1. RUC Startup Discussion

2. Problem The RUC language in the Nodal Protocols allows little or no ability for a generator to recover risk associated with operating a unit due to it’s limitations on Start up and Minimum Run offers

3. Start and Min Run Bids are Limited 4.4.9.2.1Startup Offer and Minimum-Energy Offer Criteria (4)The Resource’s Startup Offer must be equal to or less than the Resource Category Generic Startup Cost for that type of Resource listed in Section 4.4.9.2.3, Startup Offer and Minimum-Energy Offer Generic Caps, unless ERCOT has approved verifiable Resource-specific startup costs for that Resource, under Section 4.4.9.2.4, Verifiable Startup Offer and Minimum- Energy Offer Caps, in which case the Resource’s Startup Offer must be equal to or less than those approved verifiable Resource-specific startup costs. (5)The Resource’s Minimum-Energy Offer must be equal to or less than the Resource Category Generic Minimum-Energy Cost for that type of Resource listed in Section 4.4.9.2.3, Startup Offer and Minimum-Energy Offer Generic Caps, unless ERCOT has approved verifiable Resource- specific minimum-energy costs for that Resource, under Section 4.4.9.2.4, Verifiable Startup Offer and Minimum-Energy Offer Caps, in which case the Resource’s Minimum-Energy Offer must be equal to or less than those approved verifiable Resource-specific minimum-energy costs.

4. Verifiable Costs Limited 5.6.1Verifiable Costs (2)These unit-specific verifiable costs may include and are limited to the following average incremental costs: (a)Allocation of maintenance requirements based on number of starts between maintenance events using, at the option of the QSE, either: (i) manufacturer-recommended maintenance schedule; (ii) historical data for the unit and actual maintenance practices; or (iii) another method approved in advance by ERCOT in writing; (b)Startup fuel calculations based on recorded actual measured flows when the data is available or based on averages of historical flows for similar starts (for example, hot, cold, intermediate) when actual data is not available; (c)Operation costs; (d)Chemical costs; (e)Water costs; and (f) Emission credits.

5. Energy Profits Clawed Back If unoffered a RUC unit pays back 100% If offered a RUC unit pays back 50% The fact that the unit was RUCed indicates it probably isn’t in the money!!!

6. Possible Solutions Allow some reasonable percentage adder for units offered in RUC (Cost Plus ?%) Eliminate the energy clawback mechanisms Create a new “off line unavailable for RUC” flag