Update on Short-Term Market Improvements

ERCOT Wholesale Market Subcommittee

June 18, 2003

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Outline

• Solutions to current issues

• Current Status update

• Suggested Next Action Item

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Issues being resolved

• Removing Category 4 Deployments (PRR424)

• Resolving Resource Oscillation

• Improving Portfolio Allocation

• Clear BES closer to Real Time

• Improving Replacement Reserve Market Procurement (PRR413)

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Current Stage: Removing Category 4 Deployments

• PRR424 for removing Category 4 Deployments has been filed with urgent status requested

• Project Request for PRR424 has been submitted• In parallel, ERCOT is working with vendor on

preliminary project requirement• ERCOT is waiting for WMS/PRS/TAC/Board

Approval of PRR424 to officially kick off this project• The project can be finished in 3-6 months depending

on PRR approval process and project priority

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Current Stage: Resolving Resource Oscillation

• Resources used to resolve local congestion may oscillate between intervals

• ERCOT is working on a project to resolve this issue• Currently, SCADA value is used to determine the estimated Resource Output Level• Improvement: Incorporate the consideration of previous Resource Specific Deployment Instructions

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Current Stage: Clear BES Closer to Real Time

• Currently, Balancing Energy Service is cleared approximately 20 minutes prior to the start of the target interval

• ERCOT is in the final stages of testing changes that will allow the clearing to occur approximately 14 minutes prior to the start of the target interval

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Current Stage: Replacement Reserve Market Improvement

• Currently, the Replacement Reserve Market Procurement Process is optimized independently for each hour

• ERCOT filed PRR413 to optimize the Replacement Reserve Procurement Process on daily basis by considering interrelationship between hours

• At the same time, a Project Request has been submitted

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Suggested Next Action Item:Local Deployment w/o Market Solution

• Over 90% of Category 2 and 3 deployments, market solution does not exist

• Category 4 will be removed by PRR424

• Currently, deployment is based on premium bid while settlement is often based on generic cost

• Give over 90% of time there is no market solution, should we continue this process?

  CATEGORY

Market Solution 2 3 4

N 94% 91% 74%

Y 6% 9% 26%

Market Solution Statistics from 12/23/2002 to 5/31/2002

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Suggested Next Action Item:

What should we work on next?