Report to TACReport to TAC

February 2009February 2009

In BriefIn Brief Chair and Vice-Chair for 2009Chair and Vice-Chair for 2009 Working Group ReportsWorking Group Reports

QMWGQMWG VCWGVCWG

Staff reportsStaff reports EPS Meters with Loss CompensationEPS Meters with Loss Compensation Local Congestion Management with WGRsLocal Congestion Management with WGRs SCR 754 – issuesSCR 754 – issues PRR 766PRR 766 Non-Implemented Approved Zonal PRRsNon-Implemented Approved Zonal PRRs EILS: Cost ComparisonEILS: Cost Comparison

Other WMS actionOther WMS action

Working Group ReportsWorking Group ReportsQMWGQMWG

Affirm David Detelich, CPS Affirm David Detelich, CPS Energy as ChairmanEnergy as Chairman

WGRPP Forecast Accuracy WGRPP Forecast Accuracy AnalysisAnalysisERCOT will start presenting ERCOT will start presenting to ROSto ROS

Working Group ReportsWorking Group ReportsQMWGQMWG

Optimal Procurement of A/SOptimal Procurement of A/S WMS believes the procurement of WMS believes the procurement of NSRS as described in the 2009 ERCOT NSRS as described in the 2009 ERCOT Methodologies for Determining Methodologies for Determining Ancillary Service Requirements has Ancillary Service Requirements has improved using the Net Load conceptimproved using the Net Load concept and current tools available. WMS and current tools available. WMS endorses endorses changing from on-peak/off-changing from on-peak/off-peak periods to the 4 hour blockspeak periods to the 4 hour blocks for for NSRS sizing. WMS further agrees NSRS sizing. WMS further agrees alternatives that ERCOT is developing alternatives that ERCOT is developing will further optimize the procurement will further optimize the procurement of NSRS. of NSRS.

Working Group ReportsWorking Group ReportsQMWGQMWG

4 hour blocks 4 hour blocks for NSRS for NSRS

sizingsizing This analysis results This analysis results

in less total capacity in less total capacity purchased.purchased.

ERCOT to continue ERCOT to continue analysis and analysis and propose in future propose in future AS methodologyAS methodology

95th Percentile of 4-Hour Blocks Separately

95th Percentile of all On- and Off Peak Hour

Separately1960 18201960 18201714 18201714 18201714 18201714 18201325 12271325 12271325 12271325 1227850 1227850 1227850 1227850 1227855 1227855 1227855 1227855 1227

1616 12271616 12271616 12271616 12271960 18201960 1820

NSRS Procurement

Working Group ReportsWorking Group ReportsVCWGVCWG

Affirm Heddie Lookadoo, NRG and Affirm Heddie Lookadoo, NRG and Ino Gonzales, ERCOT as Co-ChairsIno Gonzales, ERCOT as Co-Chairs

Affirm Russell Lovelace, Shell Affirm Russell Lovelace, Shell Energy as Vice-ChairEnergy as Vice-Chair

Nodal Fuel AdderNodal Fuel Adder

Working Group ReportsWorking Group ReportsVCWGVCWG

Nodal Fuel AdderNodal Fuel Adder FIP issues in the RUCFIP issues in the RUC FIP only recovers a fuel index price. Does not FIP only recovers a fuel index price. Does not

recover other costs of fuel; such as intra-day recover other costs of fuel; such as intra-day premiums, transport, swing, imbalance.premiums, transport, swing, imbalance.

RUC committed units will typically purchase at Spot RUC committed units will typically purchase at Spot Gas Prices after the market closesGas Prices after the market closes

Language in the nodal protocols would result Language in the nodal protocols would result in an under-recovery of costs for RUC in an under-recovery of costs for RUC deployed units in a vast majority of instances.deployed units in a vast majority of instances.

Working Group ReportsWorking Group ReportsVCWGVCWG

Nodal Fuel AdderNodal Fuel Adder Recommendations herein only suggests modifying Recommendations herein only suggests modifying

FIP in two sections of the nodal protocols:FIP in two sections of the nodal protocols: Section 5.6.1.1 - Verifiable Startup Costs*Section 5.6.1.1 - Verifiable Startup Costs* Section 5.6.1.2 - Verifiable Minimum-Energy Costs* Section 5.6.1.2 - Verifiable Minimum-Energy Costs*

FIP + 10% will better align cost recovery to FIP + 10% will better align cost recovery to actual gas prices. actual gas prices.

FIP + 10% was chosen because FIP + 10% was chosen because it is similar to wording in current zonal protocols: it is similar to wording in current zonal protocols:

Section “6.8.1.11(3)(b) - For gas fired Resources, such Section “6.8.1.11(3)(b) - For gas fired Resources, such documentation will not be required if the requested documentation will not be required if the requested incremental fuel cost is less than one hundred ten incremental fuel cost is less than one hundred ten percent (110%) of the Fuel Index Pricepercent (110%) of the Fuel Index Price

similar to other markets costssimilar to other markets costs

Working Group ReportsWorking Group ReportsVCWGVCWG

Nodal Fuel AdderNodal Fuel Adder VCWG Options:VCWG Options:

Option 1 : FIP * 1.XOption 1 : FIP * 1.X Option 2: FIP * 1.X with a Deadband 1.Y - Option 2: FIP * 1.X with a Deadband 1.Y -

1.X1.X WMS endorse Option 1 and set WMS endorse Option 1 and set X at X at

10%,10%, and direct VCWG to address and direct VCWG to address Settlement issues associated with Settlement issues associated with Option 2 and return to WMS with more Option 2 and return to WMS with more robust recommendation.robust recommendation.

Other WMS activityOther WMS activity NPRR 147 – DAM Short Pay ChangesNPRR 147 – DAM Short Pay Changes

Remanded to new MCWG for review and recommendationRemanded to new MCWG for review and recommendation NPRR 167 – referred back to WMSNPRR 167 – referred back to WMS

Allows QSE or Resource to submit VCAllows QSE or Resource to submit VC Local Congestion Management with WGRLocal Congestion Management with WGR

SPS and WGR tripping under N-1SPS and WGR tripping under N-1 Requires WGR to monitor element that trips the SPS – Requires WGR to monitor element that trips the SPS –

concerns that element is not always radialconcerns that element is not always radial To be discussed at CMWGTo be discussed at CMWG

Endorsed SCR 754 WGRPP Forecasts Posted on Endorsed SCR 754 WGRPP Forecasts Posted on Zonal TMLZonal TML Delayed 6 months (ERCOT)Delayed 6 months (ERCOT)

Non-Implemented Approved Zonal PRRsNon-Implemented Approved Zonal PRRs ERCOT updated list for WMS priority voteERCOT updated list for WMS priority vote

PRR 601 referred to CMWG and ERCOT to review impacts of PRR 601 referred to CMWG and ERCOT to review impacts of 7/7 versus 7/87/7 versus 7/8

EILS: Cost Comparison EILS: Cost Comparison with ASwith AS

October 2008 – January 2009 Contract PeriodOctober 2008 – January 2009 Contract Period

ServiceService BH 1BH 1 BH 2BH 2 BH 3BH 3 NBHNBH

EILS EILS 10.8310.83 11.2811.28 11.3911.39 9.619.61

RRS*RRS* 16.2016.20 14.6514.65 25.5125.51 19.0219.02

NSRS*NSRS* 1.671.67 2.612.61 3.083.08 1.791.79

Up-Reg*Up-Reg* 11.8011.80 10.4610.46 26.8626.86 14.0814.08

* Average MCPCs through Jan. 15, 2009

EILS: further from EILS: further from 1000MW 1000MW Business Hours 1 Business Hours 1 (HE 0900 through 1300, Monday thru Friday except ERCOT Holidays; 420 hours):(HE 0900 through 1300, Monday thru Friday except ERCOT Holidays; 420 hours):

                  MW procured:                                      MW procured:                                        163.6  163.6

                  Number of EILS Resources:                38 (includes 24 aggregations)Number of EILS Resources:                38 (includes 24 aggregations)

                  Projected cost:                                       $762,783.00Projected cost:                                       $762,783.00

                  Average cost per MW per Hour:          $11.10Average cost per MW per Hour:          $11.10

Business Hours 2 Business Hours 2 (HE 1400 through 1600, Monday thru Friday except ERCOT Holidays; 252 hours)(HE 1400 through 1600, Monday thru Friday except ERCOT Holidays; 252 hours)

                  MW procured:                                        MW procured:                                        168.2168.2

                  Number of EILS Resources:                38 (includes 24 aggregations)Number of EILS Resources:                38 (includes 24 aggregations)

                  Projected cost:                                       $489,872.88Projected cost:                                       $489,872.88

                  Average cost per MW per Hour:          $11.56Average cost per MW per Hour:          $11.56

Business Hours 3 Business Hours 3 (Hours Ending 1700 through 2000, Monday thru Friday except ERCOT Holidays; 336 hours)(Hours Ending 1700 through 2000, Monday thru Friday except ERCOT Holidays; 336 hours)

                  MW procured:                                    MW procured:                                        163.4    163.4

                  Number of EILS Resources:                36 (includes 22 aggregations)Number of EILS Resources:                36 (includes 22 aggregations)

                  Projected cost:                                       $638,010.24Projected cost:                                       $638,010.24

                  Average cost per MW per Hour:          $11.62Average cost per MW per Hour:          $11.62

Non-Business Hours Non-Business Hours (all other hours; 1,873 hours):(all other hours; 1,873 hours):

                  MW procured:                                        MW procured:                                        139.4139.4

                  Number of EILS Resources:                33 (includes 21 aggregations)Number of EILS Resources:                33 (includes 21 aggregations)

                  Projected cost:                                       $2,647,075.31Projected cost:                                       $2,647,075.31

                  Average cost per MW per Hour:          $10.14Average cost per MW per Hour:          $10.14

Total projected cost of EILS for this Contract Period is Total projected cost of EILS for this Contract Period is $4,537,741.43$4,537,741.43.  .