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Demand Side Working Group Chairman Slides August 8, 2008

Demand Side Working Group Chairman Slides August 8, 2008. Mary Anne Brelinsky Vice President. 1. Demand Side Working Group Agenda. 2. Demand Side Working Group Agenda. 3. 2008 DSWG Goals Update. 4. Original Proposed Interim RRS Negative Bidding. 5. DSWG Proposed LaaR RRS Solution.

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Demand Side Working Group Chairman Slides August 8, 2008

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  1. Demand Side Working Group Chairman Slides August 8, 2008 Mary Anne Brelinsky Vice President 1

  2. Demand Side Working Group Agenda 2

  3. Demand Side Working Group Agenda 3

  4. 2008 DSWG Goals Update 4

  5. Original Proposed Interim RRS Negative Bidding 5

  6. DSWG Proposed LaaR RRS Solution LaaR Offered Below MCPC is Prorated when Market Oversubscribed: Solution awards LaaRs offered below the cleared MCPC and allocates LaaR RRS capacity across all awards. Solution removes any incentive to submit negative bids. More than 1,150 MWs of LaaRs Offered Below MCPC Less than 1,150 MWs of LaaRs Offered Below MCPC Gen RRS sets MCPC Prices Stacked from lowest to highest offer. Most LaaR offered at zero dollars. 2,300 MW of RRS 2,300 MW of RRS All LaaR bid below MCPC is awarded. = = Single Bid Stack Single Bid Stack = LaaR offer = Gen offer = Self Arranged 6

  7. DSWG Proposed LaaR RRS Solution Proposed Solution: Solution awards all LaaRs offered below the cleared MCPC and removes any incentive to submit negative bids. Pros: • Impact on ERCOT and Market Participants’ systems is minor and cost to implement is expected to be less than $50 K • Eliminates the incentive for LaaRs to bid negative • Need for secondary RRS solicitations unlikely Cons: • In Zonal proposal would requires QSEs to closely monitor LaaR awards and ensure that LaaRs “unarm” as required; in Nodal this issue exists regardless of solution • Proration of all LaaR bids is likely and will be up to the QSEs bidding LaaR to manage the amount of LaaR armed at any one time to conform to Protocol limits (not perceived at this time to be a significant problem) 7

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