1. Constraints Competitiveness Tests (CCT) Results Analysis of 2010 SSWG Peak Summer Case Presented to CMWG 1/27/2010

2. 2CCTAugust 2009 - Slide Agenda Description of Study –Method –Weaknesses –Results Proposal for Next Study –Constants –Changes Discussion of Issues Raised in Previous CMWG Discussion of CCT Test

3. 3CCTAugust 2009 - Slide Description of Study Model –2010 Steady State Working Group Peak Summer Case Posted Dec 2009 Constraints –Within Zone Combinations of 2010 CSCs and CREs W-N contingencies with W-N elements N-W contingencies with N-W elements N-S contingencies with N-S elements S-N contingencies with S-N elements N-H contingencies with N-H elements Decision Making Entity –Used the same information as previous study

4. Weaknesses of Study Decision Making Entity information lacking –DME information was developed for 2009 SSWG case –Significant mismatch between 2009 and 2010 cases –New DME from RARF not yet complete in Registration Scorecards go live soon. Peak Summer Case Used –Only reflects one network condition for entire year

5. N-H Constraints

6. N-W Constraints

7. W-N Constraints

8. N-S Constraints

9. S-N Constraints

10. 10CCTAugust 2009 - Slide Market Concentration Is a function of the no. of firms and their respective shares of the total production in a market. Alternative terms includes Industry Concentration, or seller concentration etc. Herfindahl-Hirschman Index (HHI) Is calculated by summing the squares of the individual market shares (in percentage) of all the participants: where si is the market share of firm i in the market; and N is the number of firms. Measuring Market Concentration - HHI

11. 11CCTAugust 2009 - Slide Measuring Market Concentration – HHI - Examples Entity Controlled Capacity (MW) Share (%)Share^2 Controlled Capacity (MW) Share (%)Share^2 Controlled Capacity (MW) Share (%)Share^2 110,00016.7277.820,00033.31111.130,00050.02500.0 210,00016.7277.88,00013.3177.86,00010.0100.0 310,00016.7277.88,00013.3177.86,00010.0100.0 410,00016.7277.88,00013.3177.86,00010.0100.0 510,00016.7277.88,00013.3177.86,00010.0100.0 610,00016.7277.88,00013.3177.86,00010.0100.0 Total60,000 1388.9 60,000 1822.2 60,000 2900.0 HHI gives proportionately greater weight to the market shares of the larger firms, in accord with their relative importance in competitive interactions HHI is a commonly used measurement. For example, the Department of Justice and Federal Trade Commission’s Horizontal Merger Guidelines use HHI. Highly competitive: below 100 Un-concentrated: between 100 to 1000 Moderately concentrated: between 1000 and 1800 Highly concentrated: above 1800

12. 12CCTAugust 2009 - Slide Import SideExport Side Annual CCT>2000>2500 Monthly CCT>2500>3000 Daily CCT>2500>3000 CCT - Test Procedure 1: A constraint fails the competitive test if its Element Competitiveness Index (ECI) is: CCT Implementation - Two Test Procedures

13. 13CCTAugust 2009 - Slide Test Procedure 1 Determine if there is sufficient competition to solve the constraint on the import and export sides by performing the following steps 1.Determine effective capacity available to resolve the constraint on the import side 2.Determine effective capacity available to resolve the constraint on the export side 3.Determine Element Competitive Index (ECI) on the import and export sides 4.Determine is the constraint is competitive by comparing the calculated ECIs on import and export sides to predefined ECI thresholds Test Procedure 2 Determine the existence of any pivotal players CCT Implementation - Two Test Procedures

14. 14CCTAugust 2009 - Slide CCT Implementation - Two Test Procedures Export Side Import Side 2.Determine effective capacity needed on Import Side to resolve the constraint (Export Side used as Reference) 3.Determine ECI on Import Side of the Constraint 1.Determine Shift Factors, effective load & effective capacity on Export Side (Import Side used as reference); and determine the resources on Export Side that bind the constraints (XUSED). Limit Effective Load (max withdraw) Effective Capacity >= (Load +Limit) Generation Entity: x, y,…, a, b,…

15. 15CCTAugust 2009 - Slide CCT Implementation - Two Test Procedures Export Side Import Side 2.Determine effective capacity needed on Import Side to resolve the constraint (Export Side used as Reference) 3.Determine ECI on Import Side of the Constraint Limit 5.Determine effective capacity needed on Export Side to resolve the constraint (Import Side used as reference) 6.Determine ECI on Export Side of the constraint Effective LoadEffective Capacity >= (Load -Limit) Generation Entity: x, y,…, a, b,… 4.Determine shift factors, effective load and effective capacity on Import Side of the constraint (Export Side used as reference); determine the resources on Import Side that relieve the constraint overload (IUSED) 1.Determine Shift Factors, effective load & effective capacity on Export Side (Import Side used as reference); and determine the resources on Export Side that bind the constraints (XUSED). 7.Determine if the constraint is non-competitive by comparing with predefined ECI thresholds

16. 16CCTAugust 2009 - Slide 2.Determine effective capacity needed on Import Side to resolve the constraint (Export Side used as Reference) 3.Determine ECI on Import Side of the Constraint 1.Determine Shift Factors, effective load & effective capacity on Export Side (Import Side used as reference) 5.Determine effective capacity needed on Export Side to resolve the constraint (Import Side used as reference) 6.Determine ECI on Export Side of the constraint 4.Determine shift factors, effective load and effective capacity on Import Side of the constraint (Export Side used as reference) 8.If not, determine if the constraint cannot be resolved by eliminating all available capacity on the Import side of the largest Entity, except Nuclear capacity and minimum energy of Coal and Lignite by any one entity and its affiliates during peak Load condition. 1) Remove Largest Entity, 2) Balance System Power, 3) If load can be served 9.If not, then a pivotal player exists. 7.Determine if the constraint is non-competitive by comparing with predefined ECI thresholds CCT Implementation - Two Test Procedures Export Side Import Side Limit Effective Load (max withdraw) Effective Capacity >= (Load +Limit) Generation Entity: x, y,…, a, b,…

17. 17CCTAugust 2009 - Slide Initial Analysis Based on CSCs/CREs Data Used – Network model same as annual (Planning Data) –The Protocol Reference 3.19 (3): Initial analysis of the CSCs and CREs and additional proposed contingency/limiting Transmission Element pairs for possible modifications or designation to their status as a Competitive Constraint must be completed prior to the Texas Nodal Market Implementation Date and subsequent analysis shall be on-going. Contingencies – CSC/CRE combinations for the same interface –I.e. evaluate all N-H CSC/CREs –in Base Case and –loss of one N-H CSC/CRE –Repeat for other 4 interfaces –No. of Constraints Evaluated: –(12*13 + 16*17 + 16*17 + 17*17 +17*17) = 1278