AOC Comparison Scenarios

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AOC Comparison Scenarios

• for the CREZ Wind Developers

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Automated Offer Curve Proposal
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AOC Objectives

• Provide ERCOT an important reliability tool
• that allows curtailment of excess wind when
  necessary
• Provide a predictable priority dispatch mechanism
  
• Marketers can model it
• Maintain compatibility with SCED

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Additional Advantages of AOC

• Preserves system reliability
• Functions in both zonal and nodal market
  configurations
• Maximizes wind production
• Reducing fuel cost exposure and energy costs to
  consumers
• Mitigates the adverse effects of negative pricing
• Especially on existing coal and nuclear
  generation

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Market Benefits of AOC

• Provides more certainty to CREZ wind developers
• Enabling financing and successful completion of
  projects
• Protects thermal generation
• Does not disturb the market or encourage market
  manipulation

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Future Congestion Potential

• Could be high
• CREZ projects alone exceed planned transmission
• Additional factors will include the pace of
  transmission build-out and the pace of wind farm
  construction
• Current system funnels power to the north and
  east from wind resources in west Texas and the
  Panhandle
• Congestion can occur when wind-generated power
  combines with thermally-generated power in
  north-central Texas

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Power Flows from New Resources SARC7A 345 kV
Injection Point
Legend Red adds flow to heavily loaded
line Orange adds flow to non-heavily loaded
line Green reduces flow on heavily loaded
line Teal reduces flow on non-heavily loaded
line Line width represents of flow on the line
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Power Flows from New Resources MRGNCRK 345 kV
Injection Point
Legend Red adds flow to heavily loaded
line Orange adds flow to non-heavily loaded
line Green reduces flow on heavily loaded
line Teal reduces flow on non-heavily loaded
line Line width represents of flow on the line
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Power Flows from New Resources GRHAMSES 345 kV
Injection Point
Legend Red adds flow to heavily loaded
line Orange adds flow to non-heavily loaded
line Green reduces flow on heavily loaded
line Teal reduces flow on non-heavily loaded
line Line width represents of flow on the line
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Example Scenarios

• No Congestion demonstrates that AOC is not
  necessary with adequate transmission
• Congestion w/o AOC - demonstrates the adverse
  effects of negative pricing and the potential for
  late-comers with lower shift factors to
  displace CREZ developers
• Congestion with AOC w/o Dispatch Priority (Padj
  35/MWh) demonstrates that AOC can work
  without dispatch priority
• Congestion with AOC with Dispatch Priority
  (Padj 35/MWh) demonstrates that AOCs
  dispatch priority mechanism has little effect
  beyond the priority it provides to existing and
  CREZ wind resources
• Congestion with AOC with Dispatch Priority
  (Padj 70/MWh) - demonstrates AOCs ability to
  mitigate the potential adverse effects on
  existing thermal generation

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Assumptions Common to All Scenarios

• Existing generation along with the shift factors
  for generation and load were based on a 2010
  Summer On-Peak Base Case power flow model,
  updated on 3/9/2007 by the ERCOT Steady State
  Working Group.
• The Wolf Hollow to Rocky Creek 345 kV line was
  assumed as a constraint with an 800 MW limit.
• Existing wind 4,416.6 MW (based on the dated
  power flow model)
• New wind added 10,000 MW CREZ priority and 2,500
  MW late-comer
• Wind availability 85, all wind resources
• Generic offer curves assumed for 21 resource
  types
• Nuclear dispatched at 100
• Hydro, HVDC, Cogen self generation dispatched
  as indicated in the power flow model
• Total generation requirement 76,953 MW
• Natural gas price 5.00 (used as the basis for
  gas-fired offer curves)

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Representative Generator Assumptions

• Existing Generation
• Comanche Peak
• Price taker
• Shift Factor 0.1763
• Cielogen 1 Existing Wind
• Offer Curve
• w/o AOC -35
• with AOC -34 to -29.5
• Shift Factor 0.0613
• Stryker_1 Gas-fired Steam
• Offer Curve 60.4 to 63.4
• Shift Factor -0.0110

• New Wind Generation
• Wind-1 CREZ Priority Wind
• Offer Curve
• w/o AOC -35
• with AOC -34 to -29.5
• Shift Factor 0.0610
• Wind-2 Non-Priority Wind
• Offer Curve
• w/o AOC -35
• with AOC -29 to -24.5
• Shift Factor 0.0580

Note under AOC, the above offer curves for both
existing and new wind resources are adjusted by
the Padj adder. For example, -34 to -29.5
becomes 1 to 5.5 when Padj 35.
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Scenario 1 No Congestion

• Shadow Price 0
• Clearing Price 51.35
• Source-side LMP 51.35
• Sink-side LMP 51.35
• Congestion Rent 0
• Wind Dispatch
• Existing Wind 3,753 MW
• Wind-1 8,496 MW
• Wind-2 2,124 MW
• Effective Offer Offer Price
• LMP Clearing Price

• Comanche Peak
• Cong. Adder 00.1762 0
• LMP 51.35
• Cielogen 1 Existing Wind
• Cong. Adder 00.0613 0
• LMP 51.35 (Fully Dispatched)
• Stryker_1 Gas-fired Steam
• Cong. Adder 0(-0.011) 0
• LMP 51.35 (Not Dispatched)
• Wind-1 CREZ Priority Wind
• Cong. Adder 00.0610 0
• LMP 51.35 (Fully Dispatched)
• Wind-2 Non-Priority Wind
• Cong. Adder 00.0580 0
• LMP 51.35 (Fully Dispatched)

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Scenario 1 All Wind is Dispatched, Due to
Negative Offer Prices Comanche Peak sees LMP
51.35
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Scenario 2a Congestion w/o AOC

• Shadow Price 1,373
• Clearing Price 47.96
• Source-side LMP -1.37
• Sink-side LMP 58.62
• Congestion Rent 1,094,587
• Wind Dispatch
• Existing Wind 2,234 MW
• Wind-1 5,523 MW
• Wind-2 2,124 MW
• Effective Offer Offer Price Congestion Adder
• LMP Clearing Price Congestion Adder

• Comanche Peak
• Cong. Adder 13730.1762 242
• LMP -194.04
• Cielogen 1 Existing Wind
• Cong. Adder 13730.0613 84.19
• LMP -36.24 (Not Dispatched)
• Stryker_1 Gas-fired Steam
• Cong. Adder 1373(-0.011) -15.11
• LMP 63.06 (Dispatched)
• Wind-1 CREZ Priority Wind
• Cong. Adder 13730.0610 83.78
• LMP -35.82 (Not Dispatched)
• Wind-2 Non-Priority Wind
• Cong. Adder 13730.0580 79.66
• LMP -31.70 (Fully Dispatched)

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Scenario 2a With Congestion, Wind Moves up
Price Curve 69 Dispatched (NP 100) Comanche
Peak sees LMP - 194.04
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Scenario 2b Congestion w/o AOC(Offer price for
all wind resources set to 0.25 as in the ERCOT
CREZ Study)

• Shadow Price 843
• Clearing Price 51.14
• Source-side LMP 20.88
• Sink-side LMP 57.68
• Congestion Rent 668,746
• Wind Dispatch
• Existing Wind 2,234 MW
• Wind-1 5,098 MW
• Wind-2 2,124 MW
• Effective Offer Offer Price Congestion Adder
• LMP Clearing Price Congestion Adder

• Comanche Peak
• Cong. Adder 8430.1762 148.46
• LMP -97.32
• Cielogen 1 Existing Wind
• Cong. Adder 8430.0613 51.65
• LMP -0.51 (Not Dispatched)
• Stryker_1 Gas-fired Steam
• Cong. Adder 843(-0.011) -9.27
• LMP 60.41 (Dispatched)
• Wind-1 CREZ Priority Wind
• Cong. Adder 8430.0610 51.40
• LMP -0.26 (Not Dispatched)
• Wind-2 Non-Priority Wind
• Cong. Adder 8430.0580 48.47
• LMP 2.27 (Fully Dispatched)

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Scenario 3 Congestion with AOC No Dispatch
Priority (Padj 35)

• Shadow Price 794
• Clearing Price 51.53
• Source-side LMP 23.03
• Sink-side LMP 57.70
• Congestion Rent 633,032
• Wind Dispatch
• Existing Wind 2,119 MW
• Wind-1 5,480 MW
• Wind-2 1,869 MW
• Effective Offer Offer Price Padj Congestion
  Adder
• LMP Clearing Price Congestion Adder

• Comanche Peak
• Cong. Adder 7940.1762 139.86
• LMP -88.32
• Cielogen 1 Existing Wind
• Cong. Adder 7940.0613 48.66
• LMP 2.88 (Partial Dispatch)
• Stryker_1 Gas-fired Steam
• Cong. Adder 794(-0.011) -8.73
• LMP 60.27 (Not Dispatched)
• Wind-1 CREZ Priority Wind
• Cong. Adder 7940.0610 48.42
• LMP 3.12 (Partial Dispatch)
• Wind-2 Non-Priority Wind
• Cong. Adder 7940.0580 46.04
• LMP 5.50 (Partial Dispatch)

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Scenario 3 Adding AOC _at_ 35 Spreads Wind Over
Price Curve 66 Dispatched (NP 88) Comanche
Peak sees LMP - 88.32
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Scenario 4 Congestion with AOC Dispatch
Priority (Padj 35)

• Shadow Price 781
• Clearing Price 51.64
• Source-side LMP 23.57
• Sink-side LMP 57.70
• Congestion Rent 624,258
• Wind Dispatch
• Existing Wind 2,547 MW
• Wind-1 6,797 MW
• Wind-2 127 MW
• Effective Offer Offer Price Padj Congestion
  Adder
• LMP Clearing Price Congestion Adder

• Comanche Peak
• Cong. Adder 7810.1762 137.69
• LMP -86.05
• Cielogen 1 Existing Wind
• Cong. Adder 7810.0613 47.90
• LMP 3.73 (Partial Dispatch)
• Stryker_1 Gas-fired Steam
• Cong. Adder 781(-0.011) -8.60
• LMP 60.23 (Not Dispatched)
• Wind-1 CREZ Priority Wind
• Cong. Adder 7810.0610 47.67
• LMP 3.97 (Partial Dispatch)
• Wind-2 Non-Priority Wind
• Cong. Adder 7810.0580 45.32
• LMP 6.31 (Partial Dispatch)

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Scenario 4 AOC _at_35 plus DP 69 of Wind
Dispatched, (NP Wind 6) Comanche Peak sees LMP
- 86.05
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Scenario 5 Congestion with AOC Dispatch
Priority (Padj 70)

• Shadow Price 274
• Clearing Price 55.17
• Source-side LMP 45.31
• Sink-side LMP 57.30
• Congestion Rent 219,417
• Wind Dispatch
• Existing Wind 2,201 MW
• Wind-1 5,055 MW
• Wind-2 0 MW
• Effective Offer Offer Price Padj Congestion
  Adder
• LMP Clearing Price Congestion Adder

• Comanche Peak
• Cong. Adder 2740.1762 48.34
• LMP 6.82
• Cielogen 1 Existing Wind
• Cong. Adder 2740.0613 16.82
• LMP 38.35 (Partial Dispatch)
• Stryker_1 Gas-fired Steam
• Cong. Adder 274(-0.011) -3.02
• LMP 58.19 (Not Dispatched)
• Wind-1 CREZ Priority Wind
• Cong. Adder 2740.0610 16.74
• LMP 38.43 (Partial Dispatch)
• Wind-2 Non-Priority Wind
• Cong. Adder 2740.0580 15.91
• LMP 39.25 (Not Dispatched)

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Scenario 5 AOC (70) Plus DP 50 of Wind
Dispatched, (NP Wind 0) Comanche Peak sees LMP
6.82
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Conclusions

• AOC allows precise control over the amount of
  wind that is curtailed for reliability reasons
• AOC can be used to mitigate the adverse effects
  of negative pricing
• AOC can provide a predictable dispatch priority
  mechanism
• AOC is compatible with SCED and could be
  implemented without having to modify the nodal
  protocols

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Question Does AOC create physical transmission
rights?

• No. Generally, the holder of physical or firm
  transmission rights cannot be curtailed except
  under emergency conditions or when transmission
  is unavailable.
• The only right that AOC provides is for the
  offers presented to SCED to be lower for priority
  wind than for non-priority wind.
• AOC does not prevent curtailment quite the
  opposite, it is activated only when curtailment
  is necessary.
• All of the congestion scenarios presented on the
  earlier slides showed some level of curtailment
  to priority wind.

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Question Does AOC affect pricing to loads?

• Yes. AOC is likely to lessen the differential in
  prices that loads experience when wind prices go
  negative.
• Most loads (approximately 94) should see little
  change in prices due to AOC.
• Loads in the West Load Zone would not be paid to
  take energy.

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Question Does AOC result in more curtailment of
wind generation?

• No, AOC is actually expected to minimize
  curtailments.
• Wind curtailments are needed for reliability
  reasons.
• The necessary level of wind curtailments will
  occur one way or another.
• AOC adds predictability and fine tuning to the
  curtailment process, resulting in less
  curtailment than a drop off the cliff method
  that occurs when wind offers cluster around a
  -35 offer price.

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