11

WMS Report TO TACWMS Report TO TAC

April 2006April 2006

22

In BriefIn Brief Two Working Group reportsTwo Working Group reports Two Task Force ReportsTwo Task Force Reports BENA presentationBENA presentation Target Rich Environment for WMSTarget Rich Environment for WMS

33

Working Group ReportsWorking Group ReportsCMWGCMWG

Review of Transmission Planning Review of Transmission Planning Economic CriteriaEconomic Criteria

44

Working Group ReportsWorking Group ReportsCMWGCMWG

Review of Transmission Planning Review of Transmission Planning Economic CriteriaEconomic Criteria

p

S

D

q

P

CS

PS

55

Working Group ReportWorking Group ReportDSWGDSWG

Credit Issue AssociatedWith LaaR Bidding

66

LaaR Bidding Behavior LaaR Bidding Behavior Created Credit IssueCreated Credit IssueLaaR Bidding Behavior

Jan 2005 to Present

($20,000)($19,000)($18,000)($17,000)($16,000)($15,000)($14,000)($13,000)($12,000)($11,000)($10,000)($9,000)($8,000)($7,000)($6,000)($5,000)($4,000)($3,000)($2,000)($1,000)

$0$1,000

Jan-

05

Feb-

05

Mar

-05

Apr-

05

May

-05

Jun-

05

Jul-0

5

Aug-

05

Sep-

05

Oct

-05

Nov

-05

Dec

-05

Jan-

06

Feb-

06

Min

imum

RR

S B

id

November 19thBid of -$19,155

May of 2005LaaRs consistently fully subscribed

PRR646 implements a

$0 RRS floor price

77

C

B

D

A

Long Term Solutions Long Term Solutions EvaluatedEvaluated

Team reviewed eight potential long term solutions:Team reviewed eight potential long term solutions:1.1. Revise settlement process and how defaults are processedRevise settlement process and how defaults are processed2.2. Revise credit provisions to require protection prior to bidding Revise credit provisions to require protection prior to bidding

and create ability to monitor real timeand create ability to monitor real time3.3. Shift credit risk to Resources rather than QSEs Shift credit risk to Resources rather than QSEs 4.4. Create two separate markets, one for LaaRs and one for GenCreate two separate markets, one for LaaRs and one for Gen5.5. Maintain a single market clearing engine, but when LaaR is Maintain a single market clearing engine, but when LaaR is

oversubscribed post separate clearing prices for LaaR and Gen oversubscribed post separate clearing prices for LaaR and Gen 6.6. Pay all ancillary services as bid (both Gen and LaaR)Pay all ancillary services as bid (both Gen and LaaR)7.7. Modify current award mechanism for LaaRs; LaaRs offered at a Modify current award mechanism for LaaRs; LaaRs offered at a

price below MCPC are awarded price below MCPC are awarded 8.8. Eliminate sunset date on short term solution and modify system Eliminate sunset date on short term solution and modify system

to reject negative offer pricesto reject negative offer prices

88

High Level Overview of High Level Overview of SolutionsSolutions

AlternativeAlternative ResolveResolves Credit s Credit

IssueIssue

Market Cost Market Cost to to

ImplementImplement

Time to Time to ImplemenImplemen

tt

Market Market ParticipanParticipan

ts ts ImpactedImpacted

LaaR LaaR Participation Participation

ImpactImpact

A. Collateralization for A. Collateralization for Negative BidsNegative Bids

Early Early 20072007

C. Single RRS Bid C. Single RRS Bid Stack with Stack with Separate LaaR and Separate LaaR and Gen MCPCs if Gen MCPCs if OversubscribedOversubscribed

Early Early 20072007

D. LaaR RRS Offered D. LaaR RRS Offered Below MCPC is Below MCPC is Prorated when Prorated when Market Market OversubscribedOversubscribed

Late Late 20062006

E. Eliminate Sunset E. Eliminate Sunset Provision on Provision on Current SolutionCurrent Solution

Late Late 20062006

* Icon size represents relative impact when compared with other alternatives.

99

Emergency Load Response Emergency Load Response Program UpdateProgram Update

DSWG given assignment to develop ELR DSWG given assignment to develop ELR Program for a 1 in 10 year loss of load Program for a 1 in 10 year loss of load event (LOLE); a probabilistic approach event (LOLE); a probabilistic approach used to determine reserve margins & used to determine reserve margins & resource adequacy resource adequacy

Proposed rule 25.505 (resource adequacy) Proposed rule 25.505 (resource adequacy) includes a “backstop” provision for includes a “backstop” provision for emergency load response (ELR) contractsemergency load response (ELR) contracts

1010

Combined Cycle Task ForceCombined Cycle Task Force Understanding start-up paymentsUnderstanding start-up payments Getting RPRS to nominate correctlyGetting RPRS to nominate correctly Uniformity in the Claw Back Uniformity in the Claw Back

provisionsprovisions

1111

Frequency Task ForceFrequency Task Force Plethora of SCE related PRRsPlethora of SCE related PRRs Holistic look at frequency controlHolistic look at frequency control Examination of SCE compliance Examination of SCE compliance

(PRR525)(PRR525)

1212

Frequency Task ForceFrequency Task Force SCE and frequency controlSCE and frequency control SCE and regulation deploymentSCE and regulation deployment Load delta and regulation deploymentLoad delta and regulation deployment Obligations / incentives and frequencyObligations / incentives and frequency Obligations / incentives and regulationObligations / incentives and regulation Wind Forecast and regulation Wind Forecast and regulation ERCOT RGS signals and SCEERCOT RGS signals and SCE

1313

Frequency Task ForceFrequency Task Force Several PRR related to SCESeveral PRR related to SCE

Full participation of WMS and ROSFull participation of WMS and ROS Fast track to beat PRR525 market Fast track to beat PRR525 market

impactsimpacts Continued work on primary Continued work on primary

frequencyfrequency

1414

BENABENA Balancing Energy Neutrality ChargeBalancing Energy Neutrality Charge WMS Goal to disaggregate in WMS Goal to disaggregate in

settlementsettlement

1515

Breakdown of January 2006 BENA

(100)

(80)

(60)

(40)

(20)

0

20

40

60

80

100

120

BE

NA

Load

Imba

lanc

e

Res

ourc

e Im

bala

nce

UR

C

CS

CQ

SE

BE

CS

CC

RE

DIT

BE

Mis

mat

ch D

eliv

ered

to E

RC

OT

Mis

mat

ch R

ecei

ved

from

ER

CO

T

$ M

illio

ns

Charges to QSE's

Payments to QSE's

1616

BENABENA Balancing Energy Neutrality ChargeBalancing Energy Neutrality Charge WMS goal to disaggregate in WMS goal to disaggregate in

settlementsettlement ERCOT will provide QSE dataERCOT will provide QSE data ERCOT will produce reportERCOT will produce report Intent of the WMS goal is satisfied Intent of the WMS goal is satisfied