August 9, 2013 | Markets COMMITTEE

1. August 9, 2013 | Markets COMMITTEE Matt Brewster Market Development Materials prepared in response to Markets Committee requests NCPC Payments: requested exhibits and examples

2. SIDE-BY-SIDE Comparison of “Penalties” Actions that reduce the Offer cost considered for NCPC under existing and Offer Flexibility designs

3. Actions that reduce Offer cost for NCPC

4. Actions that reduce Offer cost (continued)

5. Actions that reduce Offer cost (continued) Observations: • Adjustments are largely the same or eliminate “step-change” in compensation to align severity of adjustment with system impact • Late Start is the only new adjustment • Generators most often achieve ordered time within 30 minute window • Adjustment is gradual and preserves incentive to continue startup • Comparable to existing adjustment for Early Shutdown

6. Start-Up and No Load Offer Values Sample statistics for dollar value of these Offers

7. Summary Start-Up and No-Load Offer values Supply Offer values were selected from a single day in January 2013 *Average of Start-Up for hot, intermediate, and cold state resource start

8. Examples of NCPC CALCULATION Steps Demonstration of how certain (previously described) elements of the calculations are performed

9. Reduction of Start-Up fee when release occurs later than planned time (after 30 minute grace) 2 hour commitment “planned” and “actual” are release for dispatch time  Start-Up is not reduced because actual release occurs within 30 minutes after planned time ramp • Start-Up is reduced by 20% = (54 – 30) / 120 • NCPC considers Start-up of $4,800 = (1 - .20) * $6000 ramp

10. Calculation of Energy offer cost for RT Commitment and RT Dispatch NCPC eligible quantity amounts DDP = 110 MW Marginal energy offer at DDP = $24/MWh EcoMin Limit = 70 MW • RT Commitment NCPC eligible quantity = EDP (= 90 MW) • Energy offer cost = $1,110 ( = $720 + $390 ) • RT Dispatch NCPC eligible quantity = DDP – EDP (= 110 – 90 MW) • Energy offer cost = $450 EDP = 90 MW Marginal energy offer at EDP = $21/MWh Cost to EcoMin at Commitment offer RT LMP = $21/MWh Cost above EcoMin at Dispatch offer *Offer requested offer slope Unit is not ramp constrained

11. RT eligible quantity treatment during ramp-constrained resource dispatch Resource’s total NCPC credits = $408 = ( $400 + $8 ) Hour 2: Resource is ramp-constrained up which is reflected in the DDP value; DDP is upper-limit for EDP

12. RT eligible quantity treatment during ramp-constrained resource dispatch (continued) Resource’s total NCPC credits = $408 = ( $400 + $8 ) Hour 4: Resource is not ramp-constrained but dispatched to operate above the EDP  RT Dispatch NCPC credit

13. RT eligible quantity treatment during ramp-constrained resource dispatch (continued) Resource’s total NCPC credits = $408 = ( $400 + $8 ) Hour 6: Resource is ramp-constrained down  EDP set equal to DDP (feasible dispatch) and cost included in RT Commit NCPC

14. RT Commitment NCPC credit determination for multi-commitment settlement period* Min Run Time is now 2 hours Best Alternative: Resource would choose to shutdown at Hour 5. Continues to run through Hour 7 and loses $810. *Excludes Start-Up to demonstrate Commitment Cost change with No Load