Updates for 2014 LTSA Scenario and Data Assumptions

1. Updates for 2014 LTSA Scenario and Data Assumptions 4/22/2014

2. Outline • Based on feedback from stakeholders and Brattle, we made corresponding changes for the data assumptions. • Solar cost • CC and CT cost • Natural gas price • Assumption change for LNG expansion • Assumption change for High Gas Prices Scenario • Load forecast update

3. Solar Capital Cost • Solar cost monotonically declines slower and reaches the similar cost target in 2029. Based on input from Brattle

4. CC and CT Cost • Changes have been made to reflect EIA state specific adjustment

5. Natural Gas Prices • EIA natural gas forecast has been higher than actual prices in historical years. • Wood Mackenzie has a lower forecast and was averaged with the EIA forecast.

6. LNG Exports Overview • 9 Proposed LNG facilities in ERCOT • 3 general locations (Freeport, Corpus Christi region, Brownsville) • Assume principally powered from grid. • Assume 2018-2019 online dates • Assume each Bcf/d of LNG capacity has a load of several hundred MWs, based on indicative proprietary data available to ERCOT, but we expect public load data will become available soon. • Available data indicates each Bcf/d of LNG capacity could used 300 to 500 MW. These numbers show the large load impact LNG facilities could have.

7. 5. Scenario: High Natural Gas Prices • Economic Conditions • GDP growth slightly higher than under Current Trends • Population growth ~2.3%/yr • Pro-business environment • LNG exports the same as under Current Trends • Reduced Industrial growth (downstream facilities) • Increased gas exploration in Texas • Story: • Natural gas prices are high, but are below global natural gas prices – thus still continued LNG export as under Current Trends. • No impediments to LNG exports • High gas prices also reduce the downstream industrial growth compared to under Current Trends • Increase in renewable development compared to under Current Trends, due to higher gas and wholesale energy prices • Transmission Regs / Policies • Same as under Current Trends • Gen Res Adequacy Standards • Same as under Current Trends • Environm. Regs / Energy Policy • Modest environmental regulation, same as in under Current Trends • No regulatory impediments to LNG exports • Lower coal plant retirements due to higher energy margin • End - Use • Motivate high energy efficiency at a higher rate than current trends. • Implications for ERCOT: • High load growth • High urban growth • Reduced downstream industrial growth (in the Houston, Corpus, and coastal areas) • Alt. Gen Resources • Renewables are more economic and thereby more growth than under Current Trends • Annual limit on wind development • More technological improvements for renewables • Weather / Water • Same as under Current Trends • Increased water costs which contribute to the higher cost of producing natural gas • Gas Prices / Oil Prices • Natural gas prices $3.50/mmbtu above Current Trends by 2020 • Oil prices same as under Current Trends

8. Load Forecast • ERCOT official load forecast includes oil and gas drilling load already; • The official load forecast will be adjusted to obtain the load forecast for LTSA Current Trends. • Incremental EE and DR will be considered • LNG load will be added