1. GENERATION PROTOCOL AND SETTLEMENT TODAY COMET WG / RMS Workshop Electric Reliability Council of Texas May 2, 2007

2. 2 2 ERCOT GENERATION PROTOCOL AND SETTLEMENT ERCOT’s RoleERCOT’s Role Market Participant RolesMarket Participant Roles Generation RegistrationGeneration Registration Protocol and Operating Guide References Market Functions and Process to Realize Settlement Energy Settlement for Resources Topics

3. 3 3 May 2, 2007 ERCOT’s Role as defined in the protocols: System Reliability System Reliability Facilitate Wholesale Market Facilitate Wholesale Market Facilitate Retail Market Facilitate Retail Market ERCOT GENERATION PROTOCOL AND SETTLEMENT

4. 4 4 May 2, 2007 (3) Core Process to fulfill its role: Market Operations Market Operations Power Operations Power Operations Commercial Operations Commercial Operations ERCOT GENERATION PROTOCOL AND SETTLEMENT

5. 5 5 May 2, 2007 Day-Ahead Ancillary Services Capacity Market Day-Ahead Ancillary Services Capacity Market Selection & Dispatch based on competitive bids Selection & Dispatch based on competitive bids “Balanced” schedules by QSEs “Balanced” schedules by QSEs Market Operations ERCOT GENERATION PROTOCOL AND SETTLEMENT

6. 6 6 May 2, 2007 Managing Reliability – Keeping the lights on by ensuring: - Adequate transmission capacity - Adequate reserves (Ancillary Services), “just in case” - Adequate instructions are provided to participants Power Operations ERCOT GENERATION PROTOCOL AND SETTLEMENT

7. 7 7 May 2, 2007 The ERCOT power operations system monitors and analyzes all grid components every 2-4 seconds for status, loading and output. In conjunction with the transmission control centers of the TDSPs ERCOT directs the safe and reliable operation of the power system. Power Operations ERCOT GENERATION PROTOCOL AND SETTLEMENT

8. 8 8 May 2, 2007 Commercial Operations Operation of the retail transactions and financial settlement of the wholesale market Registration Registration -Retail premises -Market participants Retail Transactions Retail Transactions Data Acquisition Data Acquisition Load Profiling Load Profiling Data Aggregation Data Aggregation Settlement and billing Settlement and billing ERCOT GENERATION PROTOCOL AND SETTLEMENT

9. 9 9 May 2, 2007 Qualified Scheduling Entities (QSE) Only QSEs can schedule, bid and financially settle with ERCOT for energy and capacity Functions: Schedule Load and Generation Schedule Load and Generation Bid into the Ancillary Service market Bid into the Ancillary Service market Provide Ancillary Services Provide Ancillary Services Power Marketing Power Marketing Settle with ERCOT Settle with ERCOT QSE Market Participants ERCOT GENERATION PROTOCOL AND SETTLEMENT

10. 10 May 2, 2007 Resources (RES) Generation Facilities capable of providing energyGeneration Facilities capable of providing energy Loads capable of decreasing demand (LaaR)Loads capable of decreasing demand (LaaR) Can Provide reserve capacityCan Provide reserve capacity All Resources must be represented by a QSE Market Participants ERCOT GENERATION PROTOCOL AND SETTLEMENT

11. 11 May 2, 2007 TDSP Transmission & Distribution Service Providers (TDSPs) Local distribution / electric delivery companyLocal distribution / electric delivery company Own / maintain transmission linesOwn / maintain transmission lines Work with ERCOT in retail switching processWork with ERCOT in retail switching process Provide meter data to ERCOT for Settlement*Provide meter data to ERCOT for Settlement* Rates for service remain regulated by PUCTRates for service remain regulated by PUCT * ERCOT polls certain meters; some entities use a MRE Market Participants ERCOT GENERATION PROTOCOL AND SETTLEMENT

12. 12 May 2, 2007 Resources (RES) Registration ERCOT GENERATION PROTOCOL AND SETTLEMENT

13. 13 May 2, 2007 Resources (RES) Registration ERCOT GENERATION PROTOCOL AND SETTLEMENT

14. 14 May 2, 2007 Resources (RES) Registration ERCOT GENERATION PROTOCOL AND SETTLEMENT

15. 15 May 2, 2007 Resources (RES) Registration ERCOT GENERATION PROTOCOL AND SETTLEMENT

16. 16 May 2, 2007 Distributive Resources Protocol and Operating Guide Reference ERCOT GENERATION PROTOCOL AND SETTLEMENT Section 16.5 – Registration of Generation Resources… Every Generation Resource connected to the ERCOT Transmission System, distributed generator over one (1) megawatt (MW), Load acting as a Resource and EILS Resource must register with ERCOT. Distributed generation is an electrical generating facility located at a customer’s point of delivery (point of common coupling) of ten (10) megawatts (MW) or less and connected at a voltage less than or equal to sixty (60) kilovolts (kV) which may be connected in parallel operation to the utility system.

17. 17 May 2, 2007 Distributive Resources Protocol and Operating Guide Reference ERCOT GENERATION PROTOCOL AND SETTLEMENT Section 10.2.2 – TDSP Metered Entities TDSPs are responsible for supplying ERCOT with meter data associated with: 1.All Loads using the ERCOT System; 2.Any Generation Resource that delivers less than ten (10) MW to the ERCOT System and that is connected directly to the distribution system; …. meter data is not required from: (a)generation owned by a NOIE and used for NOIE’s self-use (not serving Customer Load); and (b)renewable generation with a design capacity less than fifty (50) kW interconnected to a TDSP and not registered as a Generation Resource

18. 18 May 2, 2007 Distributive Resources Protocol and Operating Guide Reference ERCOT GENERATION PROTOCOL AND SETTLEMENT Operating Guide Section 3.1.4 – Power Generation Companies This Section defines the minimum requirements for the integration of generation facilities greater than 10 MW into the ERCOT System. A generation facility shall be defined as any individual generating unit at a plant location that supplies energy to the ERCOT System. Each generation facility shall meet the following general requirements in order to integrate into the ERCOT System. Physically located in the ERCOT Control Area, Represented by a QSE represented PGC, or directly by a QSE.

19. 19 May 2, 2007 Distributive Resources Protocol and Operating Guide Reference ERCOT GENERATION PROTOCOL AND SETTLEMENT Operating Guide Section 3.1.4 – Power Generation Companies The QSE reporting for a PGC or a generation facility shall provide the following telemeter quantities for generation facilities greater than 10 MW to ERCOT Control Area Authority: Generator megawatts, Generator megavars, Generator energy (megawatt-hours), Substation equipment status, and Voltage where the facility connects to the Transmission Grid The directly connected TDSP may obtain any required data from ERCOT.

20. 20 May 2, 2007 Distributive Resources Protocol and Operating Guide Reference ERCOT GENERATION PROTOCOL AND SETTLEMENT Operating Guide Section 3.1.4 – Power Generation Companies The PGCs reporting QSE shall, as a minimum, provide adequate modeling information, as follows: Machine impedance and characteristics, Excitation system data, governor system constants, Transformer impedance, and Other relevant information.

21. 21 May 2, 2007 Balanced Schedules & “Relaxed” Balanced Schedules & “Relaxed” Balanced Schedules For each Interval of a QSE schedule: Qty of Resources and Obligations must Balance Qty of Resources and Obligations must Balance Bilateral Transactions must Match (Qty, QSE, Zone) Bilateral Transactions must Match (Qty, QSE, Zone) QSE may set obligations equal to supply, and/or schedule BES via ERCOT to meet Obligations* QSE may set obligations equal to supply, and/or schedule BES via ERCOT to meet Obligations* Resources: Generation or purchases Obligations: Load or sales * Limited by QSE’s collateral with ERCOT ERCOT GENERATION PROTOCOL AND SETTLEMENT

22. 22 May 2, 2007 What is the Resource Plan? Each QSE representing a Resource or Load Acting as a Resource must submit a Resource Plan!! Plan of how Generation Resources will operate Due to ERCOT by 4:00 pm of the day-ahead period Used by ERCOT to determine resource adequacy Validated against balanced schedules Let’s Check Under the Hood! Resource Plan ERCOT GENERATION PROTOCOL AND SETTLEMENT

23. 23 May 2, 2007 Wholesale Market Timeline ERCOT Market Timeline Market Operations Adjustment Period: Precedes Operating Period Operating Period: Balancing Energy Clearing Occurs every 15 minutes Power Operations Day-Ahead Period: 6:00am to 6:00pm prior to Operating Day. Commercial Operations Initial Settlement 10 days after Operating Day Final Settlement 59 days after Operating Day True-up Settlement: 180 days after Operating Day And/or specific Protocol Criteria is met ERCOT GENERATION PROTOCOL AND SETTLEMENT

24. 24 May 2, 2007 How does ERCOT acquire meter data? ERCOT GENERATION PROTOCOL AND SETTLEMENT

25. 25 May 2, 2007 TDSPs Send Meter Data to ERCOT Data is submitted to ERCOT via “EDI 867 Transactions” and loaded into ERCOT’s LODESTAR system for settlement. “EDI 867 Transactions” EDI: Electronic Data Interchange Data Acquisition

26. 26 May 2, 2007 EPS Meter Data Collection Polled directly by ERCOTPolled directly by ERCOT ERCOT converts the raw data to Settlement QualityERCOT converts the raw data to Settlement Quality MV90 is Data Collection SoftwareMV90 is Data Collection Software MV90 ERCOT initiates remote communication Meter data downloaded by ERCOT (15-minute data) Data Acquisition

27. 27 May 2, 2007 DC Ties NOIE Points of Delivery When is an EPS meter required? In general, generation: –Directly connected to transmission system –>10MW –Ancillary Services –Auxiliary Load Also: –Bi-Directional NOIE Points of Delivery –DC Ties Generation Data Acquisition

28. 28 May 2, 2007 ERCOT settles for services procured to manage the Texas power grid. Capacity Settlement Settlement Calculations Settlement of What? Energy Settlement

29. 29 May 2, 2007 Balancing Energy Resource Imbalance Load Imbalance OOME Uninstructed Resource Charge Congestion Mismatched Schedules BENA Energy Settlement Calculations

30. 30 May 2, 2007 oScheduled Generation - Metered Generation oPaid/charged at MCPE oWhy an imbalance? Instructed Deviations Uninstructed Deviations (may be subject to URC) Do all Resource Imbalances result in payments to the QSE? Resource Imbalance Protocol 6.8.1.13 Energy Settlement Calculations

31. 31 May 2, 2007 RI izq = (QRS izq - MR izq ) * MCPE iz Resource Imbalance Protocol 6.8.1.13 Terms RI : Resource Imbalance Amount QRS: Scheduled Resource MR: Metered Resource MCPE: Market Clearing Price for Energy Translation: Resource Imbalance is the difference between the Scheduled and Actual Resource output times the Clearing Price for Energy. Subscripts i: Interval z: Zone q: QSE Energy Settlement Calculations

32. 32 May 2, 2007 Scheduled Generation Actual Generation 0 220MW Resource Imbalance Example 208MW 55MWh52MWh Energy Settlement Calculations

33. 33 May 2, 2007 o Scheduled Load - Adjusted Metered Load o Paid/charged at MCPE o Why an Imbalance? UFE Forecast Inaccuracies Relaxed Balanced Schedule (section 4.3.1) LaaR’s Load Imbalance Protocol 6.9.5.2 Energy Settlement Calculations

34. 34 May 2, 2007 Actual Load Scheduled Load 0 140 160 South Zone Load Imbalance Example Energy Settlement 35MWh40MWh

35. 35 May 2, 2007 Questions