Updated Cost/Benefit Analysis for PRR 567Multi-Part A/S Bidding

PRS January Meeting

January 19, 2006

2

What We Want to Accomplish Today

Review methodology used to calculate benefits of PRR 567

Review input data and assumptions

Review results

Review revised CBA

3

Input data requirements

Typical Unit Data Start Cost - ($)

Unit Max (MW)

Unit Min (MW)

AGC Max (MW)

AGC Min (MW)

Avg HR at Unit Max (MMBtu/MWh)

Avg HR at Unit Min (MMBtu/MWh)

Avg HR at AGC Max (MMBtu/MWh)

Avg HR at AGC Min (MMBtu/MWh)

Min Run (Hours)

Min Down (Hours)

AGC Range Ramp Rate (MW/min)

Market Data (Actual) Hourly energy prices for next day

Used the previous 10 day average of North zone MCPE as a proxy

Daily gas prices Used Gas Daily prices for HSC

ERCOT historic deployment data Used previous 10 days for URS Used same month for RRS

ERCOT day-ahead A/S market data for following: (hourly for URS and RRS) MCPC Procured MW Aggregated bid stack

Note: all data except gas prices were obtained from the ERCOT Public Market Information web page.

4

Methodology for Calculating Market Cost Savings

• Using the input data calculate the following for a typical conventional steam unit and CCCT unit for both URS and RRS:

Offer bids ($/MW) Minimum running cost ($) Start Costs ($) Offer capacity (MW)

• Offers from these typical units are inserted into the RRS and URS supply stack and re-clear the RRS and URS markets for all hours

• Calculate daily savings based on the lower MCPC resulting from the new bid stack

• Determine if any “make whole payments” are required to cover start up and minimum running costs

• Subtract “make whole payments” from daily savings to determine market savings for the day

• Repeat for each day from 11/01/2004 through 10/31/2005

• Take the maximum daily saving between URS and RRS for each type of unit and sum the market savings for the 12 months.

5

Assumed Unit Parameters Used in Model

  Large Steam CCCT Small Drum

Start Cost ($) 3000+9*Max*Gas 6810+2200*Gas 2160+9*Max*Gas

Unit Max (MW) 500 500 239

Unit Min (MW) 35 130 37

AGC Max (MW) 490 500 230

AGC Min (MW) 50 130 37

Avg HR at Unit Max (MMBtu/MWh) 9.8 7.1 11.0

Avg HR at Unit Min (MMBtu/MWh) 14.0 7.8 15.0

Avg HR at AGC Max (MMBtu/MWh) 10.0 7.1 11.0

Avg HR at AGC Min (MMBtu/MWh) 13.4 7.8 14.9

Min Run (Hours) 5 10 3

Min Down (Hours) 4 4 2

AGC Range Ramp Rate (MW/min) 30 10 14

6

Market Savings Model Results

Month Large Drum CCCT Small DrumNov-2004 $1,215,114 $1,114,526 $578,106Dec-2004 $615,423 $542,972 $287,267Jan-2005 $3,995,512 $1,949,504 $2,150,815Feb-2005 $327,136 $526,640 $123,791Mar-2005 $730,131 $1,053,265 $314,785Apr-2005 $799,320 $1,362,038 $439,240May-2005 $359,871 $603,972 $227,662Jun-2005 $1,003,246 $796,753 $763,265Jul-2005 $1,207,067 $881,829 $830,641Aug-2005 $680,692 $450,939 $368,103Sep-2005 $4,341,406 $4,927,818 $2,135,910Oct-2005 $3,402,088 $2,233,312 $1,835,066

Total $18,677,007 $16,443,568 $10,054,652

Total of Monthly Max. $20,592,875

Steam

7

Market Savings by Day

Daily Max of URS and RRS for Steam unit

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,00011

/1/2

004

12/1

/200

4

1/1/

2005

2/1/

2005

3/1/

2005

4/1/

2005

5/1/

2005

6/1/

2005

7/1/

2005

8/1/

2005

9/1/

2005

10/1

/200

5

Mar

ket

Sav

ing

s

# Days > 0 218

% Days > 0 60%

Max Savings $2,618,889

Min Savings > 0 $427

8

Analysis of Resource Plan Availability of Gas Fired Steam Units

Number of days in the month unit available but not on-line

0

5

10

15

20

25

30

35

Day

s in

the

Mon

th

B_D

AVIS

_B_D

AVIG

1BR

AUN

IG_V

HB1

BRA

UN

IG_V

HB2

BRAU

NIG

_VH

B3C

ALAV

ERS

_OW

S1C

ALAV

ERS_

OW

S2C

BY_C

BY_G

1C

BY_C

BY_G

2C

BY_C

BY_G

3D

CSE

S_U

NIT

1D

ECKE

R_D

PG

1D

ECKE

R_D

PG2

FER

GU

S_FE

RG

USG

1G

BY_G

BY_5

GID

EON

_GID

EON

G3

GR

SES_

UN

IT1

GR

SES

_UN

IT2

HLS

ES_U

NIT

3H

LSES

_UN

IT4

HLS

ES_U

NIT

5H

OLL

Y_H

PG3

HO

LLY_

HPG

4LC

SES_

UN

IT2

LHSE

S_U

NIT

1LH

SES_

UN

IT2

MC

SES_

UN

IT8

MG

SES_

UN

IT6

MIL

_MIL

LER

G3

NLS

ES_

UN

IT1

NLS

ES_U

NIT

2N

LSES

_UN

IT3

PBSE

S_U

NIT

6SC

SES_

UN

IT1

SCSE

S_U

NIT

2SR

B_SR

B_G

1SR

B_SR

B_G

2SR

B_SR

B_G

3SR

B_S

RB_

G4

THSE

S_U

NIT

1T

HSE

S_U

NIT

2TR

SES_

UN

IT6

TUTT

LE_W

BT4G

4VL

SES_

UN

IT1

VLSE

S_U

NIT

2VL

SES_

UN

IT3

WAP

_WAP

_G1

WAP

_WAP

_G2

WAP

_WAP

_G3

WAP

_WAP

_G4

Jul-04

Aug-04

Sep-04

Oct-04

Nov-04

Dec-04

Jan-05

Feb-05

Mar-05

Apr-05

May-05

Jun-05

9

Analysis of Resource Plan Availability of CCCT Units

Number of days in the month unit available but not on-line

0

5

10

15

20

25

30

35

Num

ber

of D

ays

BO

SQ

UE

SW

_BS

QS

U_1

BO

SQ

UE

SW

_BS

QS

U_2

BO

SQ

UE

SW

_BS

QS

U_3

BO

SQ

UE

SW

_BS

QS

U_4

BR

AU

NIG

_AV

R1_

CT

1B

RA

UN

IG_A

VR

1_C

T2

CC

EC

_GT

1C

CE

C_G

T2

DU

KE

_DU

KE

_GT

1_J0

1D

UK

E_D

UK

E_G

T2_

J01

ET

CC

S_C

T1

ET

CC

S_U

NIT

1F

RE

C_G

T1

FR

EC

_GT

2F

RE

C_G

T4

FR

EC

_GT

5F

RN

YP

P_C

T1

FR

NY

PP

_CT

2F

RN

YP

P_C

T3

FR

NY

PP

_CT

4F

RN

YP

P_C

T5

FR

NY

PP

_CT

6F

RO

NT

ER

A_F

RO

NT

EG

1F

RO

NT

ER

A_F

RO

NT

EG

2F

RO

NT

ER

A_F

RO

NT

EG

3F

TR

_FT

R_G

1F

TR

_FT

R_G

2F

TR

_FT

R_G

3F

TR

_FT

R_G

4G

UA

DG

_GA

S1

GU

AD

G_G

AS

2G

UA

DG

_GA

S3

GU

AD

G_G

AS

4H

AY

SE

N_H

AY

SE

NG

1H

AY

SE

N_H

AY

SE

NG

2H

AY

SE

N_H

AY

SE

NG

3H

AY

SE

N_H

AY

SE

NG

4K

MC

HI_

1CT

101

KM

CH

I_1C

T20

1K

MC

HI_

2CT

101

KM

CH

I_2C

T20

1LG

E_L

GE

_GT

1LG

E_L

GE

_GT

2LO

ST

PI_

LOS

TP

GT

1LO

ST

PI_

LOS

TP

GT

2LP

CC

S_C

T11

LPC

CS

_CT

12LP

CC

S_C

T21

LPC

CS

_CT

22M

DA

NP

_CT

1M

DA

NP

_CT

2M

DA

NP

_CT

3M

DA

NP

_CT

4M

DA

NP

_CT

5M

DA

NP

_CT

6O

EC

CS

_CT

11O

EC

CS

_CT

12O

EC

CS

_CT

21O

EC

CS

_CT

22P

SG

_PSG

_GT

2P

SG

_PSG

_GT

3R

ION

OG

_CT

1R

ION

OG

_CT

2R

ION

OG

_CT

3S

AN

DH

SY

D_S

H_5

AS

AN

DH

SY

D_S

H_5

CS

AN

DH

SY

D_S

H1

SA

ND

HS

YD

_SH

2S

AN

DH

SY

D_S

H3

SA

ND

HS

YD

_SH

4T

GC

CS

_CT

1T

GC

CS

_CT

2T

GC

CS

_CT

3T

XC

TY

_CT

AT

XC

TY

_CT

BT

XC

TY

_CT

CW

CP

P_C

T1

WC

PP

_CT

2W

HC

CS

_CT

1W

HC

CS

_CT

2

Jul-04Aug-04

Sep-04Oct-04

Nov-04Dec-04

Jan-05Feb-05

Mar-05Apr-05

May-05Jun-05

10

Revised PRR 567 CBA