEs will select one of the statuses for Resources synchronized to the ERCOT System that best describes the Resource Status: Examples: ONREG – On-Line Generation Resource with Energy Offer Curve providing Regulation Service ON – On-Line Resource with Energy Offer Curve; ONRL – Available for dispatch of Load Resource providing Responsive Reserve Service or Non-Spin, excluding Controllable Load Resources Resource Responsibility A QSE may not change the quantity provided of each type of Ancillary Services awarded through the ERCOT procurement process or the aggregate Self- Arranged Ancillary Service Quantity (by Ancillary Service type) from the DAM A QSE notifies ERCOT of the specific Resources supplying Ancillary Services through telemetry and the COP 37

38. Managing AS Resource Responsibility QSEs Telemeter to ERCOT AS Resource Responsibility - MW of an AS to be provided in real-time AS Schedule - MW of each AS that each Resource is providing in Real-Time and the MW of each AS for each Resource for each hour in the COP 38

39. Managing AS Resource Responsibility Validation of RT Telemetry of Resource Responsibility For each Generation Resource and Load Resource, HSL must ≥ LSL plus ∑ of the Resource Responsibility for RRS, Reg-Up, Reg-Down and Non-Spin For Non-Spin, HSL ≥ Resource Responsibility for Off-Line Generation Resources For RRS Service Resource Responsibility: For thermal Generation Resource must be ≤ 20% HSL Must also be ≤ ten times the current Emergency Ramp Rate From Emergency Ramp Rate Curve at actual generation levels Hydro-powered Resources operating in the synchronous condenser fast-response mode may provide RRS up to the Resource’s proved 20-second response up to 100% HSL For any hydro-powered Resource with a five percent droop setting operating as a generator, the Resource Responsibility must be ≤ 20% HSL For a Load Resource, must be ≥ HSL minus ∑ LSL, Reg-Up, Reg-Down, and Non- Spin 39

40. Managing AS Resource Responsibility Validation of COP AS Quantities The COP must identify sufficient Resource capacity to meet trades and Ancillary Service Supply Responsibility, calculated as sum of Self-arranged AS AS Trade obligations DAM AS awards Same validation as RT telemetry of Resource Responsibility ERCOT validates for each hour, the balance of current day plus next operating day ERCOT will notify a QSE if the sum of the AS capacity designated in the COP for each hour, by service type is less than the QSE's AS Supply Responsibility for each service type for that hour QSEs must correct deficiencies in their COP within one hour after being notified by ERCOT SASM AS awards RUC AS procurement 40

41. Ancillary Service Capacity Performance Measures QSE Ancillary Service Capacity Monitor QSEs representing Resources receive a summary of its Resource capacity every 5 minutes on the MIS Certified Area Postings includes the following information: RRRS Capacity from Generation, Non-Controllable and Controllable Load Resources Non-Spin Capacity from On-Line Generation with EOCs, On-Line Generation with Output Schedules, Off-Line Generation, and undeployed Load Resources Undeployed Reg-Up and undeployed Reg-Down Capacity with EOCs to increase Base Points in SCED Capacity with EOCs to decrease Base Points in SCED Capacity without EOCs to increase Base Points in SCED Capacity without EOCs to decrease Base Points in SCED The QSE’s Physical Responsive Capability (PRC) The MIS report compares the QSEs AS Supply Responsibility in the EMS system to the AS Supply Responsibility in the MMS system 41

42. Ancillary Service Capacity Performance Measures QSE AS Capacity Compliance Monitoring Notification In addition to postings, ERCOT will supply a notification to QSEs when the comparison between the QSEs AS Supply Responsibility in the EMS system with the AS Supply Responsibility in the MMS system indicates that the QSE is not providing sufficient capacity The notification will be via the MIS Certified Area The notification will only be sent when there is a concern Whereas the postings on the MIS will be sent every 5 minutes 42

43. Ancillary Service Capacity Performance Measures Required Actions from the QSE If the QSE identifies that they are unable to meet their total obligations to provide committed Ancillary Service capacity, the QSE must notify ERCOT immediately If the QSE receives a QSE Ancillary Service Capacity Compliance Monitoring Notification, the QSE must: Correct the telemetry for it’s Resources, if due to a telemetry issues; or Provide justification and an acceptable correction plan to the ERCOT Operator This must be done within 10 minutes of receiving the notification 43

44. Managing AS Resource Responsibility AS Insufficiency ERCOT evaluates AS requirements and capacity throughout the Adjustment Period and Operating Period and will procure AS in the Adjustment Period for: increased need of AS capacity above that specified in the Day-Ahead replacement of AS capacity that is undeliverable due to transmission constraints replacement of AS capacity due to a QSE’s failure to provide 44

45. Managing AS Resource Responsibility AS Insufficiency If the ERCOT Operator determines in the Adjustment Period that more Ancillary Services are needed than were provided in the Day-Ahead AS Plan, the MMS shall recalculate a new AS Obligation for each QSE The AS Obligation shall allocate additional AS Obligations to QSEs using the same percentages for each hour as the original Day-Ahead allocation The MMS shall notify each QSE of its increased AS Supply Obligation for each service for each recalculated hour 45

46. Managing AS Resource Responsibility AS Undeliverable due to Transmission Constraints ERCOT operator will provide to each affected QSE with two hours’ advance notice, if possible, of: o the amount of AS that must be reduced for each affected Resource o the start and stop times of the reduction Within the two-hour advance notice, each affected QSE may do one or more of the following: o substitute capacity from other Resources represented by that QSE o substitute capacity for other QSEs using AS Trades, or o inform ERCOT that all or part of the AS capacity should be replaced If a QSE is substituting capacity on other Resources, ERCOT will determine the feasibility o If deemed infeasible or if QSE is unable to replace, ERCOT may open a SASM 46

47. Managing AS Resource Responsibility Failure to Provide QSEs will receive hourly notifications and will have one hour to correct AS deficiencies by doing the following: o Substitute capacity from other Resources represented by that QSE o Substitute capacity for other QSEs using AS Trades, or o Inform ERCOT that all or part of the AS capacity needs to be replaced 47

48. Managing AS Resource Responsibility Unit Forced Out that was providing AS Notify the ERCOT operator by phone Inform the operator of the plan to cover AS Resource Responsibility ERCOT must agree with the plan Within a time frame acceptable to ERCOT based on system conditions, the QSE may either substitute capacity using its Resources, substitute capacity from other QSEs using AS Trades, or inform ERCOT that the Ancillary Services capacity needs to be replaced For Trades, the substitution can only be effective in the next adjustment period hour For capacity that needs to be replaced by ERCOT, a SASM can only be effective in the next adjustment period hour plus one hour Changes in COP for Resources providing AS automatically notifies ERCOT to review AS deliverability 48

49. Supplemental Ancillary Services Markets (SASM) Mark Patterson

50. The Supplemental Ancillary Service Market Supplemental Ancillary Services Market (SASM) If insufficient AS capacity, ERCOT executes SASM during the Adjustment Period If AS insufficiency exists after SASM, HRUC will be used to obtain needed capacity 50

51. SASM The Supplemental Ancillary Services Market (SASM) procures additional Reg-Up, Reg-Down, Responsive Reserve, and Non-Spinning Reserve Services during the Adjustment Period. The SASM Clearing Engine minimizes the total cost of AS offers while meeting the AS requirements given the AS offers and self-arranged AS quantities. 51

52. SASM / Default QSE Protocol 6.4.8.1.2 (4) If ERCOT procures additional AS for the amount of substituted capacity that is deemed infeasible or the amount of AS capacity that each affected QSE does not replace, then; all QSEs that bought the specific AS in the DAM are charged for their share of the net cost incurred for the Ancillary Service procured by ERCOT as part of the multiple procurement processes (DAM and SASMs), in accordance with Section 6.7.3 52

53. Load Resources Participation in SASM Load Resources: COP status is ignored SASM will consider all active offers If a Load Resource does not wish to participate in SASM, the QSE should withdraw or ensure all offers have expired prior to the beginning of the Adjustment Period 53

54. SASM / Default QSE If the QSE’s AS capacity that is undeliverable because of a transmission constraint identified by ERCOT, and was not awarded in the DAM or any SASM, then the QSE is charged for the insufficient AS capacity the same price paid for the AS as purchasers in the DAM paid for that time period. If the QSE’s AS capacity that is undeliverable because of a transmission constraint identified by ERCOT, was awarded in the DAM or any SASM, then the QSE is not compensated for the quantity of the AS capacity that is undeliverable. 54

55. SASM SASM can be initiated by the ERCOT Operator during the Adjustment Period, with the following timing requirements: Start time: It must start at least two hours before the start of the Operating Hour, for which the additional AS capacity is required. In other words, SASM must start at least one hour before the Adjustment Period ends End time: The end time of SASM cannot be later than the end time of the latest DAM run. If SASM is run before HE18, the maximum end time will be the end of the current day. If SASM is executed after HE18, the maximum end time will be the end of the next day 55

56. SASM Timeline With AS Plan increase 56 Notify: QSEs of SASM QSEs of additional AS obligation ERCOT Submit: Self-Arranged AS QSE XX + 30minX + 35minX + 45minX + 60min Determine: Amount of AS to procure Execute: SASM Notify: QSEs with Awards Post quantities and MCPCs Validate: COPs AS Schedules Submit: Updated COP and AS Schedule

57. SASM Timeline without AS Plan increase 57 Notify: QSEs of SASM ERCOT QSE XX + 5minX + 15minX + 30min Execute: SASM Notify: QSEs with Awards Post quantities and MCPCs Validate: COPs AS Schedules Submit: Updated COP and AS Schedule

58. LUNCH 12:00 pm – 1:00 pm

59. Monitoring AS Reserve Postings in ERCOT Floyd Trefny

60. Monitoring AS Reserve Postings in ERCOT Nodal Protocols require the calculation of various reserves in Real-Time and for future hours RT reserves are based on telemetry of Generation limits and actual net generation Future projections are based on COP and ERCOT’s Load Forecast All calculation results are used by ERCOT operators and are posted to the market RT updates made every 10 seconds via ICCP Updates on the MIS occur every 5 minutes For future hours, updates occurs every time LF is changed or if the hour changes ERCOT posts transmission constraints that have a high probability of binding the generation dispatch in SCED Postings occur in the Day Ahead before 6:00 AM for the next operating day Updated in Real Time 60

61. Monitoring AS Reserve Postings in ERCOT Example 61 MW Capacity Generation Σ LSL = 25000 Σ HSL = 45000 Ancillary Services Reg-Up – 300 Mw Reg-Down – 300 Mw Responsive – 2300Mw Non-Spin – 1200 Mw Ramp Rate 250 Mw/Min Σ LASL = 25000 + 300 = 25300 Σ HASL = 45000 – 3800 = 41200 3800 Mw RT Generation = 35000 Σ HDL = 35000 + 1250 = 36250 Σ LDL = 35000 - 1250 = 33750 SCED Dispatch SCED Up Reserve SCED Down Reserve

62. Monitoring AS Reserve Postings in ERCOT Example 62 MW Capacity Generation Σ LSL = 25000 Σ HSL = 45000 Ancillary Services Reg-Up – 300 Mw Reg-Down – 300 Mw Responsive – 2300Mw Non-Spin – 1200 Mw Ramp Rate 250 Mw/Min Σ LASL = 25000 + 300 = 25300 Σ HASL = 45000 – 3800 = 41200 3800 Mw RT Generation = 35000 Σ HDL = 35000 + 1250 = 36250 Σ LDL = 35000 - 1250 = 33750 SCED Dispatch SCED Up Reserve SCED Down Reserve

63. Monitoring AS Reserve Postings in ERCOT Example 63 MW Capacity Generation Σ LSL = 25000 Σ HSL = 45000 Ancillary Services Reg-Up – 300 Mw Reg-Down – 300 Mw Responsive – 2300Mw Non-Spin – 1200 Mw Ramp Rate 250 Mw/Min Σ LASL = 25000 + 300 = 25300 Σ HASL = 45000 – 3800 = 41200 3800 Mw Σ HDL = 38000 + 1250 = 39250 Σ LDL = 38000 - 1250 = 36750 SCED Dispatch SCED Up Reserve SCED Down Reserve RT Generation = 38000

64. Deployment of Non-Spin Reserve Ancillary Service 64 MW Capacity Generation Σ LSL = 25000 Σ HSL = 45000 Ancillary Services Reg-Up – 300 Mw Reg-Down – 300 Mw Responsive – 2300Mw Non-Spin – 1200 Mw Ramp Rate 250 Mw/Min Σ LASL = 25000 + 300 = 25300 Σ HASL = 45000 – 3800 = 41200 3800 Mw Σ HDL = 38000 + 1250 = 39250 Σ LDL = 38000 - 1250 = 36750 SCED Dispatch SCED Up Reserve SCED Down Reserve RT Generation = 38000 2600 Mw 42400 Mw

65. Deployment of Non-Spin Reserve Ancillary Service 65 MW Capacity Generation Σ LSL = 25000 Σ HSL = 45000 Ancillary Services Reg-Up – 300 Mw Reg-Down – 300 Mw Responsive – 2300Mw Non-Spin – 0 Mw Ramp Rate 250 Mw/Min Σ LASL = 25000 + 300 = 25300 Σ HASL = 45000 – 2600 = 42400 2600 Mw Σ HDL = 38000 + 1250 = 39250 Σ LDL = 38000 - 1250 = 36750 SCED Dispatch SCED Up Reserve SCED Down Reserve RT Generation = 38000 Σ HASL = 45000 – 2600 = 42400

66. Deployment Mark Patterson

67. Regulation Service Deployment Deployment of Generation Resource Regulation Service ServiceGeneration ResourceLoad Resource Reg-Up Amount available above any Base Point, and below the High Sustained Limit (HSL) Above the Low Power Consumption limit Reg-Down Amount available below any Base Point, and above the Low Sustained Limit (LSL) Below the Load Resource’s Maximum Power Consumption limit 67

68. Regulation Service Deployment Deployment of Load Resource Regulation Service ServiceGeneration ResourceLoad Resource Reg-Up Amount available above any Base Point, and below the High Sustained Limit (HSL) Above the Low Power Consumption limit Reg-Down Amount available below any Base Point, and above the Low Sustained Limit (LSL) Below the Load Resource’s Maximum Power Consumption limit 68

69. Regulation Service Deployment QSEs to ERCOT: AS Resource Responsibility Status indicators for Regulation Up and Regulation Down Participation Factor of each Resource providing Regulation ERCOT to QSEs providing Regulation: Control Signals Every 4 seconds Over ICCP data link or SCADA 69

70. Updated Desired Base Point A calculated MW value representing the expected MW output of a Generation Resource ramping to a Base Point ERCOT’s Load Frequency Control (LFC) algorithm provides UDBP every 4 seconds to coordinate ramping of all generation to their Base Points ERCOT issues Reg-Up and Reg-Down deployment Dispatch Instructions over ICCP providing the change in MW output requested of the QSE Resource assuming all QSE Resources are at their Updated Desired Base Point If a significant frequency deviation occurs, LFC may temporarily halt ramping of UDBP if the ramping would increase the frequency deviation DEFINITION 70

71. UDBP and Permissive Blocking SCED Base Point UDBP Projected Track UDBP Dispatched Track        71

72. Responsive Reserve Deployment Responsive Reserve Communications QSEs to ERCOT: AS Resource Responsibility AS Schedule by Resource ERCOT to QSEs providing Responsive Reserve: Control Signals Every 4 seconds Over ICCP data link or SCADA for Generation and Controllable Load Resources XML for non-Controllable Load Resources For Responsive Reserve: AS Schedule = AS Resource Responsibility – AS Deployment 72

73. Responsive Reserve Deployment ERCOT allocates deployment proportionally among QSEs providing Responsive Reserve through LFC. QSE adjusts each Resource’s AS Schedule to reflect the Responsive Reserve deployment within one minute SCED is triggered and energy from Resource is dispatched by SCED 73

74. Responsive Reserve Deployment QSE’s RRS Supply Responsibility = 50 MW QSE puts all the RRS Resource Responsibility on Unit 1 Unit HSL = 250; LSL = 0; RR = 50 74 TimeQSE RRS Deploymen t Unit RRS Responsibility Unit RRS Schedule Unit HSL Unit HASL Time < T050 250200 Time = T2050 250200 Time = T + 60 S 205030250220 Time = T + 5 M 05030250220 Time = T + 5 M + 60 S 050 250200

75. Non-Spinning Reserve Non-Spinning Reserve Deployment ResourceDispatchRequirementsMisc. Off-Line Generation Resource XML message for deployment SCED dispatches energy Within 20 minutes update AS Schedule 25 minutes deadline to reflect Resource Status On-Line and telemetered generation at LSL Base Points include any Non- Spin and other energy dispatched as a result of SCED Non-Controllable Load Resource XML message Operator Dispatch Instruction 30 minutes to respond between 95% and 150% of MW deployment On-Line Generation Resource and Controllable Load Resources -XML message -QSE AS Schedule Decreased -SCED dispatches energy Within 20 minutes update AS Schedule. Base Points include Non- Spin energy and other energy dispatched as a result of SCED Non-spin can be supplied by Off-line Generation Resources that can be synchronized and ramped to a specific output level within 30 minutes. Deployment is communicated through Operator Dispatch Instruction

76. Non-Spinning Reserve Non-Spinning Reserve Deployment ResourceDispatchRequirementsMisc. Non-Controllable Load Resource XML message Operator Dispatch Instruction 30 minutes to respond between 95% and 150% of MW deployment Within 20 minutes update AS Schedule Off-Line Generation Resource XML message for deployment SCED dispatches energy 25 minutes deadline to reflect resource status online and telemetered generation at LSL Base Points include Non- Spin energy and other energy dispatched as a result of SCED On-Line Generation Resource and Controllable Load Resources XML message QSE AS Schedule Decreased SCED dispatches energy Within 20 minutes update AS Schedule. Base Points include Non- Spin energy and other energy dispatched as a result of SCED 76

77. Non-Spinning Reserve Non-Spinning Reserve Deployment ResourceDispatchRequirementsMisc. On-Line Generation Resource and Controllable Load Resources XML message QSE AS Schedule Decreased For Generation Resources, SCED Dispatches energy For Controllable Load, QSE dispatches energy Within 20 minutes update AS Schedule Base Points include Non- Spin and other energy dispatched as a result of SCED Non-Controllable Load Resource -XML message -Operator Dispatch Instruction 30 minutes to respond between 95% and 150% of MW deployment Off-Line Generation Resource -XML message for deployment -SCED dispatches energy 25 minutes deadline to reflect resource status online and telemetered generation at LSL Non-Spinning Reserves may be provided from On- Line Resources and deployed through SCED 77

78. Voltage Support Service Voltage Support Service Dispatch Unpaid Service On-Line Resource provides VSS up to Unit Reactive Limit Paid Service On-Line Resource provides VSS beyond Unit Reactive Limit On-Line Resources reduce real power output to provide additional reactive power ERCOT determines the next day if payment is to be made 78

79. Ancillary Services Qualification Mark Patterson

80. Ancillary Services Qualification 80 Regulation Up Service Regulation Down Service Responsive Reserve Service Non-Spinning Reserve Service

81. Ancillary Services Qualification 81 NP8.1.1.2.1 …Prior to the Texas Nodal Market Implementation Date, a QSE and the Resources that it represents that are qualified to provide an Ancillary Service in accordance with an effective Protocol, are deemed to be qualified to provide Ancillary Services after the Texas Nodal Market Implementation Date, provided that the QSE and the Resource have been certified capable of providing an Ancillary Service by a responsible Market Participant, as determined by ERCOT… QSE must submit a signed QSE Attestation Regarding Qualification of Ancillary Services for Resources Transitioning from Zonal to Nodal Market Operations Grandfathering of Resource Qualification

82. Ancillary Services Qualification 82 Disqualification of Resources 3.2.4 Ancillary Service Qualification and Testing Program (Nodal Operating Guide) - Requires ERCOT to revoke Resource qualification status to provide A/S for failing an A/S performance standard for 4 consecutive months 8.1.1.4 Ancillary Service and Energy Deployment Compliance Criteria (protocol)

83. Ancillary Services Qualification 83 A Resource may be provisionally qualified for a period of 90 days if: Generation Resource: Appropriate equipment installed with verifiable testing data Load Resource: Metered with an Interval Data Recorder (IDR) Electric Service Identifier (ESI ID) registration of Load Resources providing Ancillary Service by the QSE Load Resource telemetry is installed and tested between QSE and ERCOT * Provisional qualification may be revoked at any time by ERCOT for any non- compliance

84. Ancillary Services Qualification 84 Regulation Service Requirements A QSE control system must be capable of receiving Reg-Up and Reg-Down Signal from ERCOT’s LFC Resources providing Reg-Up or Reg-Down must be capable of delivering the full amount of regulating capacity offered to ERCOT within five minutes

85. Ancillary Services Qualification 85 Regulation Service Qualification test ERCOT shall confirm the date and time of the test with the QSE to validate the voice circuits. The duration of Test will be 60-minute, ERCOT shall send a random sequence of increasing ramp, hold, or decreasing ramp sequence, of no less than two minutes within the resources LSL and HSL and ramp rate limit agreed on prior to the test.

86. Ancillary Services Qualification 86 Regulation Service Qualification test (Continued) During the Test one 5-minute duration will be used to test the Resource’s ability to achieve the entire amount of Reg- Up or Reg-Down requested for qualification. GREDP/CLREDP over the entire one five minute interval must be less than or equal to 3.5%. Additionally, in all other test sequence intervals, GREDP/CLREDP must be less than or equal to 5% as calculated for the entire duration of each test sequence interval.

87. Ancillary Services Qualification 87 Responsive Reserve Service Qualification test For Generation Resources desiring qualification to provide RRS, ERCOT shall send a signal to the Resources' QSE to deploy RRS (At anytime during the window and not previously disclosed to the QSE). ERCOT shall monitor the QSEs telemetry of the Resource’s Ancillary Service Schedule for an update within 15 seconds.

88. Ancillary Services Qualification 88 Protocol Section (8.1.1.4.2 ) Within one minute following a deployment instruction, the QSE must update the telemetered Ancillary Service Schedule for Responsive Reserve for Generation Resources and Load Resources to reflect the deployment amount. The difference between the sum of the QSE’s Resource Responsive Reserve schedules and the sum of the QSE’s Resource Responsive Reserve responsibilities must be equal to the QSE’s total Responsive Reserve deployment instruction, excluding the deployment to Load Resources which are not Controllable Load Resources Responsive Reserve Service Qualification test (Continued)

89. Ancillary Services Qualification Load Resources (RRS Qualification test) 89 All pre-test requirements met Telemetry Installed and tested UFR tested and verified by ERCOT 8 Hour Test window Scheduled QSE receives verbal instruction to deploy Load Resource Load Resource to deploy between 95% and 150% of scheduled amount of RRS within 10 minutes Note: LR qualified to provide RRS also meets the deployment requirements for providing Non-Spin

90. Ancillary Services Qualification Non-Spin Reserve Service Requirements Each Resource providing Non-Spin must be capable of being synchronized and ramped to its Ancillary Service Schedule for Non-Spin within 30 minutes. Non-Spin may be provided from Generation Resource capacity that can ramp within 30 minutes or Load Resources capable of unloading within 30 minutes. Non-Spin may only be provided from capacity that is not fulfilling any other energy or capacity commitment. 90

91. Ancillary Services Qualification Non-Spin Qualification test ERCOT shall notify the QSE by using the messaging system (At anytime during the window and not previously disclosed to the QSE) and requesting that the QSE provide an amount of Non-Spin from each Resource equal to the amount for which the QSE is requesting qualification. The QSE shall acknowledge the start of the test. ERCOT shall monitor the adjustment of the Generation Resource’s Non-Spin Ancillary Service Schedule within five minutes for Resources On-Line. 91

92. Ancillary Services Qualification Non-Spin Qualification test (Continued) After Recall, Resources providing Non-Spin will be allowed to remain online for 30 minutes following Recall. Within 20 minutes following a deployment instruction, the QSE must update the telemetered Ancillary Service Schedule for Non-Spin for Generation Resources and Load Resources For Off-Line Generation Resources, 25 minutes following a deployment instruction, the Resource must also have a Resource Status indicating that it is On-Line with an Energy Offer Curve and the telemetered generation must be greater than or equal to the Resource’s telemetered LSL. 92

93. Ancillary Service Capacity Performance Measures David Maggio

94. Ancillary Service Capacity Performance Measures Sample of the QSE Ancillary Service Capacity Monitor Report (.csv format) DATE_TIME DATE_ TIME_DST QSE_ID… UNDEPLOYED _REG_UP REG_UP_SUM_RES _RESPONSIBILITY REG_UP_QSE_ RESPONSIBILITY REG_UP_ RESPONSIBILITY_MET … 5/20/2010 13:45 dQABC…25100110N … Example shows the information for Regulation Up Similar information will also be provided for RRS, Non-Spin, and Regulation Down Information for all these Ancillary Services will be in a single report Also be provided in.xml format 94

95. Ancillary Service Capacity Performance Measures QSE A is intending that Resource 1 is providing 15 MW of 40 MW Regulation Up Resource Responsibility Because of a brief telemetry issue, QSE A telemeters a 0 Regulation Up Responsibility (RURS) for Resource 1 A notification is sent to QSE A by ERCOT indicating that the telemetered Regulation Up is insufficient QSE A updates the telemetry for Resource 1 to reflect the 15 MW within 10 minutes QSE A is not required to contact the ERCOT Operator A QSE telemeters the wrong AS Resource Responsibility for a Resource and can quickly correct the issue 95

96. Ancillary Service Capacity Performance Measures QSE A is intending that Resource 1 is providing 15 MW of 40 MW Regulation Up Resource Responsibility Because of a brief telemetry issue, QSE A telemeters a 0 Regulation Up Responsibility (RURS) for Resource 1 A notification is sent to QSE A by ERCOT indicating that the telemetered Regulation Up is insufficient QSE A determines that it will take 30 minutes to correct the telemetry and calls the ERCOT Operator 5 minutes after receiving the notification to indicate this The ERCOT Operator tells QSE A that this is acceptable QSE A corrects the telemetry by the time that was indicated to the ERCOT Operator A QSE telemeters the wrong AS Resource Responsibility for a Resource and cannot quickly correct the issue 96

97. Ancillary Services Energy Deployment Performance David Maggio

98. Ancillary Services Energy Deployment Performance Regulation Service and Generation/Controllable Load Resource Energy Deployment Performance Generation/Controllable Load Resource Energy Deployment Performance (GREDP/CLREDP) are the measures for calculating a QSEs Resources in providing Regulation Service and energy in response to Dispatch Instructions GREDP/CLREDP are calculated in both MWs and as a percent error The calculations and compliance criteria vary somewhat between: Generation Resource which are not IRRs IRRs DSR Portfolios Controllable Load Resources 98

99. Ancillary Services Energy Deployment Performance GREDP for Generations Resources which are not IRRs A Resource must have a GREDP less than the greater of X% or Y MW for 85% of the five-minute clock intervals in the month during which GREDP was calculated X and Y are currently set to 5% and 5 MW, respectively (TAC reviewed) GREDP is calculated for this set of Resources for a 5-minute interval under the following circumstances; The telemetered Resource status is one of following; ONRUC, ONREG, ON, ONOS, ONOSREG, or ONEMR Net MW >= the telemetered LSL The 5-minute interval is not within the 20-minute period following an event in which ERCOT has experienced a Forced Outage causing an ERCOT frequency deviation of greater than 0.05 Hz ERCOT did not issues Emergency Base Points to the Resource during the interval ERCOT has not determined that there is a reason to exclude the interval due to abnormal operations 99

100. Ancillary Services Energy Deployment Performance GREDP for IRRs An IRR must have a GREDP less than Z% or the Net MW must be less than the expected MW output for 95% of the five-minute clock intervals in the month when the Resource received a Base Point Dispatch Instruction in which the Base Point was 2 MW or more below the IRR’s HSL used by SCED. Z is currently set to 10% (TAC reviewed) The same set of circumstances as was used for non-IRR Generation Resources is used to determine whether GREDP is calculated for IRRs as well In addition, for compliance reporting, GREDP is only being applied during 5-minute intervals in which the Resource was being curtailed Curtailment is determined using the 2 MW rule described above 100

101. Ancillary Services Energy Deployment Performance GREDP for DSR Portfolios A Resource must have a GREDP less than the greater of X% or Y MW for 85% of the five-minute clock intervals in the month during which GREDP was calculated X and Y are currently set to 5% and 5 MW, respectively (TAC reviewed) GREDP is calculated for this set of Resources for a 5-minute interval under the following circumstances; The telemetered Resource status is one of following; ONDSR or ONDSRREG, which means that it is participating in the DSR Portfolio The 5-minute interval is not within the 20-minute period following an event in which ERCOT has experienced a Forced Outage causing an ERCOT frequency deviation of greater than 0.05 Hz ERCOT did not issues Emergency Base Points to the Resource during the interval ERCOT has not determined that there is a reason to exclude the interval due to abnormal operations The 5-minute interval is not a 5-minute interval following the Forced Outage of any Resource within the QSE’s DSR Portfolio 101

102. Ancillary Services Energy Deployment Performance CLREDP for Controllable Load Resources A Resource must have a CLREDP less than the greater of X% or Y MW for 85% of the five-minute clock intervals in the month during which CLREDP was calculated X and Y are currently set to 5% and 5 MW, respectively (TAC reviewed) CLREDP is calculated for this set of Resources for a 5-minute interval under the following circumstances; The telemetered Resource status is one of following; ONRGL or ONRRCLR, which means that it is acting as a Controllable Load Resource The 5-minute interval is not within the 20-minute period following an event in which ERCOT has experienced a Forced Outage causing an ERCOT frequency deviation of greater than 0.05 Hz ERCOT did not issues Emergency Base Points to the Resource during the interval ERCOT has not determined that there is a reason to exclude the interval due to abnormal operations The 5-minute interval is not a 5-minute interval following the Forced Outage of any Resource within the QSE’s DSR Portfolio The 5-minute interval is not during the period in which the Controllable Load Resource is expected to ramping for a RRS or Non-Spin deployment or recall 102

103. Ancillary Services Energy Deployment Performance GREDP/CLREDP during an EEA In addition, GREDP/CLREDP performance will be specifically measured during 5-minute intervals in which EEA has been declared The same rules and exemptions that were applied during all intervals in the month will all be applied during these intervals Non-IRR Generations Resource, DSR Portfolios, and Controllable Load Resource may not fail the X% or Y MW criteria more than 3 of the intervals in which EEA was declared IRRs may not fail the Z% or Net MW <= expected MW criteria more than 3 intervals in which EEA was declared 103

104. Ancillary Services Energy Deployment Performance The Monthly Resource Energy Deployment Performance Report During the beginning of each month, the report will run and provide the scores for the previous month Both the compliance criteria just discussed and the additional reporting requirements of 8.1.1.4.1 of the Nodal Protocols will be included The report will be posted on the MIS Certified Area for each of the QSEs with Resources 104

105. Ancillary Services Energy Deployment Performance This example shows a small piece of the report for Generation Resources which are not part of a DSR portfolio Sample of the Monthly Resource Energy Deployment Performance Report (.xls format) QSE DUNSQSE Name Resource Name Resource Fuel Type … Monthly Compliance: % of Month that GREDP was Calculated that: Non-IRRs - GREDP was less than the greater of X% or Y MW IRRs - The Resource was Curtailed and GREDP was less than Z% or ATG <= Expected MW 000000000000001QSE_AUNIT_1GT84.000% 000000000000001QSE_AUNIT_2NUCL96.000% 000000000000002QSE_BUNIT_3WIND92.000% 000000000000003QSE_CUNIT_4WIND … 97.000% 105

106. Ancillary Services Energy Deployment Performance Responsive Reserve Service Energy Deployment Performance Within 1 minute following a deployment instruction, the QSE must update the telemetered Responsive Reserve Schedule for the appropriate Generation Resources and Load Resources to reflect the deployment amount The difference between the sum of the QSE’s Resource RRS Schedules and the sum of the QSE’s Resource RRS Responsibilities must be equal to the QSE’s total Responsive Reserve deployment instruction This excluding the deployment to Load Resources which are not Controllable Load Resources During RRS deployment, GREDP/CLREDP will continue to be calculated based on the rules and exemptions previously discussed 106

107. Ancillary Services Energy Deployment Performance Responsive Reserve Service Energy Deployment Performance cont. 10 minutes following a deployment instruction, a Load Resource, which is not a Controllable Load Resource, must have a response between 95% and 150% of the deployment instruction The Load Resource must maintain its response level between 95% and 150% until RRS is recalled or the Resource no longer has an obligation After RRS has been recalled, Load Resources, which are not Controllable Load Resources, have 3 hours to return to 95% of their obligation If the Resource is unable to do this, other Generation or Load Resources not previously committed to provide RRS can be used to meet the obligation The QSE should communicate this need to ERCOT prior to transferring the RRS Responsibility 107

108. Ancillary Services Energy Deployment Performance The Monthly Responsive Reserve Performance Report During the beginning of each month, the report will run and provide the scores for the previous month for Generation Resources, Controllable Load Resources and Non-Controllable Load Resources All RRS deployments which were recalled during the reporting month will be included in the report The report will be posted on the MIS Secure Area 108

109. Ancillary Services Energy Deployment Performance QSE Level Sample of the Monthly Responsive Reserve Performance Report (.xls format) Deployment Time Recall Time Resource Schedule Update Performance D1R1FAIL D2R2PASS D3R3PASS D4R4PASS D5R5PASS D6R6PASS D7R7FAIL D8R8PASS D9R9PASS D10R10PASS Load Resource (non-CLR) Resource Name Deployment Time Recall Time Resource Schedule Update Performance Resource Deployment Performance Return To Responsibility Performance Resource1 D1R1PASS D2R2PASS D3R3PASS Resource2 D1R1PASS D2R2PASS D3R3PASSFAILPASS D4R4PASS D5R5PASS D6R6PASSFAILPASS D7R7PASS 109

110. Ancillary Services Energy Deployment Performance Non-Spin Reserve Service Energy Deployment Performance Within 20 minutes following a deployment instruction, the QSE must update the telemetered Non-Spin AS Schedule for the appropriate Generation Resources and Load Resources to reflect the deployment amount Within 25 minutes following a deployment instruction to an off-line Generation Resource, the Resource must have a telemetered Resource status indicating that is on-line with an Energy Offer Curve (i.e. ON) During Non-Spin deployment, GREDP/CLREDP will continue to be calculated based on the rules and exemptions previously discussed 110

111. Ancillary Services Energy Deployment Performance Non-Spin Reserve Service Energy Deployment Performance cont. 30 minutes following a deployment instruction, a Load Resource, which is not a Controllable Load Resource, must have a response between 95% and 150% of the deployment instruction The Resource must maintain its response level between 95% and 150% until Non-Spin is recalled or the Resource no longer has an obligation After Non-Spin has been recalled, Load Resources, which are not Controllable Load Resources, have 3 hours to return to 95% of their obligation If the Resource is unable to do this, other Generation or Load Resources not previously committed to provide Non-Spin can be used to meet the obligation The QSE should communicate this need to ERCOT prior to transferring the Non-Spin Responsibility 111

112. Ancillary Services Energy Deployment Performance The Monthly Non-Spin Reserve Performance Report During the beginning of each month, the report will run and provide the scores for the previous month for Generation Resources, Controllable Load Resources, and Non-Controllable Load Resources All Non-Spin deployments which were recalled during the reporting month will be included in the report The report will be posted on the MIS Secure Area 112

113. Ancillary Services Energy Deployment Performance Gen. Resources and CLRs Sample of the Monthly Responsive Reserve Performance Report (.xls format) Load Resources (non-CLR) Resource Name Deployment Time Recall Time Resource Schedule Update Performance Resource Deployment Performance Return To Responsibility Performance Resource1 D1R1PASS D2R2PASS D3R3PASS Resource2 D1R1PASS D2R2PASS D3R3PASSFAILPASS D4R4PASS D5R5PASS D6R6PASSFAILPASS D7R7PASS Resource Name Deploy ment Time Recall Time Resource Schedule Update Performance On-Line Check For Off-Line Gen Performance Resource1 D1R1PASS D2R2PASS D3R3PASS D4R4FAILPASS D5R5PASS Resource2 D1R1PASSN/A D2R2PASSN/A D3R3PASSN/A D4R4PASSN/A D5R5PASSN/A 113

114. Wrap Up Floyd Trefny

115. Objectives You should now be able to: Understand the Ancillary Services (AS) ERCOT uses in the Nodal Market Offer Ancillary Services in the Day Ahead Market Manage AS Resource Responsibility in Real Time Monitor System Reserve Postings in ERCOT Respond to requests to deploy AS Capacity Qualify Resources to provide Ancillary Services Understand the two types of performance measures for providers of Ancillary Services 115

116. Wrap Up 116

117. Please Fill Out the Workshop Evaluation Your Suggestions Appreciated 117

118. Appendix DAM Co-optimization Example System Black Start Capability Qualification

119. DAM Co-optimization Example For HE 1300 ERCOT needs to procure: 1 MW of Regulation Up (Reg-Up) and; 1 MW of Responsive Reserves (RRS) Three QSEs submitted Offers and Bids as follows: BidsOffers MWEnergyMWEnergyReg-UpRRS QSE A 2$25.00$10.00$5.00 QSE B 2$30.00$11.00$9.00 QSE C 1$50.00 119

120. Offer-based Costs: Sum [Offer Price * Cleared Offer Quantity] Bid-based Revenues: Sum [Bid Price * Cleared Bid Quantity] DAM Co-optimization Example Day-Ahead Market Objective: Maximize [Bid-based Revenues – Offer-based Costs] 120 In this step, DAM uses Bid Prices and Offer Prices, not clearing prices

121. DAM Co-optimization Example EnergyReg-UpRRS QSE A $25.00$10.00 QSE B $9.00 EnergyReg-UpRRS QSE A $25.00$5.00 QSE B $11.00 EnergyReg-UpRRS QSE A $10.00$5.00 QSE B $30.00 Bid-based Revenues – Offer-based Costs $50 – $25 – $10 – $9 = $6 Case 1 Case 2 Case 3 Bid-based Revenues – Offer-based Costs $50 – $25 – $11 – $5 = $9 Bid-based Revenues – Offer-based Costs $50 – $30 – $10 – $5 = $5 121

122. DAM Co-optimization Example Energy Price Cost of additional increment of Demand How would Day-Ahead Market clear additional MW? EnergyReg-UpRRS QSE A $25.00$5.00 QSE B $11.00 Offers Awarded Offers Provided MWEnergyReg-UpRRS QSE A 2$25.00$10.00$5.00 QSE B 2$30.00$11.00$9.00 122

123. DAM Co-optimization Example EnergyReg-UpRRS QSE A 1MW @$25.00$5.00 QSE B 1MW @$30.00$11.00 Clearing Additional MW of Energy Offers MWEnergyReg-UpRRS QSE A 2$25.00$10.00$5.00 QSE B 2$30.00$11.00$9.00  Increases cost by $30 EnergyReg-UpRRS QSE A 2MW @$25.00 QSE B $11.00$9.00  Increases cost by $29 Energy Price is $29 123

124. DAM Co-optimization Example EnergyReg-UpRRS QSE A $25.001 MW @ $5.00 QSE B $11.001 MW @ $9.00 Clearing Additional Ancillary Services Offers MWEnergyReg-UpRRS QSE A 2$25.00$10.00$5.00 QSE B 2$30.00$11.00$9.00 Responsive Reserve Price is $9 EnergyReg-UpRRS QSE A $25.00$5.00 QSE B 2 MW @ $11.00 Regulation Up Price is $11 124

125. DAM Co-optimization Example In summary... Three QSEs submitted Offers and Bids as follows: QSE A sells 1MW of Energy @ $29 and 1MW of RRS @ $9 QSE B sells 1MW of Reg-Up @ $11 QSE C buys 1MW of Energy @ $29 BidsOffers MWEnergyMWEnergyReg-UpRRS QSE A 2$25.00$10.00$5.00 QSE B 2$30.00$11.00$9.00 QSE C 1$50.00 125

126. Ancillary Services Qualification System Black Start Capability Qualification A Resource is qualified to be a Black Start Resource if it has met the following requirements: (a) Verified control communication path performance; (b) Verified primary and alternate voice circuits for receipt of instructions; (c) Passed the “Basic Starting Test” as defined below; (d) Passed the ”Line-Energizing Test” as defined below; (e) Passed the “Load-Carrying Test” as defined below; (f) Passed the “Next Start Resource Test” as defined below; 126

127. Ancillary Services Qualification System Black Start Capability Qualification (g) If not starting itself, has an ERCOT-approved firm standby power contract with deliverability under ERCOT blackout circumstances from a non-ERCOT Control Area that can be finalized upon selection as a Black Start Resource; (h) If not starting itself, has an ERCOT approved agreement with the necessary TSPs for access to another power pool, for coordination of switching during a Black Start event, for coordination of maintenance through the ERCOT Outage Scheduler for all non- redundant transmission startup feeds; and (i) If dependent upon non-ERCOT transmission resources, agreements providing this Transmission Service have been provided in the proposal. 127