K E M A , I N C .

TCA/KEMA

ERCOT Cost Benefit Analysis

Implementation Impacts Assessment

ERCOT CBCG

May 4, 2004

2

K E M A , I N C .

Topics for the Day

Review Implementation Impact Assessment Plan

Implementation Impacts Deliverables Progress report

Where are we today?

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K E M A , I N C .

Project Plan Review: Implementation Impacts March: Design changes are reviewed April: Inventory current situation Mid April through early May:

Assess future operational and business processes Identify future systems

May through Mid June: Develop detailed costs Mid June though October: Review and finalize impacts

4

K E M A , I N C .

Topics for the Day

Review Implementation Impact Assessment Plan

Implementation Impacts Deliverables Progress report

Where are we today?

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K E M A , I N C .

Implementation-Related Costs and Impacts

Systems Costs Staffing Risk Transition Training On-going Maintenance & Support

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K E M A , I N C .

Deliverables – Implementation Impacts Preliminary outline and results (~summer) Summary of Impacts Report

Summary of costs Major cost drivers and cost risks Treatment of other major risks Qualitative impacts

Detailed cost spread sheets (Excel workbook format) For ERCOT For Market Participants, based on reasonable

categorization of market participants

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K E M A , I N C .

Topics for the Day

Review Implementation Impact Assessment Plan

Implementation Impacts Deliverables Progress report

Where are we today?

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K E M A , I N C .

Progress Report: Design Changes Summary Three Formal Changes Case to be considered

TNT as defined in Concept (white) Papers and Draft TNT Protocols Well defined and documentation readily available

Nodal Light as defined in the Change Case Summary Need final definition and description by April 30, 2004

Northeast System Replication as defined in the Change Case Summary Need final definition and description by April 30, 2004

The “Backcast” effort has no system impacts implications

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K E M A , I N C .

Progress Report: Inventory of Current Situation (April – May) What do we need from:

CBCG? ERCOT? Stakeholders?

Agree on assumptions memo including sector list: Investor-Owned Utilities, Municipal Utilities, Electric

Cooperatives, Independent Power Generators, Independent Power Marketers, Independent Retail Electric Providers, Consumers, ERCOT ISO, PUCT

Categorization by participant type in each sector: Large Participant vs. Small Participant or; Find a typical representative if it exist

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K E M A , I N C .

Progress Report: Assess Business Processes (now May-June) For:

ERCOT Stakeholder (by agreed upon sectors) PUCT

Action: Need to agree on suitable representative

processes for each

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K E M A , I N C .

Business Processes Impacted

Pre-Day Ahead Day Ahead Adjustment Period Operating Day Real-Time Post-Real-time Activities Others?

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K E M A , I N C .

Impacted Business Process Sample – OLD BPERCOT

FUNCTIONS

1115CSC Congestion evaluation

Notify QSEs of congested CSCsPost Schedule Impact on CSCs

Notify QSEs load difference

QSEs

FUNCTIONS

0600PUBLISH

Transmission System InformationLoad Forecast

Ancillary Service PlanAncillary Service ResponsibilityDown Balancing Energy Bids %

Transmission Loss FactorsDistribution Loss Factors

1600VERIFY

Resource Plan &Notify Affected QSEs

AFTER 1800MODIFY RPRS bids

ADJUSTMENT PERIOD beginsat the close of the Day Ahead Market

and ends at one hour beforethe Operating Hour

1300Update Balanced Schedules

Update self-Arranged AS ScheduleSubmit AS Bids

1500SUBMIT

updated ASschedule

BY 1800Evaluate Resource Planfor Security Analysis &

Evaluate RPRS needs tocorrect CSC/Local Cong/Cap

Insufficiency &Create Merit Order of RPRS

by Zone or Local Cong &Determine MCPC for RPRS &

Close and clear DA RPRS Market

1100SUBMIT

Balanced Energy ScheduleSelf-arranged AS Schedule

1600SUBMIT

Resource PlanRPRS Bids

1330Purchase AS

Review AS MCPC

1500Review &

Validate ASschedule

1315Validate Schedules

Adjust if needed

1100Validate Schedules

Notify affected QSEs

1300Validate Schedules

Notify affected QSEs

1115ResubmitCorrectedSchedules

1315ResubmitCorrectedUpdated

Schedules

0600-1100 1200-13001100-12001600-1800

1400-1500 1500-16001300-1400

CURRENT DAY AHEAD SCHEDULING

AdjustmentPeriod

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K E M A , I N C .

Impacted Business Process Sample – NEW BPERCOT

FUNCTIONS

1100Notice AS Awards

QSEs

FUNCTIONS

0600PUBLISH

Transmission System InformationLoad Forecast

Ancillary Service PlanAncillary Service ResponsibilityDown Balancing Energy Bids %

Transmission Loss FactorsDistribution Loss Factors

1600VERIFY

Current Operating Plan& Outage Schedules

for unit status consistencyNotify affected QSEs of

discrepancies

AFTER 1800ADJUSTMENT PERIOD begins

at the close of the Day Ahead RUCand ends at one hour before

the Operating Hour

1300UPDATE

Energy SchedulesCapacity NominationsDaRUC Capacity Bids

1500SUBMIT

DaRUC/AS schedules includingSelf-arranged & AS bids

selected by ERCOT

0900SUBMIT

Bids and Offers forDA Energy Market

1600SUBMIT

Current OperatingPlan

1430Notice DaRUCCommittments

1500Review &

Validate DaRUC &AS Schedules as needed

1030Validate Schedules

Notify affectedQSEs of

invalid schedules

1300Validate Nominations

& SchedulesNotify affected QSEsof invalid schedules

Start DaRUC

0900-0930 1100-13001030-11001600-1800

1430-1500 1500-16001300-1430

NODAL DAY AHEAD ACTIVITIES

AdjustmentPeriod

0600-0900 0930-1030

0900Receive Bids & Offers

Compare & matchcounter schedules

By 0930Notice matches

after marketclears

1030SUBMIT

Energy SchedulesSelf-arranged AS schedules

AS bids

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K E M A , I N C .

Progress Report: Identify Future Systems (June – July) For:

ERCOT Stakeholder (by agreed upon sectors) PUCT

Actions: Initial estimates based on empirical information Confirmation via vendor Request for Price

Information (RFI) and visits

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K E M A , I N C .

Future Progress Reports

Describe how KEMA will develop : Detailed Costs Review and Finalize Costs

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K E M A , I N C .

Questions?