1. Integrating Wind Generation and the Impact on the Texas Power Grid
October 7, 2009
Mary Anne Brelinsky
Vice President, Texas Power
Confidential

2. EDF Group and EDF Trading Overview
EDF Group is Europe’s largest electricity producer.
EDF Group is Europe’s largest electricity supplier, contributing to the supply of energy and related services to more than 38 million customers.
EDF Group is involved in all areas of the energy value chain including generation, transmission, distribution, supply and trading, and is increasingly active in Europe’s gas markets.
EDF operates 66 Nuclear Power Stations worldwide (including British Energy).
Investment Grade Credit, EDF shares trade on the Euronext Paris index (EDF)
€64 BILLION
2008 sales
€23 BILLION
in shareholder’s equity
€7.9 BILLION
In 2008 operating profit
85% owned
by the French government
164,000
Employees worldwide
126.7 GW
installed generation capacity
EDF Trading is a leader in the international wholesale energy markets.
EDF Trading has a pivotal role at the heart of the worldwide EDF Group. As EDF Group’s interface to the wholesale energy markets, EDFT uses large scale arbitrage and trading to optimize the energy positions and assets owned by EDF group.
EDFT sources, supplies, transports, stores, blends and converts physical commodities as well as trade in the financial markets.
An entrepreneurial culture, strong business platform and high caliber people combine to create a powerful business model that has driven EDF Trading to its leading position in Europe today.
€1 BILLION
2008 Operating profit
€1.6 BILLION
in shareholder’s equity
700
Employees
100% owned
by EDF Group S.A. A3
Moody’s Credit Rating
London
Headquartered

3. Eagle Energy Partners Overview
Eagle Energy, a subsidiary of EDF Trading.
Wholesale Gas Trading and Supply:
One of the top gas marketers in North America, marketing 4.4 Bcf a day of natural gas
800,000 MMBtu/d of firm transportation in 40 pipelines primarily in the Eastern US
Arrangements for storage of gas in the Mid-Con, Mid-Atlantic, Gulf Coast and West regions with 5+ year term capacity on ANR, CGT, Centerpoint, and Kern River
Wholesale Power Trading and Supply:
Market approximately 10,000 MW of third-party owned power generating assets in the US, dispatching ~8% of ERCOT
Optimize the fleet via Day-ahead, intra-day, monthly, fixed and index products
Wide regional presence: SERC, VACAR, SPP, FRCC, MISO, PJM, and ERCOT
Coal Offices in Denver and Baltimore
180 Employees in the United States and Canada
Gas Asset
Coal
Gas Transport
Power Asset

4. Eagle’s Power Footprint by Fuel Mix of Clients
Calgary
650mw
Portland
680mw
Chicago
150mw
Pittsburgh
San Francisco
188mw
53mw
Baltimore
Denver
500mw
Power Regions
685mw
16mw
PJM
80mw
Legend
648mw
Atlanta
MISO
212mw
600mw
2500mw
EDFTNA HQ
708mw
WEST
EDFTNA Office
SERC
Wind
550mw
Combined Cycle Gas
100mw
900mw
Zones
Gas Peaking
System Optimization
North
550mw
Petroleum Coke
Houston
Coal
40mw
South
Solar
136mw
250mw
290mw
212mw
830mw
Demand Response
West
180mw
Load Served

5. ERCOT Market Overview

6. Important Acronyms and Terms
CREZ – Competitive Renewable Energy Zone - an area where wind generation facilities will be installed throughout West Texas and the Panhandle and from which transmission facilities will be built to other areas of the state to deliver mostly renewable power to end-use consumers in the most beneficial and cost-effective manner.
ERCOT – Electric Reliability Council of Texas - certified by the Public Utility Commission of Texas as the Independent System Operator (ISO)
MCPC - Market Clearing Price for Capacity - highest price for a Settlement Interval for Ancillary Service capacity awarded for each of the Ancillary Services procured by ERCOT
MCPE - Market Clearing Price for Energy - highest price associated with a Congestion Zone for a Settlement Interval for Balancing Energy deployed
PGC - Power Generation Company
QSE – Qualified Scheduling Entity - Market Participant that is qualified by ERCOT to submit Balanced Schedules and Ancillary Services bids and settle payments with ERCOT
REP – Retail Electric Provider - A person or group that sells electric energy to retail Customers in ERCOT
TDSP - Transmission and Distribution Service Provider - Owns or operates for compensation in this state equipment or Facilities to transmit and/or distribute electricity, and whose rates for Transmission Service, distribution service, or both is set by a Governmental Authority
WGR - Wind-powered Generation Resource - A Generation Resource that is powered by wind.

7. ERCOT in the National Picture
North American Electric Reliability Council Regions
ASCC - Alaska Systems Coordinating Council
ERCOT - Electric Reliability Council of Texas
FRCC - Florida Reliability Coordinating Council
MRO Midwest Reliability Organization
NPCC - Northeast Power Coordinating Council
RFC ReliabilityFirst Corp.
SERC - Southeastern Electric Reliability Council.
SPP Southwest Power Pool
WSCC - Western Systems Coordinating Council

8. Texas Pre-Deregulation: 10 Control Areas
Former ERCOT Control Areas
HLP Houston Lighting and Power
TU Texas Utilities
LCRA Lower Colorado River Authority
STEC South Texas Electric Coop
PUB Public Utilities Board
TMPP Texas Municipal Power Pool
TNMP Texas New Mexico Power
CPS City Public Service
CSW Central South West
AE Austin Energy

9. Senate Bill 7 and the Renewable Energy Mandate
On January 1, 2002, retail competition in Texas was initiated for all customers of investor-owned utilities in ERCOT
Prior to Senate Bill 7 (SB 7), all retail electric customers were served by utilities, electric cooperatives, or municipally owned utilities and few customers had a choice of where or from whom they bought their power
Prices for the production and sale of electricity to both wholesale and retail customers are now dictated by market forces
Customers with peak demand of one megawatt or less had a regulated “price to beat”, provided by the REP affiliated with the traditional utility service area until 2007
Retail prices are not subject to Commission regulation or oversight, and customers are free to choose among the variety of options available from competitors in the marketplace
Transmission and distribution facilities remain regulated by the Commission
Renewable Energy Mandates encouraged the construction and operation of new renewable energy projects in Texas to reduce air pollution associated with the generation of electricity using fossil fuels

10. Texas Uses a Stakeholder Process
Rules are made using a “Stakeholder” process
Changes to market rules are made and implemented by elected stakeholders
Market participants fall into the following categories:
Independent Power Marketers
Independent Generators
Municipal Utilities
Electric Cooperatives and River Authorities
Consumers
Independent REPs
Investor Owned Utility

11. ERCOT’s Role In Texas
ERCOT’s primary role is to ensure Reliability; they do this by:
Resource capacity planning
Real-time transmission management
Procure balancing energy
Issue deployment instructions to units, as needed
ERCOT is similar to an Air Traffic Controller
ERCOT’s main roles include:
Ensures the grid can accommodate scheduled energy transfers
Maintain grid reliability
Oversees retail transactions

12. ERCOT Market Participant Structure
SCADA Data
Customer Meter Reads
Loss Information
Balanced Schedules
Ancillary Service Bids
Eagle QSE
Other QSEs
TDSP
Resource Schedules
Resource Bids
Load Schedules
Wind Only QSE
Eagle REP
Other PGCs
Other REPs
Client Load Resources
Client Generation
Client Wind Resources
Commercial & Industrial
Customers
Residential
Customers

13. Qualified Scheduling Entity (QSE)
QSEs are market participants that are qualified by ERCOT to:
Submit Balanced Schedules to ERCOT
Submit Ancillary Services Bids and Schedules to ERCOT
Clear all financial settlement with ERCOT
Staff a 7x24 Real Time Desk to handle operational changes
All Resources and Load Serving Entities (LSEs) must be represented by a QSE
To provide ancillary services in ERCOT a QSE must be a Level 4 certified QSE

14. Retail Electric Provider (REP)
Retail Electric Power providers serve all end use consumers of electricity in ERCOT
To serve load in ERCOT a REP must know:
ESID (Electric Service Identifier of the Meter) and address of Facility
ERCOT Congestion zone
Weather zone
Meter type (scalar or IDR)
Load (historical consumption pattern)
Transmission Distribution Service Provider
Contract for the wholesale supply of electricity
Contract for the wholesale supply of Ancillary Services
Financially settle with their QSE
Eagle Industrial Power Services

15. Power to Choose Website

16. ERCOT Transmission Grid
The ERCOT Grid
$30 Billion Market
6 million customers with right to choose
72,820 MW generation
Peak Load of 63,453 MW set on July 13, 2009
8,000 miles of 345 kV lines
16,000 miles of 138 kV lines
Over 38,000 miles of total transmission lines, over 1.5 times the circumference of the earth!!!

17. 2009 ERCOT Congestion Zones
Wholesale Market:
Zonal Design
Bilateral Market
Zones are defined annually
Congestion: The situation that exists when scheduled power flows, when netted, are projected to exceed the capability of a Transmission element or set of elements.
Constraint: A transmission element or group of elements ratings that limit the free flow of energy. Constraints are typically thermal, voltage stability, and angular stability limitations. These constraints are the result of defined contingencies such as the trip of a generating unit or transmission circuit.
Commercially Significant Constraint (CSC): A constraint in the ERCOT Transmission Grid that is found to limit the free flow of energy a commercially significant degree. Solutions to the congestion are solved competitively.

18. Congestion in ERCOT West North Houston South Two types of congestion:
Inter-zonal congestion
Determined by CSCs (commercially significant constraints determined by ERCOT annually)
Occurs between congestion zones
Resolved using Zonal Balancing Energy (Merit Order)
Intra-zonal congestion
Occurs within a congestion zone
Cannot be resolved with Zonal balancing energy
Unit-specific deployments and OOM Energy are utilized
Cost is uplifted system wide to all loads
West
North
Houston
South

19. MCPE and MCPC Prices
MCPCs
MCPEs

20. Three Primary ERCOT Markets
ERCOT uses three primary markets to manage generation, forecasted load, and the intraday volatility in system frequency:
Primarily over the counter energy hedges between generation, trading, and load counterparties
ERCOT purchased capacity used to maintain system reliability
Spot energy prices for the imbalance between scheduled generation and forecasted load.
Day Ahead Bilateral Markets
Day Ahead Ancillary Markets
Balancing Energy Markets

21. ERCOT’s Bilateral Market
Day Ahead Bilateral Markets
ERCOT’s Bilateral Market
In the ERCOT Bilateral Market:
Day Ahead Traders determine their position for tomorrow by evaluating load and generation resources for all participants in their Qualified Scheduling Entity (QSE)
If their aggregated portfolio position for tomorrow is long, short, or un-optimized the trader will step out into the bilateral market
Traders use ICE, Power Brokers, and direct contacts at other Power Marketers to facilitate trading
Power can be sold by Congestion Zone
Trades typically occur in 50 MW blocks:
On-peak – Monday through Friday HE 7 through HE 22 (the 5x16)
Weekend – Saturday and Sunday HE 7 through HE 22 (the 2x16)
Off-peak – Everyday HE 1-6 and HE (the 7x8)

22. Day Ahead Ancillary Services Market
Day Ahead Ancillary Markets
What are Ancillary Services (“AS”)?
According to ERCOT, “Ancillary Services are those services necessary to support the transmission of energy from resources to loads while maintaining reliable operation of transmission provider’s transmission systems in accordance with Good Utility Practice.”
Ancillary Service Products receive a Capacity Payment!
The four primary Day Ahead Ancillary Service Products are:
Regulation Up (URS): Controls the power output in response to a change in system frequency, signal is sent every 2 seconds, 24 hours a day; all signals from ERCOT cause an increase in generation from baseline
Regulation Down (DRS): Same as Regulation Up but all signals from ERCOT cause a decrease in generation from baseline
Responsive Reserve (RRS): Provided by unloaded generation facilities on line, interruptible loads controlled by high set under-frequency relays, or DC tie response that stops frequency decay; RRS is usually a short term deployment
Non-spinning Reserve (NSRS): Utilizes the portion of off-line capacity capable of being synchronized and ramped (or interrupted) to a specified output level within 30 minutes and is capable of running at specified output level for 1 hour

23. ERCOT’s Balancing Energy Market
Balancing Energy Markets
ERCOT’s Balancing Energy Market
Balancing Energy is a “thin” pool of energy that allows ERCOT to acquire additional resources to correct imbalances between generation and load
ERCOT looks at the balance between supply and demand approximately 30 minutes prior to each 15-minute interval
ERCOT will deploy "balancing energy" on behalf of the market, ERCOT may increase or decrease generation
During the financial settlement process, ERCOT determines which REPs and generators incorrectly forecasted their schedule and charges them imbalance costs
Schedules can be changed by QSEs up to an hour before the operating hour
The Balancing Energy Market does NOT provide Capacity Payments
Balancing Energy market prices change every 15 minutes and you have different prices per zone when congestion occurs

24. How has Wind Impacted ERCOT?

25. Challenges posed by wind power include:
So what happens when you add 9,000 MWs of Wind Generation to a 70,000 MW system?
Challenges posed by wind power include:
Forecasting of output in term, daily, and real time is complex
Variability in the output of the facilities require additional ancillary services to manage fluctuations
Large wind related ramp events require complimentary output from traditional generation facilities
Wind generators do not currently provide primary frequency response
Benefits created by wind generation include:
Lower spot market costs
Positive environmental impact
Job creation

26. Wind Energy in Texas Wind Capacity Installed by Year
System Planning Division Monthly Status Report August 2009

27. ERCOT Generation Stack by Fuel Type

28. ERCOT Generation Stack by Fuel Type

29. Long Term Impact of Wind on Spot Power Prices

30. Intraday Volatility Caused by Wind on the West Zone MCPE

31. Fuel Type During System Peak

32. How does ERCOT Forecast the Wind?
Two forecasts are produced for each Wind Resource:
Wind Generation Resource Production Potential (WGRPP) is an 80% probability of exceedence forecast
Short-Term Wind Power Forecast (STWPF) is the most likely or 50% probability of exceedence forecast
Each hour a new forecast is created for the next 48 hours
Aggregate forecasts are also created and sent to ERCOT
Inputs into the ERCOT Wind Forecaster:
WGR site-specific MW and meteorological data
Outage scheduler data
Registration data
Other (i.e. National or regional weather service data)
Aggregate Wind Power Forecasts:
Red = STWPF, Green = WGRPP
Key Challenges to Reliability with Increased Wind Penetration, PUCT Project Workshop 8/20/09
Dan Woodfin, Director, System Planning and John Dumas, Manager, Operations Planning

33. Forecast Error Happens
Chart to the right shows an example of forecasted expected Wind output versus actual output
On May 15, 2009 at 3:15 PM ERCOT models forecasted 6,000 MWs of wind during the off peak hours
Off peak wind output topped off at 3,000 MWs during the off peak hours
Large forecast error was caused by the over estimate of the power production as a cold front approached and passed through the region
Weather models overestimated the southerly wind speeds ahead of the front
To cover the shortage of wind output traditional generation is deployed by ERCOT
Key Challenges to Reliability with Increased Wind Penetration, PUCT Project Workshop 8/20/09
Dan Woodfin, Director, System Planning and John Dumas, Manager, Operations Planning

34. Sometimes You Can Have Too Much of a Good Thing
Wind Output/Curtailments vs. Day Ahead Resource Plans for May 2009 34
Key Challenges to Reliability with Increased Wind Penetration, PUCT Project Workshop 8/20/09
Dan Woodfin, Director, System Planning and John Dumas, Manager, Operations Planning

35. Managing the Wind Ramp
ERCOT utilizes an “ERCOT Large Ramp Alert System” (ELRAS) that employs the same data that is provided for the wind power forecasts.
ELRAS includes the following:
An estimation of the probability of a defined ramp event (i.e MW up ramp in a hour) beginning in a particular interval
Information regarding the weather event which is most likely to cause the ramping event (i.e. a cold front)
Additional attributes for each predicted ramp event including most likely start time, duration and maximum ramp rate
Time variant graphics to provide additional situational awareness
ELRAS focuses on the next 6 hours into the future
Key Challenges to Reliability with Increased Wind Penetration, PUCT Project Workshop 8/20/09
Dan Woodfin, Director, System Planning and John Dumas, Manager, Operations Planning

36. Managing the Wind Ramp (cont.)
Ramp events have different meteorological causes which makes tracking and predicting them complex
Key Challenges to Reliability with Increased Wind Penetration, PUCT Project Workshop 8/20/09
Dan Woodfin, Director, System Planning and John Dumas, Manager, Operations Planning

37. Can we have our cake and eat it too?

38. Interconnection Requests for Generation

39. Wind Installed Capacity and Interconnection Requests
ERCOT is currently tracking 230 active generation interconnection requests totaling over 83,000 MW
ERCOT is currently managing almost 48,000 MWs of wind generation interconnection requests
Transmission Projects energized in 2009 total about $416 million
To find the list of projects go to the ERCOT web at:

40. Ancillary Service Methodology
Wind Ancillary Services study was performed by General Electric consulting group with input from ERCOT staff
Study looked at the need for additional or modified ancillary services to meet reliability requirements given the large increase in wind generation in ERCOT
Study found that ERCOT needed to implement state-of-the-art wind power production forecast to protect against variability of the wind
The study predicted that with 15,000 MWs of wind installed, the amount of Regulation would go up by 23%. ERCOT experience has shown that the incremental Regulation required is greater.
ERCOT procures Regulation to ensure that reserves are sufficient to cover 98.8% of the intervals
Calculated based on previous 30 days and same month last year
Accounts for the expected increase in installed Wind Generation for the upcoming month
Provision to increase regulation requirements if the last 30 day average CPS1 score falls below 100

41. CREZ Transmission Solution
The Public Utility Commission of Texas (PUCT), under Docket 33672, designed five zones as the Competitive Renewable Energy Zones (CREZs).
The PUCT asked ERCOT to develop transmission plans that would cost-effectively collect wind from the five CREZ areas and move it to load centers.
ERCOT evaluated four scenarios and in January of 2009 the PUC approved Scenario 2.
5,600 MWs
DFW
10,300 MW
SA/AUS
2,600 MW

42. Competitive Renewable Energy Zones (CREZ)

43. Actual Summer Week Generation by Fuel Type43

44. Actual Spring Week Generation by Fuel Type44

45. Forecasted 2013 High Wind Week Generation by Fuel Type45

46. The Costs and Benefits of CREZ
Estimated cost of the CREZ project is over $4.93 B
Cost to average rate payer in Texas is $4/month
Economic and environmental benefits are significant
Roughly $1.2 B in royalty payments to landowners
Estimated $3.32 B in tax payments to state and local governments over 10 years
Creation of construction & permanent jobs ($900 MM)
Reduction of 193 MM tons of CO2 per year
Reduction of 93 k tons of NOx per year
Reduction of 17 B gallons of H2O usage per year
CREZ will add 2,334 miles of new 345-kV transmission lines capable of handling 18,456 MWs (11,553 MWs of incremental capacity above the 6,900 MWs of base case generation)
Utilities participating include AEP Texas Central, AEP Texas North, Electric Transmission Texas, LCRA, Oncor, Sharyland Utilities, South Texas Electric Cooperative, and Texas-New Mexico Power Company
As a fast track project, completion is targeted for 2013

47. Questions?