ERCOT Market Analysis

Annual TAC Review of the Market Impacts of Reliability Unit Commitments

January 28, 2014

Analysis of 1/1/13 through 12/31/13

2

Summary of 2013 compared to 2012

• Instructed Effective RUC Hours have increased– 267 hours in 2012 versus 653 hours in 2013– Most of the increase has been from Congestion

• 86 hours in 2012 to 448 hours in 2013

• Hours with offer not at SWCAP has reduced significantly– 74.5% of RUC hours in 2012 to 16.9% of RUC hours in 2013

• Possible increase in Peaker Net Margin after relaxing LSL of RUC Committed Resources has increased substantially– $21.41/MW-year in 2012 to $5,825/MW-year in 2013– RUC Generation for capacity reasons (insufficient HASL) on 1

day (10/1/2013) contributed to majority of this increase

January 28, 2014

3

RUC Commitments and Offers

January 28, 2014

• 653 Instructed Effective RUC Unit Hours in 2013• 448 hours (68.6%) for Congestion• 116 hours (17.8%) for Voltage/Reactive Support• 89 hours (13.6%) for Capacity

• Energy Offer Curve Compliance• 639 Instructed Effective RUC Unit Hours were required to have

an Energy Offer Curve priced at SWCAP for MW above LSL• 531 hours (83.1%) properly priced at SWCAP above LSL• 82 hours (12.8%) not priced at SWCAP above LSL with less than

an hours notice to update• 26 hours (4.1%) not priced at SWCAP above LSL with more than

an hours notice to update

4

RUC Effective MWh by Month

January 28, 2014

5

RUC Type Units Hours by Month (2013)

January 28, 2014

6

RUC Type Units Hours by Month (2012)

January 28, 2014

7

RUC Committed Resources Dispatched for Capacity

• 40.4 hours (6.6%) were dispatched above LSL for capacity • 611.7 Effective RUC Unit Hours

• Difference between this number and the 653 is a result of Resources starting up, shutting down, or still being Off-Line for some portion of the RUC committed hours

• LMP<=System Lambda+2 and BP>=LDL+2 used to determine dispatch for capacity

• 40.3 hours (6.6%) had prices below $100• 0.1 hours (0.01%) had prices between $100 & $500• 0 hours (0%) had prices greater than $500

January 28, 2014

8

0 to LSL Energy from ONRUC Resources

• 611.7 Effective RUC Unit Hours• Average ONRUC LDL is 121 MW, LSL is 118 MW, BP is 125 MW, HSL is 275

MW

• 520.5 hours (85.1%) are at or below LDL (BP-LDL<2MW)

• Average ONRUC LDL is 112.5 MW, LSL is 111.7 MW

• 91.3 hours (14.9%) are above LDL for transmission or capacity

• Average ONRUC LDL is 192.0 MW, LSL is 176.7 MW

• 471.7 Effective RUC hours with at least one ONRUC status• Average system total ONRUC capacity for only these hours:

• LDL is 164 MW

• LSL is 160 MW

• HSL is 364 MW

• BP is 169 MW‘Effective RUC Unit Hours’ is SCED duration, summed up to hour level, for each RUC committed Resource when it was On-Line.

‘Effective RUC Unit Hours’ considers multiple Resources committed for the same hour as different unit hours while ‘Effective RUC Hours’ considers it as single hour.

January 28, 2014

9

Estimated PNM Impact of RUC Committed Resources

January 28, 2014

MonthActual

Incremental PNM

Incremental PNM Adder from Study

1 1,260 0

2 943 2

3 3,086 378

4 3,772 76

5 1,072 255

6 1,361 57

7 2,105 20

8 2,907 0

9 5,459 11

10 5,400 4,844

11 2,988 169

12 2,618 14

Total 32,969 5,825

New PNM 38,794

• The monthly incremental Peaker Net Margin (PNM) was analyzed by relaxing the LSL to 0 for all RUC committed Resources and simulating the SCED solution

• The results indicate that the LSL of these Resources did not have a significant impact on the PNM for 2013 except for 1 day (10/1/2013)

10

Conclusion

• 653 Instructed Effective RUC Hours – of which only 89 hours were committed for capacity and

– Hours in which ONRUC resources were dispatched above LSL for capacity totaled 40.4 hours

• EOC non compliance reduced considerably to 4.1%

• Peaker Net Margin could increase by $5,825/MW-year if we remove the stranded 0-LSL energy from RUC Committed Resources

January 28, 2014

11

Appendix

January 28, 2014

12

Comparison of 2012 to 2013 (1 of 2)

January 28, 2014

Jan to Nov 2012 2013Instructed Effective RUC Unit Hours 267 653

Voltage/Reactive Support 174 116Congestion 86 448

Capacity 7 89

Instructed Effective RUC Hours required to have EOC at SWCAP for MW above HSL 251 639Hours properly priced at SWCAP above LSL 64 531

Hours not priced at SWCAP above LSL with less than an hours notice to update 27 82Hours not priced at SWCAP above LSL with more than an hours notice to update 160 26

Effective RUC Unit Hours 260.18 611.7Average LDL 142 121Average LSL 130 118Average HSL 283 275Average BP 172 125

Hours at or below LDL (BP-LDL<2MW) 144.59 520.5Average LDL (MW) 103 112.5Average LSL (MW) 96 111.7

Hours above LDL 115.59 91.3Average LDL (MW) 192 192Average LSL (MW) 173 176.7

13

Comparison of 2012 to 2013 (2 of 2)

January 28, 2014

Jan to Nov 2012 2013LMP<=System Lambda+2 and BP>=LDL+2 used to determine dispatch for capacityHours were dispatches above LSL for capacity 82.07 40.4

Hours with prices below $100 81.98 40.3Hours with prices between $100 and $500 0 0.1

Prices greater than $500 0.08 0

Effective RUC Hours with at least one resources on ONRUC status 232.34 471.7Average system total ONRUC capacity for these hours (MW)

Average LDL (MW) 159 164Average LSL (MW) 146 160Average HSL (MW) 316 364Average BP (MW) 193 169

Incremental Peaker Net Margin Adder from Study ($/MW-year) 21.41 5,825.00

14

RUC Committed Resources - Histogram of RUC BP

January 28, 2014

15

RUC Committed Resources - Relationship to Real-time Prices

January 28, 2014

16

RUC Committed Resources - Relationship to Real-time Prices

January 28, 2014

17

RUC Committed Resources - Relationship to Real-time Prices

January 28, 2014

18

RUC Committed Resources - Relationship to Real-time Prices

January 28, 2014

19

Estimated PNM Impact on 10/1/2013(Total Impact of Day was $4,813/MW-year)

January 28, 2014

20

HRUC Snapshot at 10AM on 10/1/2013for Hours 1500 to 2200

January 28, 2014

HourRUC Load

Pre RUC HSL

Pre RUC HASL

HASL Margin

RUC HSL

RUC Deselect

HSL

Post RUC HSL

15 50,601 53,476 50,311 (290) 874 226 54,12416 51,956 54,436 51,267 (689) 1,084 226 55,29417 52,961 54,510 51,407 (1,554) 1,926 1,068 55,36818 52,439 54,748 51,672 (767) 1,192 332 55,60819 50,493 52,612 49,474 (1,019) 1,424 563 53,47320 49,003 51,817 48,599 (404) 961 516 52,26221 47,777 50,526 47,557 (220) 963 516 50,97322 44,698 48,788 45,621 923 452 1 49,239