October 02, 2009October 02, 2009

Austin, TexasAustin, Texas

Quick Start Task Force Quick Start Task Force MeetingMeeting

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SummarySummary

BackgroundBackground

FrameworkFrameworkMarketMarketReliabilityReliabilityAncillary ServicesAncillary ServicesDefinitions & OtherDefinitions & Other

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BackgroundBackground

Wind Generation ResourcesWind Generation ResourcesOver 8,000 today; 15,000 estimated by 2015Over 8,000 today; 15,000 estimated by 2015Inherently variable and incompletely predictableInherently variable and incompletely predictableWill introduce operational challengesWill introduce operational challenges

Existing thermal Generation Resources can Existing thermal Generation Resources can synchronize and be fully loadedsynchronize and be fully loaded~900 MW~900 MW 10 minutes10 minutes~1,000 MW~1,000 MW 10-15 minutes10-15 minutes~3,700 MW~3,700 MW 15-30 minutes15-30 minutes

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FrameworkFramework

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AncillaryServices

Definitions & Other

MarketMarket

SCEDSCEDCannot commit Off-line Generation ResourcesCannot commit Off-line Generation ResourcesSome Generation Resources can synchronize Some Generation Resources can synchronize

within SCED timeframewithin SCED timeframeTherefore, market solutions ignored, causing Therefore, market solutions ignored, causing

potentially artificially higher energy pricespotentially artificially higher energy prices

Market Participants may self-commitMarket Participants may self-commitExposed to price riskExposed to price riskNot economically optimalNot economically optimal

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Market – Efficiency Market – Efficiency ImprovementsImprovements

2008 State of the Market Report2008 State of the Market Report“…“…Under the nodal market design, the introduction of a day-Under the nodal market design, the introduction of a day-ahead energy market with centralized Security Constrained Unit ahead energy market with centralized Security Constrained Unit Commitment (“SCUC”) that is financially binding promises Commitment (“SCUC”) that is financially binding promises substantial efficiency improvements substantial efficiency improvements in the commitment of in the commitment of generating resources.”generating resources.”

Systematic reliance on non-centralized unit Systematic reliance on non-centralized unit commitment decisions for over 5,000 MW commitment decisions for over 5,000 MW would would impair the promised substantial efficiency impair the promised substantial efficiency improvementsimprovements..

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Reliability – NormalReliability – Normal

Day-Ahead Reliability Unit CommitmentDay-Ahead Reliability Unit CommitmentReceived by 1600 in Day-AheadReceived by 1600 in Day-Ahead

Hour Reliability Unit CommitmentHour Reliability Unit CommitmentReceived throughout the Adjustment PeriodReceived throughout the Adjustment PeriodMay be received intra-Operating PeriodMay be received intra-Operating Period

• 1 hour before Real-Time1 hour before Real-Time

Clawback is 50% (DAM) or 100% (no Clawback is 50% (DAM) or 100% (no DAM)DAM)

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Reliability – EmergencyReliability – Emergency

Emergency ConditionEmergency ConditionOccurs when SCED failsOccurs when SCED failsLMPs held for most recently solved intervalLMPs held for most recently solved interval

Emergency MechanismsEmergency MechanismsVerbal Dispatch Instruction unit commitmentVerbal Dispatch Instruction unit commitmentVDI settled as HRUC [6.5.9.4.1]VDI settled as HRUC [6.5.9.4.1]No clawback during EEA (DAM) [5.7.2(3)]No clawback during EEA (DAM) [5.7.2(3)]

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Reliability – ObservationsReliability – Observations

RUCRUCNormal Normal does not utilize flexibility and has does not utilize flexibility and has

clawbackclawbackEmergency may utilize flexibility and has no Emergency may utilize flexibility and has no

clawbackclawback

ClawbackClawbackIf RTSPP > Energy Offer Curve, Quick Start If RTSPP > Energy Offer Curve, Quick Start

Units could have provided market solution Units could have provided market solution without RUC Dispatch Instructionwithout RUC Dispatch Instruction

Similar to Zonal OOME unit commitmentSimilar to Zonal OOME unit commitment

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Ancillary ServicesAncillary Services

NSRSNSRS30-minute timeline30-minute timelineDispatch Instructions to 100% of capacityDispatch Instructions to 100% of capacity

ObservationObservationNo Nodal comparable mechanism No Nodal comparable mechanism to Zonal to Zonal

Balancing Energy Capable Non-Spinning Balancing Energy Capable Non-Spinning Reserve Service (BESCNSRS)Reserve Service (BESCNSRS)

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10MNSRS10MNSRS

Avoids cost related to sub-optimal operation Avoids cost related to sub-optimal operation of On-line reserved capacityof On-line reserved capacity

Provides intermediate mechanism to ensure Provides intermediate mechanism to ensure reliability between RRS and NSRSreliability between RRS and NSRS

Recommended in GE Wind ReportRecommended in GE Wind ReportExists in PJM, Caiso, MISO, ISO-NE and Exists in PJM, Caiso, MISO, ISO-NE and

NYISONYISOWould encourage investment in innovative Would encourage investment in innovative

technologytechnology1111

DefinitionsDefinitions

ObservationsObservationsTerms “commit” and “reserve” intermixedTerms “commit” and “reserve” intermixedSome RUC definitions inconsistent, unclear Some RUC definitions inconsistent, unclear

or recursiveor recursive

Undefined termsUndefined termsQuick Start UnitQuick Start UnitCOP status of Quick Start UnitsCOP status of Quick Start Units

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Nodal QS StrategyNodal QS Strategy

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Go-LiveQ1 2011

Version 2.0

NowQ3 2009

NPRRNOGRR

QSTF & Other Forums

Phase 1: Issue DefinitionPhase 2: ComparablesPhase 3: Solution

No System ChangeNPRR/NOGRR

Comprehensive SolutionsNPRR/NOGRR

Other Changes

Questions and AnswersQuestions and Answers

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