1. ERCOT, Market Analysis 2013 Annual Constraint Competitiveness Test (CCT) Study Results – Update for 8/27/12 CMWG 8/27/2012 ERCOT Public

2. 2 Study Assumptions Models used for analysis –CRR Auction – August 2013 case (dated 7/23/2012) Total load of approximately 74,000 MW –CRR Auction – April 2013 case (dated 8/17/2012) Total load of approximately 36,000 MW –Total load and distribution of load taken from SSWG cases (Spring Off-peak, Summer On-peak) –Entire topology considered, i.e. not outages on lines and transformers Constraints that were analyzed: –741 SCED historical constraints (Nodal Go-Live up to 8/17/12) –332 CSCs/CREs –Some constraints are in both lists –All constraints were analyzed in both directions ERCOT Public8/27/2012

3. 3 Study Assumptions Previous studies were updated to reflect the latest decision making entity list (updated as of 8/17/12) –This affected mothballed Resources and Resources for which the decision making entity may have changed Only the decision making entity was considered for the studies, not the Affiliates For WGRs, the full capability was considered on the export side of the constraint and 0 MW was considered on the import side –The Resource can moved down to resolve the constraint, but cannot necessarily be moved up Similarly for DC Ties, the full capability was considered on the export side of the constraint and 0 MW was considered on the import side ERCOT Public8/27/2012

4. 4 CCT Logic Options Previously Discussed – Option 1 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 ERCOT Public8/27/2012

5. 5 CCT Logic Options Previously Discussed – Option 2 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 ERCOT Public8/27/2012

6. 6 CCT Logic Options Previously Discussed – Option 3 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 ERCOT Public8/27/2012

7. 7 Results – Summer Peak Month (August 2013) Option 3 seems 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 ERCOT Public8/27/2012 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%

8. 8 Results – Off-Peak Month (April 2013) ERCOT Public8/27/2012 ECI Threshold OptionECI Threshold [2000,2500] Overload Flag Check OptionOption 1Option 2Option 3 Constraint SetModel Comp. or Non- Comp. CountPctgCountPctgCountPctg SCED HistoricalCRR Auction Competitive98166.2%372.5%322.2% Non-Competitive50133.8%144597.5%145097.8% CSC/CRECRR Auction Competitive49875.0%20530.9%14121.2% Non-Competitive16625.0%45969.1%52378.8% Option 3 seems 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

9. 9 Results – Constraints Competitive in Both Study Cases 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 ERCOT Public8/27/2012

10. 10 Results – Constraints Competitive in Both Study Cases Applying this logic for the 3 different options, the total number of competitive constraints is: –Option 1: 1311 competitive constraints –Option 2: 232 competitive constraints –Option 3: 44 competitive constraints A full list of the competitive constraints for each option can be found in the spreadsheet on the corresponding tab ERCOT Public8/27/2012

11. 11 Timeline for Approving CCT List According to 3.19(6): “TAC shall approve the Competitive Constraints one month prior to the annual Congestion Revenue Right (CRR) Auction. …” Some key dates the for upcoming annual CRR Auction: –September 25, 2012 – ERCOT shall post the CRR Network Model for the 2013 (Year 1) Annual Auction –October 3, 2012 – ERCOT shall post the 2013 (Year 1) Auction Notice and Credit Submission Window Opens –October 25, 2012 – CRR Auction Bid Window Closes for the 2013 (Year 1) Annual Auction –October 26, 2012 – ERCOT shall post the CRR Network Model for the 2014 (Year 2) Annual Auction –November 5, 2012 – ERCOT shall post the 2014 (Year 2) Auction Notice and Credit Submission Window Opens –November 12, 2012 – CRR Auction Results posted for 2013 (Year 1) (will post earlier if completed and results verified) –November 26, 2012 – CRR Auction Credit Lock Date for 2014 (Year 2) Annual Auction –November 29, 2012 – CRR Auction Bid Window Closes for the 2014 (Year 2) Annual Auction –December 17, 2012 – CRR Auction Results posted for 2014 (Year 2) (will post earlier if completed and results verified) ERCOT Public8/27/2012