1. RPRS Settlement Examples Market Support Services March 30, 2005 March 14, 2006 Presented by ERCOT Art Deller Bill Kettlewell

2. 2 A Load-Scheduling QSE Scheduler for EZWATTS Retail Electric Provider. Wholesale Power Trader INTRODUCING The Players

3. 3 AND ALSO STARRING A Generation and Power Marketing QSE Markets and Schedules WATTSup power generation company. Qualified to provide Ancillary Services. Provide Power Marketing Services. The Players

4. 4 South WestNorth The Setting Three Congestion Zone model:

5. 5 Shift Factors CM Zone names Average Weighted Shift Factor West to North Average Weighted Shift Factor South to North Average Weighted Shift Factor South to West West20030.489911548-0.004425342-0.016725781 North2003-0.008056712-0.120276952-0.003225342 South20030.0023022360.5032578310.104328870 CSC Zonal Average Weighted Shift Factors The Setting

6. 6 Act 1 Capacity Insufficiency

7. 7 The Story Electrons R Us submits the following schedule in the Day Ahead Period to cover their load in the South Zone: Electrons R Us has a Load Ratio Share of 1%.

8. 8 The Story PowerHouse has a generator, Gator Gulch, in the North Zone that is scheduled to be off-line but available on June 27, 2006 with the following Replacement Bid Prices:  Startup Price = $120 / MW  Hourly Run Price = $25 / MW ERCOT procures Gator Gulch as Replacement Reserve during the Day-Ahead Period for Capacity Insufficiency. There is no Zonal or Local Congestion.

9. 9 RPRS Settlement Process: Pay Providers:  Capacity Insufficiency  Zonal Congestion  Local Congestion The Story Collect from Users:  Under Scheduled QSEs  Zonal Congestion  Uplift to Market

10. 10 Pay Providers:  Capacity Insufficiency  Zonal Congestion  Local Congestion The Story

11. 11 Zonal Replacement Reserve (LCFLAG = 0) Steps: 1. ZRPQ – Awarded amount 2. ZRPHR – Number of hours awarded 3. Apply Bids to calculate ZPCRPAMT Pay Providers of Capacity

12. 12 ZRPQ – Zonal Replacement Quantity Hour 15 (Intervals 57 – 60): ZRPQ = MIN[156,( 143 + 144 + 146 + 147 )/ 4] = 145 RPRSMW = 156 Pay Providers of Capacity

13. 13 ZRPHR – number of hours instructed ZRPHR = 4 HoursHr10Hr11Hr12Hr13Hr14Hr15Hr16Hr17Hr18Hr19Hr20 ZRPQ........00000145156 0....... ZRPHR........0000044440....... Pay Providers of Capacity

14. 14 ZPCRPAMT – Zonal Procured Capacity Replacement Amount Pay Providers of Capacity

15. 15 ZPCRPAMT – Zonal Procured Capacity Replacement Amount Pay Providers of Capacity ZPCRPAMT = -$8030

16. 16 The Story Collect from Users:  Under Scheduled QSEs  Zonal Congestion  Uplift to Market

17. 17 Steps:  Use maximum MCPC for any RPRS Market for the Operating day  Find the Maximum difference between the QSEs Adjusted Metered Load and Scheduled Load for any period in which there was an RPRS Market  Add the amount of the Maximum Mis-Matched quantity for any Interval with an RPRS Market RPRS Under Scheduled Charge

18. 18 RPRS Under Scheduled Charge 0, Max M (AML i1zq -CL i1zq ) US RPizq = Max M (MCPC RPizq ) * MaxMax M (AML i2zq -CL i2zq ) +MMQizq Max M (AML i3zq -CL i3zq ) Max M (AML i4zq -CL i4zq ) Variables US = RPRS Under Scheduled Charge AML = Adjusted Meter Load CL = Current Scheduled Load MCPC = Market Clearing Price for Capacity MMQ = Mismatched Amount Subscripts M = Market i = Interval z = Congestion Management Zone q = QSE RP = Replacement Reserve

19. 19 Adjusted Metered Load vs. Scheduled Load at time of RPRS Procurement Scheduled Metered Scheduled Metered Scheduled Metered Scheduled Metered Hour Ending 1500 Max Difference = 10MW RPRS Under Scheduled Charge

20. 20 For Hour Ending 1500: Maximum MCPC = $55 Maximum Under Scheduled amount = 10MW Maximum Mismatch amount = 0MW RPRS Under Scheduled Charge

21. 21 For Hour Ending 1500, Electrons R Us pays USRPAMT = $55 * (10MW) = $550 Other QSE’s besides Electrons R US also pay USRPAMT, such that the total collected is USRPBILLAMTTOT = $55 * (100MW) = $5500 RPRS Under Scheduled Charge

22. 22 The Story Collect from Users:  Under Scheduled QSEs  Zonal Congestion  Uplift to Market

23. 23 Steps:  Calculate total costs of Procured RPRS Capacity.  Calculate total RPRS Underscheduled Charge.  Calculate total Replacement Capacity payments to TCR holders.  Calculate total CSC impact Replacement Capacity charge.  Sum all of the above and multiply by Load Ratio Share. RPRS Uplift Charge

24. 24 UC RP = -1 * [ Σ ( PC RP + LPC RP ) + Σ US RP + TCRPAY RP + Σ CSC RP ]* LRS RPRS Uplift Charge Variables UC = RPRS Uplift Charge PC = Cost of Capacity for Zonal Congestion and Capacity Insufficiency LPC = Cost of RPRS for Local Congestion US = RPRS Under Scheduled Charge TRCRPAY = TCR Payment per Hour CSC = RPRS CSC Impact Capacity Charge LRS = Load Ratio Share Subscripts RP = Replacement Reserve

25. 25 For Hour Ending 1500, Electrons R Us pays UC RP = -1 * [ Σ PC RP + Σ US RP ]* LRS UCRPAMT = -1*(ZPCRPBILLAMTTOT + USRPBILLAMTTOT) * LRS = -1*(-$8030 + $5500) * 0.01 = $25.30 RPRS Uplift Charge

26. 26 Act 2 Zonal Congestion

27. 27 The Story Electrons R Us submits the following schedule in the Day Ahead Period to cover their load in the North Zone: Electrons R Us has a Load Ratio Share of 1%.

28. 28 The Story PowerHouse has a generator, Gator Gulch, in the North Zone that is scheduled to be off-line but available on June 27, 2006 with the following Replacement Bid Prices:  Startup Price = $120 / MW  Hourly Run Price = $25 / MW ERCOT procures Gator Gulch as Replacement Reserve during the Day-Ahead Period for Zonal Congestion. The South to North CSC is constrained.

29. 29 RPRS Settlement Process: Pay Providers:  Capacity Insufficiency  Zonal Congestion  Local Congestion The Story Collect from Users:  Under Scheduled QSEs  Zonal Congestion  Uplift to Market

30. 30 Pay Providers:  Capacity Insufficiency  Zonal Congestion  Local Congestion The Story

31. 31 Zonal Replacement Reserve (LCFLAG = 0) Steps: (Same as with Capacity Insufficiency) 1. ZRPQ – Awarded amount 2. ZRPHR – Number of hours awarded 3. Apply Bids to calculate ZPCRPAMT Pay Providers of Capacity

32. 32 ZPCRPAMT – Zonal Procured Capacity Replacement Amount Pay Providers of Capacity ZPCRPAMT = -$8030

33. 33 The Story Collect from Users:  Under Scheduled QSEs  Zonal Congestion  Uplift to Market

34. 34 Just as before, in Hour Ending 1500, Electrons R Us pays USRPAMT = $55 * (10MW) = $550 Other QSE’s besides Electrons R US also pay USRPAMT, such that the total collected is USRPBILLAMTTOT = $55 * (100MW) = $5500 RPRS Under Scheduled Charge

35. 35 The Story Collect from Users:  Under Scheduled QSEs  Zonal Congestion  Uplift to Market

36. 36 South WestNorth Res 1 = 90MW Res 2 = 95MW Res 3 = 100MW Res 4 = 105MW RPRS Zonal Congestion Charge Example: Load 1 = 90MW Load 2 = 95MW Load 3 = 100MW Load 4 = 105MW

37. 37 RPRS Zonal Congestion Charge CSC RPhq = SPC CSCh * MAX (0, I CSChq )) I CSChq = MAX [0,MAX [Σ ((QSS TOPiqz – QOS TOPiqz ) * SF zcsc ) z ] n ] Variables CSC = Commercially Significant Constraint I =Scheduled MW Impact QSS = QSE Supply Schedule QOS = QSE Obligation Schedule SF = Shift Factor SPC = Shadow Price for Capacity Subscripts i = Interval h = Hour being calculated n = Number of time RPRS is procured TOP = Time of Replacement q = QSE z = Congestion Management Zone

38. 38 For each interval in Hour Ending 1500, Calculate the impact on the the South to North constraint as follows: Impact South = (Resource – Obligation) * SF SN Impact North = (Resource – Obligation) * SF SN Impact SN = Impact South + Impact North The hourly impact is the maximum interval impact during the hour. RPRS Zonal Congestion Charge Calculate the Schedule Impact

39. 39 RPRS Zonal Congestion Charge Calculate the Schedule Impact The hourly impact is the maximum interval impact during the hour; ICSC = 65.47 MW

40. 40 CSCRPAMT= (Impact) * Shadow Price for Capacity = ICSC * MCPCSPC = (65.47MW)($100/MW) = $6547.00 RPRS Zonal Congestion Charge Calculate the Congestion Charge

41. 41 The Story Collect from Users:  Under Scheduled QSEs  Zonal Congestion  Uplift to Market

42. 42 UC RP = -1 * [ Σ ( PC RP + LPC RP ) + Σ US RP + TCRPAY RP + Σ CSC RP ]* LRS RPRS Uplift Charge Variables UC = RPRS Uplift Charge PC = Cost of Capacity for Zonal Congestion and Capacity Insufficiency LPC = Cost of RPRS for Local Congestion US = RPRS Under Scheduled Charge TRCRPAY = TCR Payment per Hour CSC = RPRS CSC Impact Capacity Charge LRS = Load Ratio Share Subscripts RP = Replacement Reserve

43. 43 For Hour Ending 1500, Electrons R Us pays UC RP = -1 * [ Σ PC RP + Σ US RP + TCRPAY RP + Σ CSC RP ]* LRS UCRPAMT = -1*[ ZPCRPBILLAMTTOT + USRPBILLAMTTOT + (TCROWNEDERCOT * MCPCSPC) + CSCRPQSEBILLAMTTOT] * LRS = -1*[-$8030 + $5500 - (500MW * $100/MW) + $51,000 ] * 0.01 = $15.30 RPRS Uplift Charge

44. 44 Act 3 Local Congestion

45. 45 The Story PowerHouse has a generator, Swamp Thing Unit 1, in the South Zone that is scheduled to be off-line but available on June 27, 2006 with the following Replacement Bid Prices:  Startup Price = $120 / MW  Hourly Run Price = $25 / MW ERCOT procures Swamp Thing Unit 1 as Replacement Reserve during the Adjustment Period for Local Congestion. There is no Zonal Congestion.

46. 46 The Story Data for Swamp Thing Unit 1 Gas-Steam Reheat Boiler RCGSC = $3000 + (FIP * 16.5 MMBtu/MW * RMC) RCGMEC = 17.0 MMBtu/MW * FIP Power House brings the unit on and operates at 100 MW during the instructed hours Note: RMC (Resource Maximum Capacity) is the average HSL during the first hour of the instructed period.

47. 47 RPRS Settlement Process: Pay Providers:  Capacity Insufficiency  Zonal Congestion  Local Congestion The Story Collect from Users:  Under Scheduled QSEs  Zonal Congestion  Uplift to Market

48. 48 Pay Providers:  Capacity Insufficiency  Zonal Congestion  Local Congestion The Story

49. 49 Pay Providers of Capacity Local Replacement Reserve (LCFLAG = 1) Steps 1. LRPQ – Awarded amount 2. LRPHR – Number of hours awarded 3. LPS – Start up payment 4. LPO – Operation payment

50. 50 LRPQ – Local Replacement Quantity Hour 15 (Intervals 57 – 60): LRPQ =( 124 + 125 + 127 + 128 )/ 4] = 126 HoursHr10Hr11Hr12Hr13Hr14Hr15Hr16Hr17Hr18Hr19Hr20Hr21 LCFLAG........222221111222....... IntervalInt57Int58Int59Int60Int61Int62Int63Int64Int65Int66Int67Int68 LSL........75767879 78 77....... Hours LRPQ........00000126128127 000....... Hr10Hr11Hr12Hr13Hr14Hr15Hr16Hr17Hr18Hr19Hr20Hr21 Pay Providers of Capacity HSL........124125127128 127 126.......

51. 51 LRPHR – number of hours instructed LRPHR = 4 HoursHr10Hr11Hr12Hr13Hr14Hr15Hr16Hr17Hr18Hr19Hr20 LRPQ........00000126128 1270....... LRPHR........0000044440....... Pay Providers of Capacity

52. 52 Pay Providers of Capacity Calculate LPS – Local RPRS start up payment LPS = RCGSC / LRPHR = [$3000 + (FIP * 16.5 MMBtu/MW * RMC)] / LRPHR = [$3000 + (FIP * 16.5 MMBtu/MW * LRPQ (1st HR) ] / LRPHR = [$3000 + ($8.00/MMBtu * 16.5 MMBtu/MW * 126 MW)] / 4 HR = $4908 / HR Section 6.8.1.11

53. 53 Pay Providers of Capacity RCGMEC = 17.0 MMBtu/MWh * $8.00/MMBtu = $136 / MWh LPO = [ ($136 - $60 / MWh) * 75 MW * ¼ hr) + ($136 - $61 / MWh) * 76 MW * ¼ hr) + ($136 - $62 / MWh) * 78 MW * ¼ hr) + ($136 - $63 / MWh) * 79 MW * ¼ hr) ] =$5734.75 for Hour Ending 1500 Section 6.8.1.11 Calculate LPO – Local RPRS Operating payment

54. 54 Pay Providers of Capacity LPCRPAMT – Local Procured Capacity Replacement Amount For Hour Ending 1500, LPCRPAMT = -1* [Max(0, LPS + LPO) + LPRPADJ] = -1* [($ 4908.00 + $5734.75)] + 0 = -$10,642.75 Section 6.8.1.11

55. 55 The Story Collect from Users:  Under Scheduled QSEs  Zonal Congestion  Uplift to Market

56. 56 UC RP = -1 * [ Σ ( PC RP + LPC RP ) + Σ US RP + TCRPAY RP + Σ CSC RP ]* LRS RPRS Uplift Charge Variables UC = RPRS Uplift Charge PC = Cost of Capacity for Zonal Congestion and Capacity Insufficiency LPC = Cost of RPRS for Local Congestion US = RPRS Under Scheduled Charge TRCRPAY = TCR Payment per Hour CSC = RPRS CSC Impact Capacity Charge LRS = Load Ratio Share Subscripts RP = Replacement Reserve

57. 57 For Hour Ending 1500, Electrons R Us pays UC RP = -1 * [ LPC RP ]* LRS UCRPAMT = -1* [ LPCRPBILLAMTTOT ] * LRS = -1* [ -$ 10,642.75 ] * 0.01 = $106.43 RPRS Uplift Charge

58. 58 Questions