1. August 2012 Wholesale Market Operations Constraints Competitiveness Tests (CCT) – Annual CCT 2013 Study Result with New Approach Market Support and Analysis

2. 2 Changes from Current Approach to New Approach ERCOT PublicAugust 2012 Current ApproachNew Approach Shift factor reference Import and export terminals Distributed load ECI impact Product of capacity and shift factor Product of capacity and square of shift factor ECI significant threshold 1/3 of maximum SF as well as not contributed to worst flow Minimum of absolute 0.02 value and 1/3 of maximum SF Overload-ability (worst flow) Accumulate generation impact from worst SF until meet system total load impact +/- line limit, then compare accumulated generation capacity to system total load Accumulate generation capacity from worst SF until meet system total load, then compare accumulated generation impact to line limit Wind capacity available ratio Expected on-peak output0% for those with SF<0

3. 3 Implemented CCT Logic for this Study 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” An option up for consideration is ignoring the “overloaded under worst case scenario” check –May be appropriate because we are only analyzing one month, which is a peak load month, as oppose to 12 monthly cases ERCOT PublicAugust 2012

4. 4 Constraint Sets and Models used in Annual CCT Study Models –SSWG 2013 Summer case (dated 2/27/2012) with CRR Annual Auction August 2013 constraint and contingency definitions (dated 9/28/2011) –CRR Auction August 2013 case (dated 7/23/2012) –Basic picture on both models Total generation capacity about 94,000 MW from registration data Total load about 74,000 MW from SSWG 2013 Summer case Entire topology considered, no outages on lines and transformers Constraint Sets –SCED historical constraints since go-live (693 distinct constraints, all evaluated for both directions) –CSC/CRE (332 distinct constraints, all evaluated for both directions) ERCOT PublicAugust 2012

5. 5 Result on SCED Historical Constraints (Zero-out Negative Wind Flow, ECI Threshold [2000,2500], OL Flag Check) ERCOT PublicAugust 2012 Current Approach New Approach SSWG Model Count SSWG Model Percentage Competitive 100972.80% Non-competitive 23216.74% Non-competitive Competitive 141.01% Non-competitive 1319.45% Total 1386100.00% Current Approach New Approach CRR Auction Model Count CRR Auction Model Percentage Competitive 84562.50% Non-competitive 30722.71% Non-competitive Competitive 70.52% Non-competitive 19314.28% Total 1352100.00%

6. 6 Result on CSC/CRE Constraints (Zero-out Negative Wind Flow, ECI Threshold [2000,2500], OL Flag Check) ERCOT PublicAugust 2012 Current Approach New Approach SSWG Model Count SSWG Model Percentage Competitive 54882.53% Non-competitive 537.98% Non-competitive Competitive 131.96% Non-competitive 507.53% Total 664100.00% Current Approach New Approach CRR Auction Model Count CRR Auction Model Percentage Competitive 50375.75% Non-competitive 9013.55% Non-competitive Competitive 131.96% Non-competitive 588.73% Total 664100.00%

7. 7 Result on SCED Historical Constraints (Zero-out Negative Wind Flow, ECI Threshold [2000,2500], No OL Flag Check) ERCOT PublicAugust 2012 Current Approach New Approach SSWG Model Count SSWG Model Percentage Competitive 261.88% Non-competitive 121587.66% Non-competitive Competitive 130.94% Non-competitive 1329.52% Total 1386100.00% Current Approach New Approach CRR Auction Model Count CRR Auction Model Percentage Competitive 332.44% Non-competitive 111982.77% Non-competitive Competitive 50.37% Non-competitive 19514.42% Total 1352100.00%

8. 8 Result on CSC/CRE Constraints (Zero-out Negative Wind Flow, ECI Threshold [2000,2500], No OL Flag Check) ERCOT PublicAugust 2012 Current Approach New Approach SSWG Model Count SSWG Model Percentage Competitive 19929.97% Non-competitive 40260.54% Non-competitive Competitive 121.81% Non-competitive 517.68% Total 664100.00% Current Approach New Approach CRR Auction Model Count CRR Auction Model Percentage Competitive 20430.72% Non-competitive 38958.58% Non-competitive Competitive 71.05% Non-competitive 649.64% Total 664100.00%

9. 9 Summary of Study Results – Number of Competitive Constraints ERCOT PublicAugust 2012 ECI Threshold OptionECI Threshold [2000,2500]ECI Threshold [2500,3000] Overload Flag Check OptionOL Flag CheckNo OL FlagOL Flag CheckNo OL Flag Constraint SetModel Comp. or Non- Comp. CountPctgCountPctgCountPctgCountPctg SCED Historical SSWG Competitive102373.81%392.82%103774.82%705.05% Non-Competitive36326.19%134797.18%34925.18%131694.95% CRR Auction Competitive85263.02%382.81%87965.01%856.29% Non-Competitive50036.99%131497.19%47334.98%126793.71% CSC/CRE SSWG Competitive56184.49%21131.78%62193.53%31146.84% Non-Competitive10315.51%45368.22%436.47%35353.16% CRR Auction Competitive51677.71%21131.77%60891.57%33450.31% Non-Competitive14822.28%45368.22%568.43%33049.70%

10. 10 Inconsistent Results Between the 2 Models (Switch between Competitive/Non-existing and Non-competitive) ERCOT PublicAugust 2012 DatasetDescriptionCount csc CSC/CRE constraint set existing in both SSWG 2013 model and CRR auction Aug 2013 model 45 sced_crraug SCED historical constraint set existing only in CRR auction Aug 2013 model 56 sced_sswg SCED historical constraint set existing only in SSWG 2013 model 38 scedhist SCED historical constraint set existing in both SSWG 2013 model and CRR auction Aug 2013 model 189 Total328 (Zero-out Negative Wind Flow, ECI Threshold [2000,2500], OL Flag Check)

11. 11 Causes of Inconsistent Results between the 2 Models Actual topology change –Results in shift factor change –Results in ECI change Line limit change –Results in overload-ability change –Result in PPI change once compared pivotal flow to line limit ERCOT PublicAugust 2012

12. 12 Concerns during Annual CCT Study DC-Ties (all DC-Ties have been considered in the study with entity as ERCOT) Only the decision making entity was considered for this study, not Affiliates Impact of peak load in cases that were studied –Significantly reduced the number of overload-able constraints, –A high-ECI constraint can be competitive just because it won’t be overloaded in the worst case when generators with SF<0 are used to meet peak load Should negative WGR shift factors be included in the shift factor cut-off even if the MWs are considered to be 0 ERCOT PublicAugust 2012

13. 13 Additional Material ERCOT PublicAugust 2012

14. 14 Summary of all New Study Results ERCOT PublicAugust 2012 ECI Threshold OptionECI Threshold [2000,2500]ECI Threshold [2500,3000] Overload Flag Check OptionOL Flag CheckNo OL FlagOL Flag CheckNo OL Flag Constraint SetModelPatternCountPctgCountPctgCountPctgCountPctg SCED Historical SSWG Comp to Comp100972.80%261.88%103374.53%674.83% Comp to Non-Comp23216.74%121587.66%26719.26%123388.96% Non-Comp to Comp141.01%130.94%40.29%30.22% Non-Comp to Non-Comp1319.45%1329.52%825.92%835.99% CRR Auction Comp to Comp84562.50%332.44%87965.01%856.29% Comp to Non-Comp30722.71%111982.77%35926.55%115385.28% Non-Comp to Comp70.52%50.37%00.00%0 Non-Comp to Non-Comp19314.28%19514.42%1148.43%1148.43% CSC/CRE SSWG Comp to Comp54882.53%19929.97%61091.87%30045.18% Comp to Non-Comp537.98%40260.54%365.42%34652.11% Non-Comp to Comp131.96%121.81%111.66%111.66% Non-Comp to Non-Comp507.53%517.68%71.05%7 CRR Auction Comp to Comp50375.75%20430.72%58187.50%30946.54% Comp to Non-Comp9013.55%38958.58%527.83%32448.80% Non-Comp to Comp131.96%71.05%274.07%253.77% Non-Comp to Non-Comp588.73%649.64%40.60%60.90%

15. 15 Results Presented During 8/6 CMWG Meeting For the results presented at the 8/6 CMWG Meetings, the ECI thresholds that were used were 3000 and 2500 (as oppose to 2500 and 2000) For the wind capacity ratio –ECI: 0% for the WGRs with shift factors < 0 –PPI: 100% for all (impact on constraint considered to be 0) ERCOT PublicAugust 2012

16. 16 Results Presented During 8/6 CMWG Meeting Results on SCED Historical Constraints – Overload Check ERCOT PublicAugust 2012 Current ApproachNew Approach SSWG Model Count SSWG Model Percentage Competitive 102674.03% Non-competitive 27419.77% Non-competitive Competitive 40.29% Non-competitive 825.92% Total 1386100.00% Current ApproachNew Approach CRR Auction Model Count CRR Auction Model Percentage Competitive 86764.13% Non-competitive 37127.44% Non-competitive Competitive 00.00% Non-competitive 1148.43% Total 1352100.00%

17. 17 Results Presented During 8/6 CMWG Meeting Results on CSC/CRE Constraints – Overload Check ERCOT PublicAugust 2012 Current ApproachNew Approach SSWG Model Count SSWG Model Percentage Competitive 60390.81% Non-competitive 436.48% Non-competitive Competitive 111.66% Non-competitive 71.05% Total 664100.00% Current ApproachNew Approach CRR Auction Model Count CRR Auction Model Percentage Competitive 57185.99% Non-competitive 629.34% Non-competitive Competitive 253.77% Non-competitive 60.90% Total 664100.00%

18. 18 Results Presented During 8/6 CMWG Meeting Results on SCED Historical Constraints – No Overload Check ERCOT PublicAugust 2012 Current ApproachNew Approach SSWG Model Count SSWG Model Percentage Competitive 745.34% Non-competitive 122688.46% Non-competitive Competitive 40.29% Non-competitive 825.92% Total 1386100.00% Current ApproachNew Approach CRR Auction Model Count CRR Auction Model Percentage Competitive 916.73% Non-competitive 114784.84% Non-competitive Competitive 00.00% Non-competitive 1148.43% Total 1352100.00%

19. 19 Results Presented During 8/6 CMWG Meeting Results on CSC/CRE Constraints – No Overload Check ERCOT PublicAugust 2012 Current ApproachNew Approach SSWG Model Count SSWG Model Percentage Competitive 30145.33% Non-competitive 34551.96% Non-competitive Competitive 111.66% Non-competitive 71.05% Total 664100.00% Current ApproachNew Approach CRR Auction Model Count CRR Auction Model Percentage Competitive 31046.69% Non-competitive 32348.64% Non-competitive Competitive 253.77% Non-competitive 60.90% Total 664100.00%

20. 20 Other Previously Discussed Results If at another Load Profile - Compared to Previous Study in May 2012 –Out of 542 CSC/CRE constraints, 522 are competitive and 20 are non-competitive with current CCT approach. Note it considers ECI, PPI and worst case flow. –While with proposed min(0.02, 1/3) squared SF approach, out of 542 CSC/CRE constraints, 290 are competitive and 252 are non- competitive. Note it considers ECI, PPI and worst case flow as well. –The competitive ratio for CSC set reduces from 96% to 53%. –Note that this version of result is based on DCCT 11/30/2011. ERCOT PublicAugust 2012