1. Direct Load Control Update Betty Day Manager of Load Profiling and Data Aggregation February 25, 2003 Retail Market Subcommittee

2. Background on DLC Protocols Section 18.7.2 (gray boxed) and the Load Profiling Guides (LPG 16.2) require lagged-dynamic sample to settle the market for DLC PWG has submitted Protocol revisions and LPG revisions to replace the gray boxes to implement DLC –Addresses settlement for DLC in general –Addresses issues related to DLC participation in BUL ERCOT is unable to implement system changes for DLC as laid out by Protocols and LPG by June 1, 2003

3. At the Demand Response Workshop on 01/31/03, Commissioner Perlman asked ERCOT to meet with Green Mountain and Comverge to explore alternatives such that some form of DLC could be implemented for Summer 2003 In response to the above, a DLC Beta Test Program was outlined Should this be approved via the stakeholder process, ERCOT believes it would be able to implement a DLC Beta Test Program for Summer 2003 Background on DLC (continued)

4. Engineering Estimates from Quantum Study Results taken from Quantum Consulting 1996 Report, “Houston Lighting & Power Company’s Energy Partners Direct Load Control Program Summer 1995 Impact Evaluation”

5. DLC Beta Test Proposed Engineering Estimates System peak day demand reduction scaled down from 1.32 kW to 1.10 kW Demand reductions for other temperature ranges scaled down proportionately Analysis assumed temperatures at mid-point of ranges Linear regression formula developed to compute demand reductions based on temperature

6. DLC Beta Test Proposed Engineering Estimates

7. Weighted weather zone temperatures will be input into the formula to estimate load reductions during the control events Estimated load reduction impact will be ramped-in and ramped-out based on details of the control methodology implemented for each event No estimate made for post-control period ‘payback’

8. DLC Beta Test Proposed Engineering Estimates

10. Beta Test is limited to June 1 – September 30, 2003 Participation limited to residential ESI IDs on Green Mountain’s DLC program as of April 15, 2003, or 5,000 ESI IDs, whichever is less Number of controls limited to 40 per month, while duration of control time limited to 15% of the hours in each month Consideration for the DLC Beta Test will be reflected in energy obligations only; There will be no BUL payments for the DLC Beta Test DLC Beta Test Limitations

11. DLC Beta Test Proposed Engineering Estimates

12. Green Mountain must provide ERCOT with access to a radio receiver and data-logger which records radio control signals Green Mountain must provide ERCOT with details of current maintenance level of radios on its DLC program and reports of maintenance from Beta Test inception to conclusion Green Mountain must provide ERCOT a daily report of all control events Green Mountain must notify ERCOT daily of participants who withdraw from the DLC program DLC Beta Test Requirements

13. Green Mountain must fund a pilot load research sample to support ERCOT’s analysis of the DLC program (CenterPoint to install IDRs and process data) Green Mountain and Comverge must not know load research sample point locations CenterPoint Energy must submit 814_20 transactions to change profile codes: RESHIDLC_COAST_NIDR_NWS_NOTOU or RESLODLC_COAST_NIDR_NWS_NOTOU DLC Beta Test Requirements (continued)

14. For control days ERCOT will modify the standard profiles during the control period(s) using the computed load reductions For non-control days ERCOT will use the standard profiles as the DLC profiles ERCOT will manually load the DLC profiles into LODESTAR The settlement process will proceed accordingly and all profiles will be posted to the web (Market Participants will be able to see frequency of control events) DLC Beta Test Load Profiles

15. ERCOT will monitor pilot sample data – if sample data reflect inconsistencies in load reduction during reported control events, ERCOT may terminate the Beta Test program ERCOT will analyze the sample data to test the PWG suggested baseline methodology for BUL ERCOT will use the sample data for subsequent sample design to support the recommended lagged-dynamic methodology DLC Beta Test ERCOT Involvement

16. ERCOT will proceed with system changes to implement the DLC methodology when and as approved by the stakeholder process ERCOT will implement a “list-based segment” for the Beta Test participants DLC Beta Test ERCOT Involvement (continued)

17. Deviate from Protocols 18.2.9 “Adjustments and Changes to Load Profile Development” “…ERCOT shall give at least 150 days notice to all Market Participants prior to market implementation of any change in Load Profile Methodology, existing Load Profiles, or when any additional Load Profiles are developed.” Potentially deviate from Load Profiling Guides 12.4 “Process Timing for Requesting Changes” “…The time of annual implementation of approved changes shall not be during the months from June through September, inclusive.” Based on a recommendation from PWG, approve and forward to TAC the request to create a new profile (LPG 12.9) DLC Beta Test Requirements to Implement in Summer 2003