March 13, 2007 Slide 1 ERCOT Nodal 101 COPS Market Guide Commercial Operations Market Guide Section 5 a. Overview of ERCOT ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 2 ERCOT Nodal 101 LMP Fundamentals Locational Marginal Pricing (LMP) is the offer-based marginal cost of serving the next increment of Load at a given network node. LMPs are calculated by the DAM process or by the SCED process. LMPs typically include a pricing component for energy, congestion and losses, and are calculated at each network node. ERCOT is using a DC Power Flow Model to calculate LMPs. DC Power Flow does not consider voltage and reactive power in the calculation of LMPs. Losses are not explicitly incorporated in the LMP in the ERCOT Nodal Market. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 3 ERCOT Nodal 101 The LMP Foundation Locational Marginal Pricing (LMP) provides: Market transparency Observable consequence of behavior Direct assignment of local congestion costs Balance of reliability and economics Strong market signals Efficient ERCOT instructed unit-level dispatch Market Participants Impacted: Qualified Scheduling Entities (QSEs) Load Serving Entities (LSEs) Retail Electric Providers (REPs) Municipally Owned Utilities Electric Cooperatives Transmission Service Providers (TSPs) Distribution Service Providers (DSPs) Resource Entities Power Marketers/Traders Aggregators ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 4 ERCOT Nodal 101 The New Market Structure ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 5 ERCOT Nodal 101 ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Register Market Participants Register Assets Qualify Market Participants Check Credit Registration and Compliance Refer to Registration Guide Registration is the process of receiving and maintaining data on Market Participants and their assets needed for operation in the ERCOT market. Qualification activities will follow registration and depend on the business functions to be supported. Testing connectivity with ERCOT Verifying Market Participants can perform protocol required functions Establishing creditworthiness Monitoring of behavior: Compliance is the on-going process used to monitor performance of a business based on an established set of criteria. March 13, 2007 Slide 6 ERCOT Nodal 101 Operations System Planning Operations System Planning includes both long and short-term planning. Long-term planning focuses on Black Start contracts, topology changes, planned maintenance Outages, new generation interconnections, and planned transmission additions. Short-term planning focuses on Planned Outages, Voltage Profiles, unplanned events, short-term topology changes, current weather and Load forecasts. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Secure RMR & Black Start Contracts Determine Voltage Profiles Submit NOMCR Forecast Load March 13, 2007 Slide 7 ERCOT Nodal 101 Congestion Revenue Right Auction The Congestion Revenue Right (CRR) Auction occurs monthly and annually. The auction allows registered Congestion Revenue Right (CRR) Account Holders to bid and / or offer the financial instruments known as Congestion Revenue Rights (CRRs). A Congestion Revenue Right (CRR) entitles the Congestion Revenue Right (CRR) Owner to be charged or to receive congestion rents that ERCOT collects. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Offer CRRs for sale Bid to buy CRRs Determine Revenue Adequacy Conduct Auction Validate Transmission Capacity March 13, 2007 Slide 8 ERCOT Nodal 101 Operational Timeline Do Not Bold Any Sections ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 9 ERCOT Nodal 101 Day-Ahead Operations Day-Ahead Operations consists of the Day- Ahead Market (DAM) and the Day-Ahead Reliability Unit Commitment (DRUC). The Day-Ahead Market allows Qualified Scheduling Entities (QSEs) to bid and / or offer energy and Congestion Revenue Rights (CRRs) and to offer Ancillary Services. Day-Ahead Reliability Unit Commitment (DRUC) is executed after the Day-Ahead Market (DAM) and ensures reliability of the transmission grid. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Post Forecasted ERCOT System Conditions Submit Bids, Offers, Trades, & Schedules Execute DAM Execute DRUC Communicate Results March 13, 2007 Slide 10 ERCOT Nodal 101 Day-Ahead Operations Fundamentals The features of the Day-Ahead Market (DAM) are Voluntary participation (except for RMRs) Financially binding Co-optimization of Energy Offers and Bids, Congestion Revenue Rights (CRRs) Offers and Bids, and Ancillary Service Offers Day-Ahead Reliability Unit Commitment (DRUC), like HRUC, is executed to ensure that enough capacity is committed in the right locations to reliably serve the forecasted Load. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 11 ERCOT Nodal 101 Day-Ahead Market Fundamentals To provide an opportunity to purchase, sell and trade capacity and energy even if you do not have Resources or Load. To provide price transparency, discovery and certainty. To establish the market value of Congestion Revenue Rights (CRRs). ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 12 ERCOT Nodal 101 Day-Ahead Market Activity Day-Ahead Market (DAM) is executed at Activities prior to DAM execution: Posting of information on the MIS Secure Area Submit DAM and DRUC Offers Submit DAM Bids Submit Self-Arranged AS quantities Submit DC Tie Schedules May submit Trades May update COP May submit Self-Schedules ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 13 ERCOT Nodal 101 Day-Ahead Market ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 14 ERCOT Nodal 101 Day-Ahead Operations Activity Activities after DAM execution: ERCOT shall communicate DAM awards no later than 1330 ERCOT shall post required information on the MIS no later than 1330 Day-Ahead Reliability Unit Commitment (DRUC) executes at Activities prior to DRUC execution: Must have Self-Arranged Ancillary Services Quantities represented by physical capacity or backed by Ancillary Service Trades May update COP May submit Trades ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 15 ERCOT Nodal 101 Activity Timeline ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 16 ERCOT Nodal 101 Adjustment Period Activity Activities in the Adjustment Period: Current Operating Plans may be updated Energy offers may be submitted and / or updated Output Schedules may be submitted and / or updated Trades may be submitted and / or updated Self-Schedules may be submitted Communication of Forced Outages A Supplemental Ancillary Service Market (SASM) may be executed if necessary Energy scheduling, as it exists today, is no longer applicable in the Nodal Market. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 17 ERCOT Nodal 101 Adjustment Period The Adjustment Period begins at 1800 (when Day-Ahead Operations ends) and ends when the Operating Period begins. The Adjustment Period provides an opportunity for Qualified Scheduling Entities (QSEs) to submit new information and update previous entries where appropriate. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Submit, Validate & Update Offers, Trades & Schedules Execute SASM Request Resource Decommitments Communicate Results March 13, 2007 Slide 18 ERCOT Nodal 101 Resource Decommitment and Forced Outage Resource Decommitment In the Adjustment Period, decommitment is requested by updating the Resource Status in the COP and is subject to validation using Hourly Reliability Unit Commitment. In the Operating Period, decommitment is requested by contacting an ERCOT operator so ERCOT may determine the reliability impact. For any interval that the Resource has been committed in a RUC Process, decommitment may only result from a Forced Outage. In the event of a Forced Outage or de-rating of a Resource, the QSE must provide ERCOT with information pertaining to the duration, schedule and nature of the event. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 19 ERCOT Nodal 101 Activity Timeline Note: Is This Slide Needed? ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 20 ERCOT Nodal 101 Reliability Unit Commitment - RUC The Hour-Ahead is the hour before the Operating Hour and is part of the Operating Period. The Hourly Reliability Unit Commitment (HRUC) process is executed in the Hour- Ahead to ensure reliability of the transmission grid. The Hourly Reliability Unit Commitment (HRUC) will approve or reject any Resource Decommitments that were requested during the Adjustment Period. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Execute HRUC Approve Resource Decommitments Communicate Results March 13, 2007 Slide 21 ERCOT Nodal 101 Day-Ahead Reliability Unit Commitment DRUC must be executed after the close of the DAM. The DRUC Study Period is the next Operating Day. Three-Part Supply Offers submitted prior to DAM, but not awarded in the DAM will be considered in DRUC. Resources that have not submitted a Three-Part Supply Offer, but are designated as available in the COP may still be committed by DRUC. QSEs are to update the COP to indicate DRUC commitments. DRUC-Committed Resources are subject to Make-Whole and Clawback settlements. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 22 ERCOT Nodal 101 Hourly Reliability Unit Commitment HRUC is executed to fine-tune the Resource commitments using updated forecasts and updated Outage information. The HRUC Study Period is the remaining hours in the current Operating Day. If Day-Ahead Reliability Unit Commitment (DRUC) has solved, the study period for HRUC is the remaining hours in the current Operating Day PLUS all hours in the next Operating Day. Resources that have not submitted a Three-Part Supply Offer, but are designated as available in the COP may still be committed by HRUC. QSEs are to update the COP to indicate HRUC commitments. HRUC-Committed Resources are subject to Make-Whole and Clawback settlements. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 23 ERCOT Nodal 101 Real-Time Operations Real-Time Operations, also referred to as the Operating Hour, is part of the Operating Period. Real-Time Operations consists of a sequence of programs, processes and interactions between ERCOT and Market Participants. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Send & Receive Real-Time Telemetry Execute LFC Monitor & Manage Ancillary Services Execute Real-Time Security Analysis Execute SCED Communicate Results March 13, 2007 Slide 24 ERCOT Nodal 101 Operating Period Activity The Operating Period consists of the Hour-Ahead (hour prior to the Operating Hour) and Real-Time Operations (the Operating Hour). Activities in the Hour-Ahead: Hourly Reliability Unit Commitment (HRUC) is executed HRUC Commitments are communicated Activities in Real-Time Operations: QSEs may update and / or submit Output Schedules for DSRs Real-Time data is provided by QSEs and TSPs Network Security Analysis is performed Security Constrained Economic Dispatch (SCED) is executed Load Frequency Control (LFC) is executed Ancillary Service capacities are monitored Instructions and prices are communicated ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 25 ERCOT Nodal 101 Real-Time Operations Real-Time Operations balances reliability and economics Manages the transmission system reliability and security Generation and transmission constraints Weather conditions Planned and unplanned Outages Meets total Load Considers offers ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 26 ERCOT Nodal 101 Real-Time Data ERCOT requires telemetered data to assess the reliability of the Transmission Grid in Real-Time. Some of the information required is: From Transmission Service Providers (TSPs): Transmission bus voltages MW and MVAR pairs Calculated MVA for all lines, transformers and reactors Actual breaker and switch status for all modeled devices Tap position for auto-transformers From Qualified Scheduling Entities (QSEs): Generator Step-up transformers tap position Low and High Sustained Limit for each Resource via telemetry Real-Time weather ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 27 ERCOT Nodal 101 Security Constrained Economic Dispatch Operations SCED ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements SCED SCED is executed every five-minutes, but may be executed at anytime. SCED calculates LMPs, Shadow Prices and Resource-specific Base Points. March 13, 2007 Slide 28 ERCOT Nodal 101 Security Constrained Economic Dispatch Process Failure Should SCED fail, an Emergency Condition will be declared. For each interval that SCED does not provide a solution, the prices will be set to the most recently cleared interval. ERCOT may perform measures to remedy the SCED failure, such as: Relaxing the transmission constraints and Ancillary Service Limits. Issuing instructions and Emergency Base Points for Resources. Holding the instructions from the previous interval. ERCOT must notify the market of the failure through the Messaging System (ERCOT-to-QSE Real-Time communication system) and by posting on the MIS Secure Area. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 29 ERCOT Nodal 101 Load Frequency Control Load Frequency Control (LFC) is executed every four seconds to maintain system frequency. ERCOT provides control signals to each QSE providing Regulation Service and Responsive Reserve Service. Each QSE is responsible for providing ERCOT with a participation factor for each of its Resources every four seconds via telemetry Participation factors notify ERCOT of how regulation energy is planned to be distributed among the QSEs resources. The Resource Limit Calculator is used to ensure that LFC deployments will respect the Resources Ancillary Service commitments and physical limitations. LFC deployments are settled using Real-Time pricing. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 30 ERCOT Nodal 101 Network Operations Model ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements The Network Operations Model contains the physical characteristics, ratings, and operational limits of all the Transmission Elements within the ERCOT Grid. An accurate Network Operations Model is required: In order to calculate accurate Base Points and prices. To build the Congestion Revenue Right (CRR) Network Model and the Planning Model. A Network Operations Model Change Request (NOMCR) is used to control all information entering the Network Operations Model. NOMCRs must be Common Information Model (CIM) compliant. ERCOT shall post all NOMCRs on the MIS Secure Area within five Business Days of receipt. NOMCRs will be posted using a CIM-compliant format. March 13, 2007 Slide 31 ERCOT Nodal 101 Settlements The Real-Time Market, the Day-Ahead Market and the Congestion Revenue Right (CRR) Auction will be settled separately in the Nodal Market. There are different Settlement timelines for each of these Settlements. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Gather & Submit Meter Data Aggregate Data Create Statements & Invoices Pay Invoices Submit, Manage & Resolve Disputes March 13, 2007 Slide 32 ERCOT Nodal 101 Market Information System ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Create and Submit Queries Access Data Process Data Extracts The Market Information System (MIS) is a commercial-level website that has three levels of access: Public Area, access for the public. Secure Area, access for approved entities only. Certified Area, access for an individual Market Participant. Information posted on the MIS is in accordance with the Protocols, and as required by regulations of the Public Utility Commission of Texas (PUCT) and other Governmental Authorities. March 13, 2007 Slide 33 ERCOT Nodal 101 Ancillary Service Capacity Monitor The following Ancillary Service quantities are made available every ten seconds through the MIS Secure Area and the ICCP link: Responsive Reserve Capacity from Load and Generation Resources Non-Spinning Reserve Undeployed Reg-Up and Reg-Down Available capacity with Energy Offer Curves that may be used to increase/decrease Base Points in SCED Available capacity without Energy Offer Curves that may be used to increase/decrease Base Points in SCED ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 34 ERCOT Nodal 101 COPS Market Guide Commercial Operations Market Guide Section 6 c. MMS/EMS/NMMS i.Offers, Bids, Schedules, Trades ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 35 ERCOT Nodal 101 Offers An offer is a proposal to sell by product, location and/or price. Day-Ahead Market and Day-Ahead Reliability Unit Commitment Offers: Three-Part Supply Offers Energy Offer Curves DAM Energy-Only Offers Ancillary Service Offers CRR Offers Reliability Must-Run Offers ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 36 ERCOT Nodal 101 Three-Part Supply Offer Consists of: ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Startup OfferMinimum-Energy OfferEnergy Offer Curve $ to Startup $/MWh to Operate at Low Sustained Limit $/MWh to Operate at Given MW Quantity Above Low Sustained Limit March 13, 2007 Slide 37 ERCOT Nodal 101 Three-Part Supply Offer (continued) The Startup Offer component represents all costs incurred by a Generation Resource in starting up and reaching breaker close. The Minimum-Energy Offer component represents the costs incurred by a Resource in producing energy up to and including the Resources Low Sustained Limit (LSL) after breaker close. The Energy Offer Curve represents an offer to sell energy at or above a certain price and at a certain quantity in the DAM or a willingness to dispatch a given unit in Real-Time. Startup Offers, Minimum-Energy Offers, and Energy Offer Curves are capped. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 38 ERCOT Nodal 101 Three-Part Supply Offer or Energy Offer Curve The Energy Offer Curve may be submitted as a part of a Three-Part Supply Offer or alone (without a Startup Offer and a Minimum-Energy Offer). Three-Part Supply Offers: Are used by the Day-Ahead Market, the Reliability Unit Commitment (RUC) Processes, and Security Constrained Economic Dispatch (SCED). Will continue to be considered in RUC Processes until the Resource is committed, the offer expires, or the offer is withdrawn. Energy Offer Curves: Are used by the Day-Ahead Market and Security Constrained Economic Dispatch (SCED). May be updated and / or submitted in the Adjustment Period for any interval the Resource is not RUC-Committed or DAM-Committed. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 39 ERCOT Nodal 101 Offers (continued) ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Three-Part Supply Offers: If a Three-Part Supply Offer for a Resource is awarded in DAM, the commitment is only financial and there is no physical obligation for the Resource to be On-Line in Real-Time. A QSE may not submit a Three-Part Supply Offer to be considered in the DRUC unless the offer was also submitted for consideration in the DAM. Energy Offer Curves: Are considered in the DAM. A QSE submitting only an Energy Offer Curve is said not be offering the Resource into RUC, but may be committed depending on Resource status in the COP. March 13, 2007 Slide 40 ERCOT Nodal 101 Offers (continued) DAM Energy-Only Offer Curve This is an offer curve for use only in the DAM. Offer represents energy offered for sale at a specific Settlement Point and is not Resource-specific. Ancillary Service Offers: The capacity of a single Resource may be offered for multiple Ancillary Services. Resource specific offers may be for Regulation Service, Non-Spinning Reserve Service or Responsive Reserve Service. Offers must include specific Resources, quantities, schedules including an expiration time and date. No offer may exceed $1,000/MW. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 41 ERCOT Nodal 101 Offers (continued) Congestion Revenue Right (CRR) Offers: All CRRs in a given offer must be of the same type. All CRRs in a given offer must have the same source and sink. A block CRR offer must have the same number of CRRs in each hour. A block CRR offer must consist of contiguous hours. Reliability Must-Run Offers ERCOT submits Three-Part Supply Offers based on RMR Agreement rates and other relevant information. ERCOT may submit Energy Offer Curves based on RMR Agreement rates and other relevant information. RMR unit offers may be considered in the DAM, DRUC or HRUC. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 42 ERCOT Nodal 101 Bids A bid is a proposal to buy by product, location and/or price. DAM Energy Bids Bid format should correspond to DAM Energy-Only Offers. Bids represent willingness to buy energy at or below a certain price and at a certain quantity at a specific Settlement Point in the DAM. DAM Energy Bids are only valid in the DAM. Point-to-Point (PTP) Obligation Bid PTP Obligations are a hedge against congestion in which QSEs who are also CRR Account Holders may bid for in the DAM. PTP Obligations bought in the DAM are settled at Real-Time Settlement Point Prices. PTP Obligation Bids may be for more than one PTP Obligation as long as they have the same source and sink, the same number of hours in each block and if they are for contiguous hours. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 43 ERCOT Nodal 101 Output Schedules An Output Schedule is the desired MW level for a Resource for every five- minute interval For a Resource that is not dynamically scheduled, an Output Schedule may be submitted and / or updated during the Adjustment Period For a Dynamically Scheduled Resource (DSR), an Output Schedule may be submitted and /or updated before SCED execution. Incremental and Decremental Energy Offer Curves may be submitted in addition to the Output Schedule for DSRs. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 44 ERCOT Nodal 101 Energy Offer Curves and Output Schedules An Energy Offer Curve or an Output Schedule must be submitted and maintained for all times when the Resource is On-Line, except for an RMR Unit. If a valid Output Schedule or Energy Offer Curve is not available at the time of SCED execution, the Output Schedule is set equal to the telemetered output of the Resource. If both an Output Schedule and Energy Offer Curve exist, the Energy Offer Curve automatically nullifies the Output Schedule for that Resource. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 45 ERCOT Nodal 101 Self-Schedules ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Self-Schedules A Self-Schedule specifies the amount of a QSEs energy supply at a specific source Settlement Point used to meet the QSEs energy obligation at a specific sink Settlement Point. A Self-Schedule is for Settlement purposes only and will be settled using Real-Time Settlement Point Prices. A Self-Schedule may be submitted for any Settlement Interval before the end of the Adjustment Period for that Settlement Interval. March 13, 2007 Slide 46 ERCOT Nodal 101 Self-Arranged Ancillary Services Self-Arranged Ancillary Services are the portion of the Ancillary Service Obligation that QSEs elect to provide from its resources or trades. This quantity must be reported to ERCOT prior to ERCOT procures the portion of the actual Ancillary Service Obligation not self-arranged in the Day-Ahead Market. Prior to 1430 (prior to Day-Ahead Reliability Unit Commitment execution) all Self-Arranged Ancillary Service Quantities must be represented by physical capacity (Load or Generation Resources) or backed by Ancillary Service Trades. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 47 ERCOT Nodal 101 Trades Trades transfer either a financial responsibility or a capacity obligation between a buyer and a seller. The types of trades include: Capacity Trades Energy Trades Ancillary Service Trades Congestion Revenue Rights Trades Each trade must be confirmed by both buyer and seller. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 48 ERCOT Nodal 101 COPS Market Guide Commercial Operations Market Guide Section 6 c. ii. COP ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 49 ERCOT Nodal 101 Current Operating Plan Any QSE representing a Resource is obligated to submit a Current Operating Plan (COP). The COP includes operating conditions for each Resource, for each hour in the next seven Operating Days. The COP must identify sufficient Resource capacity to meet trades and Ancillary Service Supply Responsibility. The COP is used in the Day-Ahead Market and Reliability Unit Commitment Processes; it is NOT used in SCED. The COP may be modified up to the point of dispatch for each Generation Resource. The QSE has 60 minutes after an event to modify or update the COP reflecting changes in availability of any Resource. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 50 ERCOT Nodal 101 COPS Market Guide Commercial Operations Market Guide Section 6 d. Prices ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 51 ERCOT Nodal 101 There are three types of Settlement Points: Resource Nodes Load Zones Hubs LMPs are used to calculate Settlement Point Prices. Settlement Points ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 52 ERCOT Nodal 101 Resource Nodes A Resource Node is an Electrical Bus where a Generation Resources measured output is settled. Settlement Points (continued) ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 53 ERCOT Nodal 101 Settlement Points (continued) ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Load Zones There are three types of Load Zones Competitive Load Zones The four congestion zones in effect during the 2003 ERCOT market. Non-Opt in Entity (NOIE) Load Zones NOIE Load Zones will be determined by Protocol criteria. DC Tie Load Zones If energy is being exported via the DC Tie, the DC Tie is considered a Load. The Settlement Point Price for a Load Zone is the Load-weighted average of the LMPs at all buses assigned to that Zone. The Load-weighting must be determined using the Load, if any, from the State Estimator at each Electrical Bus. In Real-Time, the LMPs will also be time-weighted. March 13, 2007 Slide 54 ERCOT Nodal 101 Hubs Hubs are defined by the Protocols using normal system conditions. Hubs consist of Hub Buses Hub Buses consist of one or more electrical buses within a single substation Hubs are only used for trading purposes. The Settlement Point Price for a Hub is the simple average of the Hub Buses LMPs. A Hub Bus LMP is the simple average of the LMPs assigned to each Electrical Bus within the Hub Bus. In Real-Time, the LMPs will also be time-weighted. Settlement Points (continued) ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 55 ERCOT Nodal 101 COPS Market Guide STOPPED 12/10/07 MEETING Commercial Operations Market Guide Section 8 Settlement Statement & Detail ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 56 ERCOT Nodal 101 Settlements Fundamentals In the Texas Nodal Market, the Real-Time Market, the Day-Ahead Market and the CRR Auction will be settled separately. ERCOT shall post and maintain a Settlements Calendar on the MIS Public Area to denote significant Settlement dates. Settlement Statements may be accessible electronically on the MIS Certified Area. A Statement or Invoice reflecting a negative amount represents a payment due by ERCOT to the recipient; a positive amount represents a payment due to ERCOT by the recipient. Any settlement may be disputed. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 57 ERCOT Nodal 101 Real-Time Market Settlements Timeline Invoices are issued on a weekly basis. Resettlements may occur at any time after the Initial Statement. This timeline has not changed from the current practice. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 58 ERCOT Nodal 101 Real-Time Market Settlements The Real-Time Market includes Settlements for Day-Ahead Reliability Unit Commitment (DRUC), the Adjustment Period, and Real-Time operations. The Real-Time Market Settlement Intervals are either one hour or 15 minutes. Real-Time LMPs are used to calculate Real-Time Settlement Point Prices. SCED calculates Real-Time LMPs. All Real-Time LMPs, Supplemental Ancillary Service Market (SASM) Market Clearing Prices for Capacity (MCPCs), and Real-Time Settlement Point Prices are final at 1600 of the next Business Day after the Operating Day. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 59 ERCOT Nodal 101 Real-Time Market Settlements (continued) Resource Node Settlement Point Price Based on the Base-Point time-weighted average of the Real-Time LMPs for that Resource Node Load Zone Settlement Point Price Based on the state-estimated Load in MW and the time-weighted and Load- weighted average of the Real-Time LMPs at the Electrical Buses included in the Load Zone. Hub Settlement Point Price Based on the time-weighted simple average of the Real-Time LMPs of the Hub Buses included in the Hub. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 60 ERCOT Nodal 101 Real-Time Market Settlements (continued) Real-Time Settlements RUC Settlements Energy Imbalance Real-Time Energy Real-Time Congestion for Self-Schedules Base-Point Deviations RMR Settlements Voltage Support Black Start Emergency Power Supplemental Ancillary Service Market Settlements Applicable CRR Settlements ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 61 ERCOT Nodal 101 Day-Ahead Market Settlements Timeline ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 62 ERCOT Nodal 101 Day-Ahead Market Settlements The Day-Ahead Market Settlement Interval is one hour. The Day-Ahead Market algorithm calculates LMPs and Market Clearing Prices for Capacity (MCPCs). MCPCs are used for Ancillary Service Settlements. DAM LMPs are used to calculate DAM Settlement Point Prices. All DAM LMPs, MCPCs, and Settlement Point Prices are final at 1000 of the next Business Day after the Operating Day. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 63 ERCOT Nodal 101 Day-Ahead Market Settlements (continued) Resource Node Settlement Point Price Is the LMP at that Resource Node for that hour as calculated in the DAM process. Load Zone Settlement Point Price Based on historical State Estimator distributions and the Load-weighted average of the Day-Ahead LMPs at the Electrical Buses included in the Load Zone. Hub Settlement Point Price Based on the simple average of the Day-Ahead LMPs of the Hub Buses included in the Hub. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 64 ERCOT Nodal 101 Day-Ahead Market Settlements (continued) Day-Ahead Settlements Day-Ahead Energy Ancillary Services Applicable CRR Settlements ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 65 ERCOT Nodal 101 Congestion Revenue Right Auction Settlements Timeline ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 66 ERCOT Nodal 101 Congestion Revenue Rights Settlements Congestion Revenue Rights may be settled using the CRR Auction clearing price, Day-Ahead Settlement Point Prices, and / or Real-Time Settlement Point Prices. The CRR Clearing Price is equal to the corresponding Shadow Price for that CRR product. When a CRR Account Holder is awarded CRRs as a result of a CRR Auction, the CRRs do not become the property of the winning CRR Account Holder until the CRR Invoices have been paid in full. When a CRR Account Holder sells PTP Obligations as a result of an auction at a negative price, the CRR Account Holder is not relieved of the PTP Obligations until the CRR Invoices have been paid in full. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 67 ERCOT Nodal 101 Congestion Revenue Rights Settlements (continued) CRR Auction Settlements Awarded Offers and Bids Charge for PCRRs Distribution of Auction Revenues CRR DAM Settlements All types of CRRs Shortfall Charges CRR Real-Time Settlements PTP Obligations purchased in the DAM PTP Options and PTP Options with Refund that were not awarded in the DAM (eligible NOIEs only) Shortfall charges ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 68 ERCOT Nodal 101 Congestion Revenue Rights Balancing Account If the Day-Ahead Congestion Rent is greater than the total payments to all CRR Owners for the CRRs settled in the DAM for any Operating Hour, a credit is put into the CRR Balancing Account for that Operating Hour. For each Operating Hour, if the Day-Ahead Congestion Rent is less than the total payment to all CRR Owners for the CRRs settled in the DAM, a charge will be made to each CRR Owner based on CRR Credit Ratio Share. Each month, if there are funds available in the CRR Balancing Account, a refund may be paid to the CRR Owners that have had a shortfall charge in that month; shall be distributed on a CRR Credit Ratio Share. If there is a surplus after all CRR Owners have received eligible refunds, the funds will be paid based on a monthly Load Ratio Share. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 69 ERCOT Nodal 101 Settlements Disputes A timely dispute must be submitted by Market Participants within ten Business Days after the statement is posted. ERCOT will make all reasonable effort to resolve open disputes within ten Business Days of the billing dispute due date. All communication regarding dispute resolution, including status, must use the MIS Certified Area or other electronic process. Market Participants who disagree with a resolution have the right to utilize the Alternative Dispute Resolution (ADR) process. Granted settlement disputes are reconciled in the next available settlement statement. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 70 ERCOT Nodal 101 COPS Market Guide Delete Section Commercial Operations Market Guide Section 8 b. Ancillary Services ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 71 ERCOT Nodal 101 Self-Arranged Ancillary Services Covered in Section 6c Self-Arranged Ancillary Services Self-Arranged Ancillary Services are the portion of the Ancillary Service Obligation that QSEs elect to provide from its resources or trades. This quantity must be reported to ERCOT prior to ERCOT procures the portion of the actual Ancillary Service Obligation not self-arranged in the Day-Ahead Market. Prior to 1430 (prior to Day-Ahead Reliability Unit Commitment execution) all Self-Arranged Ancillary Service Quantities must be represented by physical capacity (Load or Generation Resources) or backed by Ancillary Service Trades. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 72 ERCOT Nodal 101 Hourly Reliability Unit Commitment Covered in Section 5a HRUC is executed to fine-tune the Resource commitments using updated forecasts and updated Outage information. The HRUC Study Period is the remaining hours in the current Operating Day. If Day-Ahead Reliability Unit Commitment (DRUC) has solved, the study period for HRUC is the remaining hours in the current Operating Day PLUS all hours in the next Operating Day. Resources that have not submitted a Three-Part Supply Offer, but are designated as available in the COP may still be committed by HRUC. QSEs are to update the COP to indicate HRUC commitments. HRUC-Committed Resources are subject to Make-Whole and Clawback settlements. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 73 ERCOT Nodal 101 Day-Ahead Reliability Unit Commitment Covered in Section 5a DRUC must be executed after the close of the DAM. The DRUC Study Period is the next Operating Day. Three-Part Supply Offers submitted prior to DAM, but not awarded in the DAM will be considered in DRUC. Resources that have not submitted a Three-Part Supply Offer, but are designated as available in the COP may still be committed by DRUC. QSEs are to update the COP to indicate DRUC commitments. DRUC-Committed Resources are subject to Make-Whole and Clawback settlements. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 74 ERCOT Nodal 101 COPS Market Guide Commercial Operations Market Guide Section 8 b. CRRs ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 75 ERCOT Nodal 101 Congestion Revenue Right Auction The Congestion Revenue Right (CRR) Auction occurs monthly and annually. The auction allows registered Congestion Revenue Right (CRR) Account Holders to bid and / or offer the financial instruments known as Congestion Revenue Rights (CRRs). A Congestion Revenue Right (CRR) entitles the Congestion Revenue Right (CRR) Owner to be charged or to receive congestion rents that ERCOT collects. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Offer CRRs for sale Bid to buy CRRs Determine Revenue Adequacy Conduct Auction Validate Transmission Capacity March 13, 2007 Slide 76 ERCOT Nodal 101 Congestion Costs ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Congestion Costs Compares: The payments made to generators with congestion (actual system conditions). The payments that would have made to generators if no congestion existed. Congestion costs are not used in Settlements. They are used to determine the amount of additional money that is being paid due to congestion. March 13, 2007 Slide 77 ERCOT Nodal 101 Congestion Management LMPs may be exceptionally volatile Supply and Demand constantly change Condition of transmission grid Weather conditions drive variances in grid performance Unanticipated Outages and incidents Modification of topology in model used for price calculations Use financial instruments to manage risk Congestion Revenue Rights (CRRs) entitle the CRR Owner to be charged or to receive congestion rents that ERCOT collects. Acquired through ERCOT or bilateral trades Contract For Differences provides for hedging against price at a given location. May be part of bilateral Market Participant contracts ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 78 ERCOT Nodal 101 Congestion Revenue Rights Fundamentals The objective of a CRR is to provide a financial instrument that may be used as a hedging mechanism against congestion costs. The owner of a CRR is entitled to be charged or to receive compensation for congestion rents. CRR ownership is open to anyone that may meet credit and registration guidelines except for ERCOT staff, Transmission Service Providers (TSPs), Distribution Service Providers (DSPs) and members of the PUCT. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 79 ERCOT Nodal 101 Congestion Revenue Rights Fundamentals (continued) CRR Characteristics: Measured in MWs with granularity of tenths of MWs (0.1MW) One hour Fully tradable (few exceptions) A designated source and a designated sink (except for Flowgate Right) Flowgate Right (FGR) has a designated directional network element, or a bundle of directional network elements ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 80 ERCOT Nodal 101 Congestion Revenue Rights Fundamentals (continued) CRR Types: Point-to-Point (PTP) Options provide a point-to-point congestion hedge that can only result in a payment to the CRR holder. There are also PTP Options with Refunds PTP Obligations provide a point-to-point congestion hedge that may result in a payment or a charge to the CRR holder. There are also PTP Obligations with Refunds Flowgate Rights (FGRs) provide a congestion hedge on a grouping of network elements that can only result in a payment to the CRR Holder. Currently the only ERCOT flowgate is the McCamey Area Flowgate. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 81 ERCOT Nodal 101 Congestion Revenue Rights Fundamentals (continued) CRRs may be acquired through: Direct allocation CRR Auctions Bilateral market transactions Day-Ahead Market ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 82 ERCOT Nodal 101 Direct Allocation of Congestion Revenue Rights ERCOT shall allocate Preassigned Congestion Revenue Rights (PCRRs) to eligible NOIEs (Non-Opt-In Entities). PCRRs may be PTP Options or PTP Obligations. NOIEs must choose the Capacity Option or the Refund Option for their PCRRs. ERCOT shall allocate McCamey Area Flowgate Rights (MCFRIs) to eligible QSEs representing wind-powered Generation Resources in the McCamey Area. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 83 ERCOT Nodal 101 Congestion Revenue Right Auctions ERCOT shall conduct monthly and annual CRR Auctions. A six-month trial period must be completed prior to the initiation of the first annual CRR Auction. The network capacity not directly allocated will be available in the auction. PTP Options, PTP Obligations, and FGRs shall be available in the auction. The auction uses the CRR Network Model which is based on the Network Operations Model. Includes significant outages Uses Dynamic Ratings Uses peak Load conditions for the month ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 84 ERCOT Nodal 101 Congestion Revenue Right Auctions (continued) Both monthly and annual auctions offer CRRs in the following blocks (having the same MW amount for each hour within the block): 5x16 blocks for hours ending , Monday through Friday (excluding NERC holidays), in one-month strips 2x16 blocks for hours ending , Saturday and Sunday, and NERC holidays in one-month strips 7x8 blocks for hours ending and hours ending Sunday through Saturday in one-month strips 7x24 blocks (consisting of a combination of the three previous types) in one month strips ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 85 ERCOT Nodal 101 Congestion Revenue Right Auctions (continued) The CRR Auction Process: The objective function is to maximize revenue with the constraint that all winners pay the same dollar amount per MW per hour for the same product. Bids and offers are optimized to produce the greatest value in a manner that is simultaneously feasible. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 86 ERCOT Nodal 101 Congestion Revenue Right Auction Settlements Distributing CRR Auction Revenues for the first three years after the Nodal Implementation Date: If the source and sink of the CRR are in the same 2003 ERCOT Congestion Management Zone, the revenues will be distributed on a zonal Load Ratio Share. If the source and sink of the CRR are in different 2003 ERCOT Congestion Management Zones, the revenues will be distributed on an ERCOT-wide Load Ratio Share. The Load Ratio Share is based on the peak 15-Minute Interval for the month. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 87 ERCOT Nodal 101 Bilateral Market Transactions Any CRR Account Holder may trade PTP Options, PTP Obligations, and FGRs bilaterally. Bilateral trading may be done privately or through ERCOT. ERCOT will facilitate trading on the MIS Secure area. The characteristics may not be modified from the terms of the original CRR. ERCOT shall populate a database of CRR Owners with the annual and monthly first-buyers of CRRs and first-recipients of PCRRs and MCFRIs. Transfer is not effective until the seller reports the transaction, the buyer acknowledges it, and both parties meet ERCOTs credit requirements to support the transfer. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 88 ERCOT Nodal 101 Congestion Revenue Rights in the Day-Ahead Market PTP Obligations are the only type of CRR that will be available for purchase in the DAM. Any CRR Account Holder that is also a QSE may bid for PTP Obligations in the DAM. NOIEs may offer PTP Options and / or PTP Options with Refunds into the DAM. If the offer is not awarded in the DAM, the PTP Option and / or PTP Option with Refund will be settled in Real-Time. ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 89 ERCOT Nodal 101 COPS Market Guide Commercial Operations Market Guide Section 8 b. Extracts and Reports ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 90 ERCOT Nodal 101 Market Information System ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements Create and Submit Queries Access Data Process Data Extracts The Market Information System (MIS) is a commercial-level website that has three levels of access: Public Area, access for the public. Secure Area, access for approved entities only. Certified Area, access for an individual Market Participant. Information posted on the MIS is in accordance with the Protocols, and as required by regulations of the Public Utility Commission of Texas (PUCT) and other Governmental Authorities. March 13, 2007 Slide 91 ERCOT Nodal 101 Posting of Information ERCOT shall post the following by 0600 on the MIS Secure Area: Network Operations Model that includes outages for the minimum Load hour and the peak Load hour Weather assumptions Any weather-related changes to transmission contingency list Load forecasts for the next seven days, by hour Load forecast distribution factors Load Profiles Distribution Loss Factors Current list of all Settlement Points By 0600 ERCOT shall notify each QSE of its Ancillary Service Obligation for each service for each hour ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements March 13, 2007 Slide 92 ERCOT Nodal 101 Posting of Information ERCOT shall post on the MIS Public Area no later than 1330: Day-Ahead Market Clearing Price for Capacity (MCPC) for each type of Ancillary Service for each hour Day-Ahead Settlement Point Prices for each Settlement Point for each hour Shadow Prices for every binding constraint for each hour Quantity, in MW, of total Ancillary Service Offers received in the DAM by Ancillary Service type for each hour Total quantity of energy (in MWh) bought in the DAM at each Settlement Point for each hour Total quantity of energy (in MWh) sold in the DAM at each Settlement Point for each hour Aggregated Ancillary Service Offer Curve for all Ancillary Service Offers for each type of Ancillary Service for each hour ERCOT Overview Market Overview Locational Marginal Pricing Adjustment Period & Real-Time Operations Course Introduction Day-Ahead Operations Course Conclusion Congestion Revenue Rights Settlements