1. COPS – ERCOT PROJECTS UPDATE WHOLESALE MARKET DEVELOPMENT Paula Feuerbacher October 20, 2004

2. PROJECTS:  PR30014 – Load Research Sampling:  TDSP Pilot – Initiated 08/18/04  Estimated Deployment: November 1, 2004  PR40005 – NIDR to IDR Default Profiling (PRR-471)  Estimated Deployment: November 3, 2004  PUCT 28407 – Final REC Purchasing Requirements  Estimated Deployment: late November 2004  PRR-488 – Weather Responsiveness  Estimated Deployment: early December 2004  PR30026 – EPS Meter Data Extract  Estimated Deployment: mid December 2004  PR40104 – Zero Charge Elimination  Estimated Deployment: 2 nd Quarter of 2005  Lodestar Upgrade  Estimated Deployment: 1 st Quarter of 2005

3. EMMS R4 COPS presentation Ryan Aldridge, ERCOT 9/20/04

4. 4 Projects Affecting Settlements  PR-30093 (RPRS)  PR-30131_02 (Resource Plan Improvements)  PR-40050 (Resource Specific Bid Limits)  PR-30163 (OOM Tool)

5. PR-40093 (RPRS)  PRR’s 413 and 491  11 new Bill Determinants  Changes to both Zonal and Local RPRS Settlement formulas

6. PR-40093 (RPRS) Zonal -- Current  Current Zonal RPRS Formula  PCRP qiuz = -1 * MCPCRP iz * ZCRP qiuz PCRP qiuz = Replacement Reserve Service Payment by Resource per interval for that QSE PCRP qiuz = Replacement Reserve Service Payment by Resource per interval for that QSE MCPCRP iz = Highest Replacement Reserve Market Clearing Price MCPCRP iz = Highest Replacement Reserve Market Clearing Price ZCRP qiuz = Accepted Unit Adjustment Replacement Reserve Service Capacity Quantity (MW) ZCRP qiuz = Accepted Unit Adjustment Replacement Reserve Service Capacity Quantity (MW)

7. PR-40093 (RPRS) Zonal – R4  EMMS R4 Zonal RPRS Formula  PCRP qiuz = -1 * Max (PABCRP iu, MCPCRP iz ) * ZCRP qiuz  PABCRP iu = CBPRP iu /N + HOBPRP iu PABCRP iu = Bid Price of the single Resource awarded Replacement Reserve PABCRP iu = Bid Price of the single Resource awarded Replacement Reserve CBPRP iu = Capacity bid price submitted by the QSE for the single Resource CBPRP iu = Capacity bid price submitted by the QSE for the single Resource N = Number of hours that this Resource is continuously procured N = Number of hours that this Resource is continuously procured HOBPRP iu = Hourly operational bid price submitted by the QSE for the single Resource HOBPRP iu = Hourly operational bid price submitted by the QSE for the single Resource

8. PR-40093 (RPRS) Local -- Current  Current Local RPRS Formula  LPCRP qi = -1 * SUM (PABCRP iu * LCRP qiu ) u LPCRP qi = Replacement Reserve Service Payment by Resource per interval for that QSE LPCRP qi = Replacement Reserve Service Payment by Resource per interval for that QSE PABCRP iu = Bid Price of the single Resource awarded Replacement Reserve of that interval PABCRP iu = Bid Price of the single Resource awarded Replacement Reserve of that interval LCRP qiu = Accepted single Resource Replacement Reserve Service Capacity to solve Local Congestion (MW) per interval per QSE for that single Resource. LCRP qiu = Accepted single Resource Replacement Reserve Service Capacity to solve Local Congestion (MW) per interval per QSE for that single Resource.

9. PR-40093 (RPRS) Local – R4  EMMS R4 Local RPRS Formula  LPCRP iuq = -1 * MAX (0, LPSRP iu + LPORP iu )  LPCRP iq = -1 * SUM (LPSRP iu + LPORP iu ) u LPCRP qi = Replacement Reserve Service Payment by Resource per interval for that QSE LPCRP qi = Replacement Reserve Service Payment by Resource per interval for that QSE LPSRP iu = Price for starting a unit that is selected for Replacement Reserve Service to resolve Local Congestion LPSRP iu = Price for starting a unit that is selected for Replacement Reserve Service to resolve Local Congestion LPORP iu = Price for operating a unit that is selected for Replacement Reserve Service to resolve Local Congestion LPORP iu = Price for operating a unit that is selected for Replacement Reserve Service to resolve Local Congestion  LPORP iu = SUM [(RCGMEC c – MCPE jz ) * MIN (MINCAP ju /4, MR ju )] j  LPSRP iu = RCGSC c /N RCGMEC c = Resource Category Generic Minimum energy Cost for a specific category of generation unit. RCGMEC c = Resource Category Generic Minimum energy Cost for a specific category of generation unit. MCPE jz = Market Clear Price MCPE jz = Market Clear Price MINCAP ju = Generating Unit Low Sustainable Limit as reported in the unit’s Resource Plan MINCAP ju = Generating Unit Low Sustainable Limit as reported in the unit’s Resource Plan MR ju = Actual metered output of the Resource MR ju = Actual metered output of the Resource RCGSC c = Resource Category Generic Startup Cost for a specific category of generation unit RCGSC c = Resource Category Generic Startup Cost for a specific category of generation unit N = Number of hours that this Resource is continuously procured N = Number of hours that this Resource is continuously procured

10. PR-30131_02 Resource Plan Improvements  PRR’s 359  No new Bill Determinants  No Settlement formula changes

11. PR-30131_02 Resource Plan Improvements  PRR 359 allows QSEs to update their Resource Plans after the adjustment period  EMMS R4 will take a snapshot of the Resource Plan every 15 minutes  All data passed to Settlements from the Resource Plan will come across as 96 hourly interval cuts instead of the current 24 hourly interval cuts  QSEs will see the 96 hourly interval cuts and will need to scale to 24 hourly interval cuts in order to shadow settle

12. PR-40050 Resource Specific Bid Limits  PRR 485  Bringing back LEIOL’s  Small change to Local Balancing Energy Down formula

13. PR-40050 (Bringing back LEIOL’s)  PRR 485 allows resources to indicate if they are bid or non-bid resources  Deployments to non-bid resources will be paid OOME (NMLEIOL or OOMIOL)  Deployments to bidding resources will be paid as bid (LEIOL)

14. PR-40050 LBE Down formula change -- Current  Current LBEDN formula  LPCRSD quiz = -1 * Σ((MCPE iz - BPM qiuz ) * Max(0, Min(OL qiuz -MR quiz, OL qiuz - IOL qiuz ))) u LPCRSD quiz = Payment to QSE for providing Balancing Energy Down from specific unit to solve Local Congestion per QSE per interval per zone LPCRSD quiz = Payment to QSE for providing Balancing Energy Down from specific unit to solve Local Congestion per QSE per interval per zone MCPE iz = Market Clearing Price of Energy per interval per zone MCPE iz = Market Clearing Price of Energy per interval per zone BPM qiuz = Decremental bid premium specified for that specific unit per interval BPM qiuz = Decremental bid premium specified for that specific unit per interval OL quiz = Resource Plan output level submitted by the QSE for the unit given the unit-specific instruction for that interval OL quiz = Resource Plan output level submitted by the QSE for the unit given the unit-specific instruction for that interval MR quiz = Meter reading per unit per interval MR quiz = Meter reading per unit per interval IOL quiz = The instructed output level for the unit given a unit-specific instruction IOL quiz = The instructed output level for the unit given a unit-specific instruction

15. PR-40050 LBE Down formula change – R4  EMMS R4 LBEDN formula  LPCRSD quiz = -1 * Σ(MAX(0,(MCPE iz - BPM qiuz )) * Max(0, Min(OL qiuz -MR quiz, OL qiuz - IOL qiuz ))) u LPCRSD quiz = Payment to QSE for providing Balancing Energy Down from specific unit to solve Local Congestion per QSE per interval per zone LPCRSD quiz = Payment to QSE for providing Balancing Energy Down from specific unit to solve Local Congestion per QSE per interval per zone MCPE iz = Market Clearing Price of Energy per interval per zone MCPE iz = Market Clearing Price of Energy per interval per zone BPM qiuz = Decremental bid premium specified for that specific unit per interval BPM qiuz = Decremental bid premium specified for that specific unit per interval OL quiz = Resource Plan output level submitted by the QSE for the unit given the unit-specific instruction for that interval OL quiz = Resource Plan output level submitted by the QSE for the unit given the unit-specific instruction for that interval MR quiz = Meter reading per unit per interval MR quiz = Meter reading per unit per interval IOL quiz = The instructed output level for the unit given a unit-specific instruction IOL quiz = The instructed output level for the unit given a unit-specific instruction

16.  Current LBEDNAGG formula  LPCRSD qviz = -1 * Σ((MCPE iz - BPM qivz )) * Max(0, Min(OL qivz - MR qviz, NETDEQ iv )))v * LBEAG iv LPCRSD = Payment to QSE for providing Balancing Energy Down from specific Aggregated unit to solve Local Congestion per QSE per interval per zone LPCRSD quiz = Payment to QSE for providing Balancing Energy Down from specific Aggregated unit to solve Local Congestion per QSE per interval per zone MCPE iz = Market Clearing Price of Energy per interval per zone MCPE iz = Market Clearing Price of Energy per interval per zone BPM qivz = Decremental bid premium specified for that specific Aggregated unit per interval BPM qivz = Decremental bid premium specified for that specific Aggregated unit per interval OL qivz = Resource Plan output level submitted by the QSE for the Aggregated Unit containing the unit given the unit- specific instruction for that interval OL qivz = Resource Plan output level submitted by the QSE for the Aggregated Unit containing the unit given the unit- specific instruction for that interval MR qviz = Meter reading per Aggregated Unit per interval MR qviz = Meter reading per Aggregated Unit per interval NETDEQ iv = The overall net direction per the instructions given to the Aggregated Unit results in a down direction NETDEQ iv = The overall net direction per the instructions given to the Aggregated Unit results in a down direction LBEAG iv = The percentage of the aggregated instructions to the Aggregate Unit that represents the OOM Energy market. LBEAG iv = The percentage of the aggregated instructions to the Aggregate Unit that represents the OOM Energy market. PR-40050 Aggregated LBE Down formula change Current

17. PR-40050 Aggregated LBE Down formula change R4  EMMS R4 LBEDNAGG formula  LPCRSD qviz =-1 * Σ(MAX(0,(MCPE iz - BPM qivz )) * Max(0, Min(OL qivz -MR qviz, NETDEQ iv ))) v * LBEAG iv LPCRSD quiz = Payment to QSE for providing Balancing Energy Down from specific Aggregated unit to solve Local Congestion per QSE per interval per zone LPCRSD quiz = Payment to QSE for providing Balancing Energy Down from specific Aggregated unit to solve Local Congestion per QSE per interval per zone MCPE iz = Market Clearing Price of Energy per interval per zone MCPE iz = Market Clearing Price of Energy per interval per zone BPM qivz = Decremental bid premium specified for that specific Aggregated unit per interval BPM qivz = Decremental bid premium specified for that specific Aggregated unit per interval OL qivz = Resource Plan output level submitted by the QSE for the Aggregated Unit containing the unit given the unit- specific instruction for that interval OL qivz = Resource Plan output level submitted by the QSE for the Aggregated Unit containing the unit given the unit- specific instruction for that interval MR qviz = Meter reading per Aggregated Unit per interval MR qviz = Meter reading per Aggregated Unit per interval NETDEQ iv = The overall net direction per the instructions given to the Aggregated Unit results in a down direction NETDEQ iv = The overall net direction per the instructions given to the Aggregated Unit results in a down direction LBEAG iv = The percentage of the aggregated instructions to the Aggregate Unit that represents the OOM Energy market. LBEAG iv = The percentage of the aggregated instructions to the Aggregate Unit that represents the OOM Energy market.

18. PR-30163 (OOM Tool)  No PRR  Probable new Bill Determinants  No changes to Settlement formulas

19. PR-30163 (OOM Tool)  The requirements for this project have not been fully defined  EMMS design has not been finalized yet  Changes to Settlements will result in the designed changes on the EMMS side