1. NPRR 097 DSR and Small Capacity / Low Operating Level Issues for Compliance Monitoring

2. Background  Previous method to gauge Regulation deployment performance in Nodal Protocols worked for DSRs and was a compromise by TPTF members  New method adopted by TPTF in NPRR 097 and forwarded to PRS  Returned to TPTF by PRS to vet concerns over DSR ability to meet the new Regulation Service and Generation Resource Energy Deployment Performance Criteria

3. New Method  Unit by unit measurement of performance and delivery of energy and regulation  Essentially a % error measurement of the difference between actual generation and expected generation  Works well for most unit statuses  GREDP (%) = ABS[((ATG – AEGR)/(ABP + ARI)) – 1.0]*100

4. Problems Inherent with New Method  Original problem presented as comments to PRS – QSEs with DSRs forced to choose either to pass the GREDP metric or to follow their dynamic load Difficult, if not impossible, to do both Difficult, if not impossible, to do both  Second problem – For all units Units operating at low load levels or have a smaller capacity have a very small window for error Units operating at low load levels or have a smaller capacity have a very small window for error

5. Qualification / Reporting Requirements  To qualify to provide Regulation 8.1.1.2.1.1 states – “During at least one five minute duration interval selected to evaluate each of the Reg-Up and Reg- Down amounts being tested, the Generation Resource Energy Deployment Performance (GREDP) calculated in accordance with Subsection 8.1.2.4.1 below over the entire five minute interval must be less than or equal to 3.5%. Additionally, in all other test sequence intervals, the Resource’s measured GREDP must be less than or equal to 5% as calculated for the entire duration of each test interval.” “During at least one five minute duration interval selected to evaluate each of the Reg-Up and Reg- Down amounts being tested, the Generation Resource Energy Deployment Performance (GREDP) calculated in accordance with Subsection 8.1.2.4.1 below over the entire five minute interval must be less than or equal to 3.5%. Additionally, in all other test sequence intervals, the Resource’s measured GREDP must be less than or equal to 5% as calculated for the entire duration of each test interval.”

6. Qualification / Reporting Requirements (cont’d)  In addition, 8.1.1.4.1(4) states that ERCOT shall post to the Certified Area of the MIS a report for each Generation Resource that includes GREDP %  The report provides intervals where: GREDP % < 2.5% GREDP % < 2.5% GREDP % > 2.5% but 2.5% but < 5% GREDP % > 5% GREDP % > 5%

7. Tackling the DSR Issues

8. DSR Impacts  New method requires calculations to be calculated from the SCED Base Point  As long as SCED does not dispatch a DSR from its submitted OS, the OS becomes the Base Point [6.4.2.2(2)(a)]  For a DSR, sum of DSR OSs is a best case estimation of where load will be

9. DSR Impacts  NOIEs have the ability to follow their telemetered load with DSRs and may do so with any combination of DSRs (ie. can move any DSR unit in their portfolio to meet changes in load)  If a DSR elects to follow its load instead of SCED Base Point, a natural deviation from Base Point will occur (natural error)  This natural error is captured in the new GREDP criteria creating a disadvantage to NOIEs in passing the metric – NOIEs are allowed a smaller bandwidth for error than non-NOIEs and will fail the criteria more frequently

10. DSR Impacts  NOIEs placed in an undesirable predicament Insulate customers from adverse pricing and fail the GREDP metric and face possible TRE action OR Insulate customers from adverse pricing and fail the GREDP metric and face possible TRE action OR Expose customers to adverse pricing but avoid failing the GREDP metric and possible TRE action Expose customers to adverse pricing but avoid failing the GREDP metric and possible TRE action  Neither choice is acceptable and places an unequal burden on NOIEs

11. Proposed Solution  Stays within framework of current GREDP calculation  Creates two methods for calculating GREDP Original calculation maintained for non-DSRs Original calculation maintained for non-DSRs New calculation for DSRs – similar to what previously existed in Protocols but was struck New calculation for DSRs – similar to what previously existed in Protocols but was struck  Removes the “natural error” from GREDP calculation

12. Proposed Solution  Allows for non-DSRs in a NOIE fleet to be calculated under the original GREDP methodology  Maintains same reporting and qualification requirements as original GREDP  Will not impact non-NOIE QSEs

13. Proposed Solution Goal  Allows NOIEs to insulate customers from adverse pricing while giving NOIEs a fair opportunity to pass the metric and avoid TRE action

14. Calculation for Generation Resources with non-DSR status GREDP (%) = ABS[((ATG – AEGR)/(ABP + ARI)) – 1.0]*100  No changes

15. GREDP Calculation for DSR Resources GREDP (%) = ABS[(ATDSRG – AIBPD + ADBPD + Intra-QSE Purchase – Intra- QSE Sale – AEGR) / (ATDSRL + ARI) – 1.0] * 100  Introduces a telemetered load component

16. The Low Operating Level / Small Capacity Issue

17. Low Operating Level Impacts  5% of a small number is a small number  2.5% of a small number is a really small number

18. Impacts Reporting Thresholds 2.50%3.50%5.0% Operating Level 10.25.35.5 25.625.8751.25 501.251.752.5 1002.53.55 2506.258.7512.5 50012.517.525 75018.7526.2537.5

19. Impacts  Many units that operate at very low output levels are often older and have less sophisticated controls to meet these tight standards  Many of these units provide needed Ancillary Services  Smaller capacity units, older units, and those operating at low load levels provide a valuable service to the market (especially across peaks) and should not be penalized based on an extremely small bandwidth

20. Ultimate Impact to the Market  Units operating at low levels are more likely to fail the GREDP metric although they are providing the same quality service as those operating at high levels – this will force smaller units out of the market and drive up AS costs to the consumer

21. Proposed Solution  Introduces a 5 MW bandwidth to the equation  If error is less than 5 MW then GREDP = 0  Consistent with the Base Point Deviation Charges in Section 6 of the Nodal Protocols

22. Non-DSR Solution If: ABS(ATG – AEGR – ABP - ARI) < 5 Then: GREDP = 0 Else: GREDP (%) = ABS[((ATG – AEGR)/(ABP + ARI)) – 1.0]*100

23. DSR Solution If: ABS(ATDSRG – AIBPD + ADBPD – ATDSRL+ Intra-QSE Purchase - Intra-QSE Sale – AEGR - ARI) < 5 GREDP = 0 Else: GREDP (%) = ABS[(ATDSRG – AIBPD + ADBPD + Intra- QSE Purchase – Intra-QSE Sale – AEGR) / (ATDSRL + ARI) – 1.0] * 100