txho/10627 HLP089.PPT DSWG LaaR Update May 13, 2005

LaaR Supply – What is a LaaR? A Load Acting as a Resource, or LaaR, is a customer with an interruptible load that meets ERCOT requirements and is qualified to provide Ancillary Services under ERCOT’s “LaaR” program Responsive Reserve is one Ancillary Service that a Load can provide if the customer is capable of instantaneously interrupting their power supply LaaR providers can sell their capacity by either: Contracting directly with an REP (fixed price, term) Bidding into the daily ERCOT Ancillary Service Auction

Limit to Quantity of LaaR in ERCOT Current limit for LaaR provided RRS in ERCOT is 1,150 MW per hour (ERCOT nominates percentage limit monthly) REPs can self arranged 50% of their Responsive Reserve obligations with LaaR Responsive LaaRs are beginning to bid very aggressively (most negative bid for 05-12-05 was -$14.00 in bid stack)

Where are we headed?

Where are we headed?

Where are we headed?

RRS Bid Stack for Thursday May 12th 53 negative priced blocks in the RRS bid stack 725 MWs bid at a negative price LaaRs are beginning to bid very aggressively (most negative bid for 05/12/05 was -$14.00