1. Demand Side Working Group Load Resource Performance Subgroup April 9, 2010 Mary Anne Brelinsky EDF Trading North America

2. 1 LaaR Zonal Market versus Nodal Market ProvisionZonal MarketNodal Market Provisional Qualification Allowed for 90 days. (6.10.1)Allowed for 90 days. (8.1.1.1(4)) Revocation of Provisional Qualification Provisional qualification as described herein may be revoked by ERCOT at any time for any non-compliance with provisional qualification requirements. (6.10.1) Provisional qualification as described herein may be revoked by ERCOT at any time for any non-compliance with provisional qualification requirements. (8.1.1.1(5)) Qual. TestActual load shed test required (PRR 714)Actual load shed test required (8.1.1.2 (12)) Net Dependable Capability Testing NoneGeneral capacity testing must be used to verify a Resource’s Net Dependable Capability. Net Dependable Capability is the maximum sustained capability of a Resource as demonstrated by performance testing. Each QSE for the Load Resources that it represents may not provide ERCOT a Maximum Power Consumption (MPC) greater than that Resource’s Net Dependable Capability without a text description indicating the reason for the increase. Qualification tests allow the Resource and QSE to demonstrate the minimum capabilities necessary to deploy an Ancillary Service. (8.1.1.2 (2)) Unannounced Testing by ERCOT Unannounced load shed test conducted by ERCOT if not deployed or successfully tested in previous 365 days None Performance monitoring/ evaluation Portfolio-based. If a QSE portfolio deploys 95-150% of its obligation within 10 minutes, all LaaRs that deployed successfully are deemed to have passed (thus, not subject to annual test for 365 days). LaaRs within the portfolio that did not deploy are not credited with a successful deployment (thus, still subject to annual testing). If a QSE portfolio does not achieve its 95-150% deployment within 10 minutes, all LaaRs that failed to deploy are considered to have failed the deployment (a strike, and still subject to annual test). LaaRs within the portfolio that did deploy their obligation within 10 minutes are considered to have deployed successfully (thus, not subject to annual test for 365 days). Resource-specific.

3. 2 LaaR Zonal Market versus Nodal Market (cont.) ProvisionZonal MarketNodal Market Penalty for non- performance (QSE) ERCOT may revoke any or all Ancillary Service qualifications of any QSE providing an Ancillary Service (s) for continued failure to comply with required performance standards. (6.10.12) ERCOT may require a Market Participant to develop and implement a corrective action plan to address its failure to meet performance criteria in this Section. The Market Participant must deliver a copy of this plan to ERCOT and must report to ERCOT periodically on the status of the implementation of the corrective action plan. (8.4(1)) Continued qualification as a QSE is contingent upon compliance with all applicable requirements in these Protocols. ERCOT may suspend a QSE’s rights as a Market Participant when ERCOT reasonably determines that it is an appropriate remedy for the Entity’s failure to satisfy any applicable requirement. (16.2.1(6)) Penalty for non- performance (LaaR/LR) ERCOT may revoke the Ancillary Service qualification of any LaaR for failure to comply with the required performance standards. Specifically, if a LaaR that is providing Responsive Reserve Service fails to respond with at least 95% of its scheduled capacity within ten (10) minutes of an ERCOT Dispatch Instruction, that response shall be considered a failure. Two LaaR performance failures within any rolling one-year period shall result in disqualification of that LaaR. After six (6) months of disqualification, the LaaR may reapply for qualification provided it submits a corrective action plan to ERCOT that identifies actions taken to correct performance deficiencies and the disqualified LaaR successfully passes a new actual deployment qualification test as specified in Section 6.10.2, General Capacity Testing Requirements. (6.10.12) ERCOT may revoke any or all Ancillary Service qualifications of any Generation Resource or Load Resource for continued material non- performance in providing Ancillary Service capacity or energy. (8.4(2)) POTENTIAL AGENDA ITEMS FOR THE SUBGROUP:  Produce recommendation to DSWG on whether to sponsor PRR and NPRR, or NPRR only.  Consider implications of proration on resource-specific RRS offers.  Add unannounced testing provisions for Load Resources.  Provide more detailed definition of a performance failure.  Determine appropriate penalties for LR performance failures.  Determine appropriate penalties for QSE performance failures.

4. 3 Increasing Consumptio n Decreasing Consumption HASL LASL Current Load Telemetry LSL = LPC = 0 5 – 30 Minutes Normal Load Fluctuations Expected Load Resource Scheduling HSL = MPC Decreasing Consumption HASL LASL Current Load Telemetry LSL = LPC = LPC Limit 5 – 30 Minutes A Load Resource is currently consuming 22 MWs and has a RRS schedule of 20 MWs. The Load Resource telemeters the following: Current Load = 22 MW RRS Schedule = 20 MW LPC = 0 MW LPC Limit = 0 MW ERCOT calculated LASL = 20 MW (LPC + RRS Schedule) Net Dependable Capability = 22 MW (Current Load – LPC) 22 MW 20 MW 0 MW RRS Schedule 20 MW Regulation Down Regulation Up Responsive Reserve Non Spinning Reserve Load Resource Limit Calculator As depicted in Section 6.5.7.2 Of the Nodal Protocols

5. 4 Expected Load Resource Event Decreasing Consumption HASL LASL Current Load Telemetry LSL = LPC = LPC Limit Minutes A Load Resource is currently consuming 22 MWs and has a RRS schedule of 20 MWs. The Load Resource telemeters the following: Current Load = 22 MW RRS Schedule = 20 MW LPC = 0 MW LPC Limit = 0 MW ERCOT calculated LASL = 20 MW (LPC + RRS Schedule) Net Dependable Capability = 22 MW (Current Load – LPC) 22 MW 20 MW 0 MW RRS Schedule 20 MW HASL LASL Current Load Telemetry LSL = LPC = LPC Limit 10 Minutes 22 MW 20 MW 0 MW RRS Schedule 20 MW What happens during a deployment? 0 Load Resource sheds 22 MWs in less than 10 mins. 8.1.1.4.2 (d) During periods when the Load level of a Load Resource (excluding Controllable Load Resources) has been affected by a Dispatch Instruction from ERCOT, the performance of a Load Resource in response to a Dispatch Instruction must be determined by subtracting the Load Resource’s actual Load response from its Baseline. “Baseline” capacity is calculated by measuring the average of the real power consumption for five minutes before the Dispatch Instruction if the Load level of a Load Resource had not been affected by a Dispatch Instruction from ERCOT. The actual Load response is the average of the real power consumption data being telemetered to ERCOT during the Settlement Interval indicated in the Dispatch Instruction. The load would pass the event.

6. 5 Load Resource Failure and Remedy HASL LASL Current Load Telemetry LSL = LPC = LPC Limit 10 Minutes 22 MW 20 MW 0 MW RRS Schedule 20 MW What happens when a Load Resource fails to perform during a deployment? 0 Load Resource sheds 15 MWs in 10 minutes, 7 MWs shy of the LPC of 0 MWs. Load is at 7 MW ERCOT Raises the LPC Limit by 7 MWs. HASL LASL Current Load Telemetry LSL = LPC = LPC Limit 10 Minutes 22 MW 20 MW 7 MW RRS Schedule 13 MW 0 A Load Resource is currently consuming 22 MWs and has a RRS schedule of 13 MWs. The Load Resource telemeters the following: Current Load = 22 MW RRS Schedule = 13 MW LPC = 7 MW LPC Limit = 7 MW ERCOT calculated LASL = 20 MW (LPC + RRS Schedule) Net Dependable Capability = 15 MW (Expected Power Consumption – LPC Limit)