Seasonal Resource Adequacy Assessment

1. Seasonal Resource Adequacy Assessment Dan Woodfin Director, System Planning GATF September 9, 2011

2. Background • Analysis of system operations during the peak days this summer have noted discrepancies between CDR inputs / assumptions and actual reserve availability, as noted in presentation at last GATF meeting • The more-significant discrepancies are a function of: • CDR assumptions matching NERC reporting requirements (e.g. load forecast based on Normal weather) and/or • the CDR being intended for longer-term resource assessment • Other discrepancies indicate improvements that need to be made to the data collection process for the CDR • ERCOT is proposing several improvements for GATF discussion in this presentation GATF

3. Procedural Changes • For this discussion, assume: • The CDR would be issued in January for Year+1 to Year+10 • e.g. January 2012 release would include 2013-2022 • A new report – the Seasonal Assessment of Resource Adequacy (SARA) – would be released in ~April 15 for Summer season and ~October 15 for winter season • Long-term projections are necessarily based on less certain information than near-term projections • CDR would continue to be based on assumptions consistent with use of probabilistic target reserve margins, albeit with some improvements • SARA would be based on most-current projections of input data; comparison would not be made to target reserve margin GATF

4. Changes to Long-Term CDR • Demand Forecast – discussed in separate presentation (for GATF) • Resources (more on these on the following slides): • Capacities based on Seasonal Max Sustainable Limit (MSL) • Need more definition in Protocols as to how this value should be determined or add “peak temperature derate” in CDR • Revise the survey sent to PUNs to better capture expected output during EEA and ensure generating capacity/load reduction not double counted in Demand Forecast, Load Resources and EILS • Include probability-weighted capacities for planned generation GATF

5. Adjustment between Seasonal MSL and Peak Weather HSLs • No definition of how Seasonal MSL is to be determined • Values are likely based on different assumptions across units • Temperature/humidity assumptions may not reflect weather that would be expected during peak demand conditions • Define ambient/operating conditions to be used by REs for determining Seasonal MSLs or request ambient assumptions and adjustment curve GATF

6. PUN Survey – Draft Survey Text Below GATF

7. Probability Weighting of Planned Unit Capacities • Currently, CDR includes MW for units with signed interconnection agreement and air permit • For last several CDRs, the contact for each of these units was asked to update the expected in-service year • Recently, ERCOT surveyed each of these contacts and asked for the probability, by year, that the unit would be in-service by June 1 of that year • Results are confidential, but indicate need for a change • Include only the probability-weighted capacity of planned units be counted • May require Protocol change, since it will be difficult to aggregate in a way that guarantees that confidentiality of each unit’s individual probability is protected GATF

8. Seasonal Assessment of Resource Adequacy (SARA) • Approach • Deterministic, illustrating range of potential values for uncertain inputs • Incorporate near-term forecasted data, where available • ERCOT independent assessment with flexible assumptions to address currently-relevant issues • Adequacy not based on target reserve margin, since uncertainties addressed deterministically GATF

9. Conceptual Differences from Long-term CDR Assumptions • Demand: • Use 3 month-ahead weather outlook to develop Base forecast • Illustrate appropriately high range based on weather and economy (90th percentile temps if Base is Normal, All Time Temps if Base is above normal?) • Use latest EILS procurement quantities GATF

10. Conceptual Differences from Long-term CDR Assumptions • Resources • Use capacities from CDR (including previously-discussed improvements) • Illustrate with and without planned generation • Reduced by planned maintenance outages • Illustrate range of forced outages • Reflect any uncertainty associated with drought, environmental restrictions, and other relevant factors that may arise over time • May be appropriate to look at this on monthly basis due to seasonal outages GATF

11. What is correct measure of capacity adequacy for SARA • Use of the 13.75% planning reserve margin in this context is NOT APPROPRIATE • Possible solution • Calculate two risks: • EEA Risk = Total Resources – High Demand – 90th percentile forced outages – Operating Reserves from Generation • Capacity Insufficiency Risk = EEA Risk + Demand Response • If both of these are positive, does that mean No Risk? No • Is this an acceptable / reasonable / useful measure of risk? GATF

12. Numeric Comparison of CDR versus SARA for 2011 For Discussion Purposes Only GATF

13. Discussion GATF