PWG Update Report By Ernie Podraza of Reliant Energy ERCOT PWG Chair for RMS Meeting June 12, 2003

1. PWG Update Report By Ernie Podraza of Reliant Energy ERCOT PWG Chair for RMS Meeting June 12, 2003

2. Next PWG Meetings 6/18-6/19, and 7/9. • New Profile Cost Recovery Method per PUCT Project 25516. • PRR399 - Requirements for Replacing an IDR with a Non- IDR Meter. • Can a meter owner (non-TDSP) have an IDR meter installed but request that the billing/settlement be based on non-IDR data? • Annual Profile Type and Weather Zone Validation. • Opt-in Entity Issues for PWG. • Oil and gas properties profile change request. • Direct Load Control (DLC) Project Status. • PRR 362, Section 18.4.4.2 – Load Profile ID Correction.

3. PUCT Project 25516, Load Profiling and Load Research Rule. • Approved at open meeting 3/05/03. Effective Date April 16, 2003 (Oct. 16, 2003 - end of 6 months). • Load Research is done by TDSP per the sample design of ERCOT and TDSP cost recovery would be through the TDSP rate making process. • ERCOT has 6 months to establish a procedure to provide a method of recovery of research costs associated with obtaining a new profile by a sponsoring Market Participant. • Ballpark estimate of the research cost for a new profile. • List two or three methods with pro and con. • ERCOT may use the template from TXU Energy • ERCOT presented a strawman at the 5/07/03 PWG meeting. • Refined the strawman at the 5/28/03 PWG Meeting.

4. New Profile Cost Recovery Method per PUCT Project 25516. (Voting Issue) SITUATION: PUCT PROJECT NO. 25516, LOAD PROFILING AND LOAD RESEARCH RULEMAKING, requires that there be a method for reimbursing a market participant who has incurred costs in developing a non-ERCOT sponsored profile. The current issue to RMS is what would be the preferred procedure to reimburse the requestor of the new profile. The PWG has been asked to ballpark estimates of cost for a new profile request and submit 2 or 3 methods of reimbursement. Previously to the RMS exploder, documents have been sent to assist in your decision.

5. New Profile Cost Recovery Method per PUCT Project 25516. PROJECT NO. 25516, LOAD PROFILING AND LOAD RESEARCH RULEMAKING, states in §25.131. (c) (3); A TDU may recover its reasonable and necessary costs incurred in performing load profile research as required by this section. §25.131. (e) (2); Any costs associated with developing the supporting data and documentation that is necessary for ERCOT's evaluation of the proposed profile change shall be the responsibility of the person initially requesting the profile change. §25.131. (e) (3); Within six months of the effective date of this section, ERCOT shall establish and implement a process to collect a fee from any REP who seeks to assign customers to a non-ERCOT sponsored profile. The process shall include a method for other REPs who use the profile to compensate the original requester of the new profile and for ERCOT to notify TDUs which REPs are authorized to use the new profile. A TDU shall not, without authorization, assign a customer to a profile for which a REP or another person has paid the costs of developing the new profile. See the file attached called 25516finrule.doc (note this is not to be considered the official copy of the rule).

6. New Profile Cost Recovery Method per PUCT Project 25516. • ASSUMPTIONS: • Costs for a Universal Profile can be reimbursed. • Costs for a non-Universal Profile is not reimbursed. • DEFINITIONS: • A Universal Profile can be used by all Competitive Retailers(CR). • A non-Universal Profile can not be used by any other CR. Example is a Direct Load Control Profile which is a list based specific CR profile. • REFERENCE MATERIAL: • File newprofilesstrawman.xls, which is the original strawman drafted by the ERCOT staff.

7. New Profile Cost Recovery Method per PUCT Project 25516. • Ballpark costs for a new profile request consist of: • Costs for load research data with a TDSP consisting of, • Buying and installing IDR meters, • Installing communication equipment such as phone lines or cell phones, • Reading the meters and translating the data. • All other costs consisting of, • Defining the request such as identify population, profile, players, data, etc., • Preparing the request such as collect & analyze data and present the case, • Reviewing process such as meeting with ERCOT staff, PWG, RMS, TAC, Board, and • Reporting the results to sponsors such as summarize costs and report to players. • REFERENCE MATERIAL: • Files new profile load research costs2.xls, IDR costs.xls, and PcrEstCosts.xls.

8. New Profile Cost Recovery Method per PUCT Project 25516. • Ballpark costs for a new profile request: • Costs for load research data with a TDSP range from: • $ 800 to $ 1,000 per sample site. • All other costs range from: • $ 17,000 to $ 54,000. • Composite costs range for; • 100 samples = 80,000 + 17,000 = $ 97,000, • 350 samples = 350,000 + 54,000 = $ 404,000. • REFERENCE MATERIAL: • Files new profile load research costs2.xls, IDR costs.xls, and PcrEstCosts.xls.

9. New Profile Cost Recovery Method per PUCT Project 25516. • REIMBURSEMENT METHODS; • Market Uplift to CRs only, • Pay As You Go, • TDSP/Subscriber Pay. • REFERENCE MATERIAL: • File RMS-Ballpark Cost-Methods2.doc, which is notes from the 5/28/03 PWG meeting.

10. New Profile Cost Recovery Method per PUCT Project 25516. Market Uplift to CRs only Description: ERCOT would reimburse the requestor $C, where $C equals the requestor’s cost once the profile is approved. ERCOT would collect the cost $C by charging a fee to all CRs where, FEE = $C / ERCOT Annual MWH = $/MWH such that, the total collected would equal $C. The fee flows through the QSE. A prescribed number of new profiles would be allowed each year for general use and then the successful requestor would be reimbursed via ERCOT. The reimbursement would be tied to a predetermined cost for developing a request and ERCOT would budget the proposed dollars for the number of profiles to be allowed each year. If the budget is not used then those funds would roll to the next period for profile requests. Pro: Non-opt-in entities do not have to pay for profiles they do not use. Simple to administer. Continues ERCOT financial relationships with QSE. Con: CRs not using the profile also pay. Requires a new ERCOT fee or increase to current $/Mwh Fee. QSE has to keep totals by CR if not already available to pass on the cost to the CRs. Population size could change from the initial sample affecting all profiles.

11. New Profile Cost Recovery Method per PUCT Project 25516. Pay As You Go Description: If a CR is the requestor then, FEE = $C / n , where $C is the cost and n equals the number of CRs using the profile. If the requestor is not a CR then, FEE for a CR = $C / (n + 1). As a CR subscribes to the profile the fee is recalculated and reallocated for all CRs subscribing and the requestor and each is reimbursed accordingly to the current fee. Includes a 2 year sunset on the fee whereby no fee is charged after 2 years. Pro: CR using the profile pay and not other CRs . Most faithful to the spirit of the PUCT rule. Con: Without a subscription period, population size could change from the initial sample affecting all profiles. ERCOT does not have a financial relationship with CRs or requestor. More complicated to administer.

12. New Profile Cost Recovery Method per PUCT Project 25516. Pay As You Go

13. New Profile Cost Recovery Method per PUCT Project 25516. TDSP/Subscriber Pay Description: When a profile is approved, the TDSP reimburses the TDSP load research costs incurred by the requestor. The TDSP recovers the costs through regulatory filings. All the CRs subscribing to the profile reimburse the other costs of the requestor. The initial subscription period would be 150 days. The CRs that subscribe to use the profile will pay the fee, where FEE = Other$C / n CRs. Includes a 2 year sunset on the fee whereby no fee is charged after 2 years and additional non-subscribing CRs could use the profile after the sunset period. Pro: Simple administration for ERCOT, CRs and requestor. Having a shorter sunset period less the pressure for rotation of load research sample sites. Rule provides for TDSP to recover costs and for the responsibility load research for ERCOT profiles. Con: TDSP has to administer cost recovery filings. ERCOT does not have a financial relationship with CRs or requestor . Population size could change from the initial sample affecting all profiles.

14. New Profile Cost Recovery Method per PUCT Project 25516. • RMS Preference is ? (voting issue): • Market Uplift to CRs only, • Pay As You Go, • TDSP/Subscriber Pay, • None of the above, or • Some combination of the above. • PWG will take the RMS preference and craft the necessary PRR and LPGRR.

15. PRR399 - Requirements for Replacing an IDR with a Non- IDR Meter. • The Peak Demand is equal to or less than 200 kW (or 200 kVa) for a period of twelve (12) consecutive months. • Previous PWG discussions centered around loads <= 10 kW where a watt hour meter would normally be installed. • Discussed at the 5/7/03 PWG Meeting. • Had non-consensus discussions at the 5/28/03 PWG Meeting and 6/4/03 PWG Conference Call. • Presentation of PWG comments for RMS meeting 6/12/03.

16. Can a meter owner (non-TDSP) have an IDR meter installed but request that the billing/settlement be based on non-IDR data? • Shall be discussed further at the PWG. • WMS has been requested to review the issue.

17. Annual Profile Type and Weather Zone Validation. • Feb 1, 2003 to complete algorithms using new usage month in the Profile Decision Tree. • Oncor, AEP North, AEP Central, and TNMP complete. • CNP pending. • Residential Complete. • Business segment has 2.4% error rate per ERCOT. • Preliminary analysis of profile id changes. • LPGRR2003-002 for procedures and timeline approved by TAC 5/8/03. No changes made by Board on 5/20/03. LPGRR COMPLETE. Load Profiling Guide update in process. • Lessons Learned document by ERCOT worked into Profile Decision Tree FAQs. • Profile ID assignments issues, future PRR and LPGRR. • Profile Decision Tree Version 1.08 published to ERCOT Web.

18. Annual Validation Preliminary analysis of profile id changes. Compares the initial validation profile id assignments, period ending February 2001 with profile ID assignments based on 12 months ending April 2002 and using the usage month algorithm in current Profile Decision Tree. Percentages are for a residential and a business sample of 20,000 ESIIDs each per TDU and not over the whole population.

19. Opt-in Entity Issues for PWG. • Nueces and San Patricio. • Texas SET Version 1.5 Mid July, 2003. • Invite the Muni and Coop Segment participation. • ACTION ITEMS: • Initial Validation of Profile Id Assignments. • Updates to the LPG, Load Profiling Guides. • Updates to Protocols. • Shall be using the Profile Decision Tree Version 1.08.

20. Oil and gas properties profile change request. • Submitted to ERCOT 3/6/03 by Pioneer Natural Resources, Priority Power Management, and Energy Data Source . • ERCOT to post to WEB. • Argument is that the aggregate profile is a very high load factor profile, close to flat. • ERCOT is to evaluate and submit recommendation to PWG. • May test the new PUCT Rule 25516 for reimbursement. • ERCOT shall post the methodology request to the Market Information System (MIS) and respond to the request within sixty (60) days of the posted date of the request. This period does not include the time to analyze and render the complete assessment of the request. • “ERCOT withholds a decision on making a recommendation on whether to adopt or to deny adoption of the suggested profile change; instead ERCOT finds the request, as submitted, is incomplete and deficient. The requestors are invited to address the incompleteness and deficiencies listed below and re-submit the request for further review.” • PWG plans to discuss at the 6/18-6/19 PWG meeting.

21. Direct Load Control (DLC) Project Status. • PRR 385 Section 18 (RMS approved 3/25, PRS 3/20, TAC 6/08 and Board 5/20). • LPGRR2003-001 is attached to PRR385 (to be presented to TAC 7/02). • ERCOT Schedule is pending, Project Manager assigned. • ERCOT and some Market Participants question priority going forward. • PRR Section 6 (submitted by DSWG 3/17/03, PRR388 BUL Capacity Payments, TAC approved 3/6, Board 3/18). Language for DLC still needs to be written for a PRR. • Memo, on Project 26359 on Competitive Metering, May 8, 2003, by Commissioner Perlman suggests that wires companies need to develop a rate structure that provides strong incentives for demand responsiveness by charging different rates during high load periods. • PRR400 does not completely cover DLC issues.

22. PRR 362, Section 18.4.4.2 – Load Profile ID Correction • Deferred by PRS 11/26/02. • Annual Load Profile Type and Weather Zone Validation procedures and timelines. • RMS Vote of approval. • Cleaned up language in Protocols 18.4 as comment to PRR362. • LPGRR2003-002 Sections 11.4 and 11.5. • Approved by PRS. • Approved by TAC on 5/8/03. • PRR 362 approved by Board 5/20/03 and no comments were made to the LPGRR. LPGRR COMPLETE. Load Profiling Guide update in process.