1. September 2012 Wholesale Market Subcommittee Report to Technical Advisory Committee

2. 2 –Chair: Jennifer Bevill (AEP) –Vice Chair: Seth Cochran (DC Energy) –WMS is looking for a motion to confirm new WMS leadership! –Big shout out and THANK YOU to Eric Goff for all his hard work & dedication! Confirmation of WMS Leadership (Vote)

3. 3 Credit Requirement for DAM Bids and Offers (Vote)  Protocol Section 4.4.10, “Credit Requirement for DAM Bids and Offers” specifies: “For qualified PTP Obligation bids, ERCOT shall reduce the credit exposure in paragraph (6)(d)(i) above, by the product of the bid price, if positive, and the quantity of the bid less than or equal to the quantity of the total of all expiring CRRs at the specified source and sink pair and delivery period, less all valid previously submitted PTP Obligation bids at the specified source and sink pair and delivery period multiplied by a factor initially set at 80% and to be reviewed by TAC and approved by the ERCOT Board at least annually.” At its August 15th, 2012 meeting WMS endorsed the existing factor with no revisions. WMS is looking for a motion to keep the existing factors with no revisions!

4. 4 NPRR449- Allows Market to Evaluate and Select First Round Transaction Limit Protocol 7.5.2 changes removed 10,000 limit and replaced with: The Technical Advisory Committee (TAC) shall establish transaction limits for the annual and monthly CRR Auctions for Participating CRR Account Holders. As part of TAC consideration to establish or change transaction limits, ERCOT shall provide upon TAC request to TAC or a TAC-designated subcommittee the historical number of transactions submitted by each CRR Account Holder and the number of active CRR Account Holders aggregated up to the associated Counter-Party for each requested CRR Auction without identifying the names of the CRR Account Holders or Counter-Parties. Upon TAC approval of a change in transaction limits, ERCOT shall post these values as part of the next regularly scheduled CRR Auction Notice. Only Participating CRR Account Holders are allowed to submit transactions in the relevant CRR Auction. TAC motion with approval of NPRR449 in March: TAC voted to recommend approval of NPRR449 as recommended by PRS in the 3/22/12 PRS Report, as amended by the 4/4/12 ERCOT comments, and as revised by TAC; set an initial transaction limit of 5,000 for annual CRR Auctions and 7,500 for monthly CRR Auctions; and request that WMS review the process and timelines associated with setting transaction limits for future CRR Auctions.

5. 5 Release of Historical Number of CRR Transactions (Vote) ERCOT believes that a motion is needed from TAC to: 1- Request ERCOT to release this data 2- Designate the TAC subcommittee it should be released (via email exploder and posted with next subcommittee’s meeting materials) 3- Specify which auction(s) this transaction data should be released for. Preview of what ERCOT would expect to post for each auction: With this data the market could weigh the potential benefit and risks of increasing or decreasing the transaction limits. At its August 15 th meeting, WMS recommended that TAC direct ERCOT to release the transaction data for the last Annual Auction to the WMS email exploder. WMS is looking for a motion to direct ERCOT to release transaction data for the 2011 Annual Auction data to the WMS email exploder!

6. 6 Timing of Transaction Limit Changes TAC approval of new transaction limits must proceed the CRR Auction Notice ERCOT recommends 2-Business Days prior to the notice The Annual Auction Notice deadline is October 3, 2012 TAC doesn’t meet again until October 4, 2012 CMWG CRR Subgroup will meet on September 10, 2012 to discuss potential changes WMS meeting on September 12, 2012 and will vote on any recommended changes Depending on the outcome, TAC may want to consider an email vote in order to effectuate any desired changes for the 2013 Annual Auction

7. 7 2013 Competitive Constraints (Vote) Option 1 logic: –A constraint is “Competitive” if Constraint can not be overloaded under worst case scenario OR Combination of –There are resources with absolute Shift Factor >=2 % –AND positive-SF ECI of squared SF with min(0.02, 1/3) threshold <= 2500 –AND negative-SF ECI of squared SF with min(0.02, 1/3) threshold <= 2000 –AND no pivotal player exists –Otherwise, it is “Non-Competitive” The results using option 1 logic can be found for each constraint in column AJ of the spreadsheet

8. 8 2013 Competitive Constraints (Vote) Option 2 logic: –A constraint is “Competitive” if Combination of –There are resources with absolute Shift Factor >=2 % –AND positive-SF ECI of squared SF with min(0.02, 1/3) threshold <= 2500 –AND negative-SF ECI of squared SF with min(0.02, 1/3) threshold <= 2000 –AND no pivotal player exists –Otherwise, it is “Non-Competitive” The results using option 2 logic can be found for each constraint in column AO of the spreadsheet

9. 9 2013 Competitive Constraints (Vote) Option 3 logic: –A constraint is “Competitive” if Constraint can be overloaded under worst case scenario AND Combination of –There are resources with absolute Shift Factor >=2 % –AND positive-SF ECI of squared SF with min(0.02, 1/3) threshold <= 2500 –AND negative-SF ECI of squared SF with min(0.02, 1/3) threshold <= 2000 –AND no pivotal player exists –Otherwise, it is “Non-Competitive” The results using option 3 logic can be found for each constraint in column AQ of the spreadsheet

10. 10 2013 Competitive Constraints (Vote) ERCOT stated that Option 3 seemed to be most aligned with Protocol 3.19(1) and grey-boxed 3.19.3(2) Please note that the same constraint may be in both the “SCED Historical” and “CSC/CRE” constraints list ECI Threshold OptionECI Threshold [2000,2500] Overload Flag Check OptionOption 1Option 2Option 3 Constraint SetModel Comp. or Non- Comp. CountPctgCountPctgCountPctg SCED HistoricalCRR Auction Competitive96164.8%342.3%171.1% Non-Competitive52135.2%144897.7%146598.9% CSC/CRECRR Auction Competitive51978.2%20230.4%284.2% Non-Competitive14521.8%46269.6%63695.8%

11. 11 2013 Competitive Constraints (Vote) The currently grey-boxed Protocols have the following language: –“3.19.3Long-Term Constraint Competitiveness Test (1) The Long-Term CCT uses the monthly peak Load case for all calculations. The monthly peak case must include planned transmission and Resource Outages for the month. (2) A constraint is classified as competitive for the year if it is competitive with respect to all monthly cases for the year. A constraint is competitive for a monthly case if the constraint can be overloaded in the monthly case and it doesn’t meet any of the following conditions:…” For the purposes of this study, this would seem to mean that a constraint would only be competitive if it were shown to be competitive in both the April and August cases

12. 12 2013 Competitive Constraints (Vote) WMS approved the following motion via email vote: –WMS Recommends that TAC approve the list of Competitive Constraints for 2013 as identified by the modified Option 3 methodology, which deems a constraint to be competitive if it is competitive in either the August 2013 or April 2013 Congestion Revenue Rights (CRR) case. Further, WMS directs the WMS Chair to file comments to NPRR472 to effectuate this change. WMS comments on NPRR472 made the following change: –“3.19.3Long-Term Constraint Competitiveness Test (1) The Long-Term CCT uses the monthly peak Load case for all calculations. The monthly peak case must include planned transmission and Resource Outages for the month. (2) A constraint is classified as competitive for the year if it is competitive with respect to ANY monthly case for the year. A constraint is competitive for a monthly case if the constraint can be overloaded in the monthly case and it doesn’t meet any of the following conditions:…”

13. 13 2013 Competitive Constraints (Vote) WMS approved the following motion via email vote: –WMS Recommends that TAC approve the list of Competitive Constraints for 2013 as identified by the modified Option 3 methodology, which deems a constraint to be competitive if it is competitive in either the August 2013 or April 2013 Congestion Revenue Rights (CRR) case. Further, WMS directs the WMS Chair to file comments to NPRR472 to effectuate this change. WMS comments on NPRR472 made the following change: –“3.19.3Long-Term Constraint Competitiveness Test (1) The Long-Term CCT uses the monthly peak Load case for all calculations. The monthly peak case must include planned transmission and Resource Outages for the month. (2) A constraint is classified as competitive for the year if it is competitive with respect to ANY monthly case for the year. A constraint is competitive for a monthly case if the constraint can be overloaded in the monthly case and it doesn’t meet any of the following conditions:…”

14. 14 2013 Competitive Constraints (Vote) WMS is looking for a motion to approve the list of Competitive Constraints as recommended by WMS and to approve NPRR472 with WMS comments!