ERCOT 2003 UFE ANALYSIS

1. ERCOT2003 UFE ANALYSIS By William Boswell & Carl Raish AEIC Load Research Conference July 13, 2005

2. ERCOT SETTLEMENT PROCESS

3. CURRENT PROFILE GROUPS AND SEGMENTS • Residential Low Winter Ratio • Residential High Winter Ratio • Business Non-Demand • Business Low Load Factor (< 40%) • Business Medium Load Factor (40% - 60%) • Business High Load Factor (> 60%) • Business IDR Default • Non-Metered Lighting (street lights, security lights, etc) • Non-Metered Flat (traffic signals, communication equipment, etc)

4. ERCOT WEATHER ZONES

5. 8 Adjusted Static Profile Types 8 Weather Zones 1 Flat Profile 65 Unique Profiles Daily ERCOT HAS 65 UNIQUE PROFILES

6. LOAD PROFILING METHODOLOGY • Adjusted Static Models for metered Load Profiles • Engineering estimates for non-metered loads • Scaled profiles based on meter readings spanning the trade day or if unavailable previous meter readings • Proxy day profiles for IDR premises if trade day data unavailable • Un-scaled profiles for both IDR and NIDR premises when individual meter data is unavailable • Supplemental Load Profiling • Time-Of-Use (chunking) • Direct Load Control (lagged dynamic)

7. LOAD AND UFE – ERCOT 2003 PEAK Based on True-up Settlement • This is a graph of load and UFE on the Peak Day in 2003.

8. Sources of UFE include: ■ Generation Measurement Errors ■ Load - Missing/Erroneous Usage Data - Model Error - Load Profile ID Assignment Error ■ Losses - Model Error - Loss Code Assignment Error UFE Basics • UFE (unaccounted for energy) is computed as follows: UFE = Generation – (Load + Losses) • Negative UFE indicates load/losses are overestimated • Positive UFE indicates load/losses are underestimated

9. UFE GAP - - - - - - > Losses: Transmission & Distribution Profiled Energy Usage Non-Interval Data Non-Metered Accounts Interval Data Energy Usage UFE Basics Net Generation forSettlement Interval Net Generation Compared to Load Buildup

10. Final Settlement Initial True-Up DATA VERIFICATION IN THE SETTLEMENT PROCESS UFE is computed for each 15-minute interval of a settlement run. • Initial Settlement(17 days after the trade day) • Final Settlement (59 days after the trade day) • True-up and Resettlement (6 months to up to several years after the trade day.) • The latest resettlement in each interval is used in the analysis for Initial, Final and True-Up.

11. 2003 UFE Mwh by Month Annual Total = 1,673,000 MWh SR01

12. STATISTICAL RESULTS SR03

13. 2002 UFE has a negative bias across all settlements. 2003 UFE has a negative bias for Initial and final Settlement, positive bias for True-up. 2003 UFE for True-up has a mean of 0.5% and a median of 0.2% as compared to -1.6% and -1.8% respectively for 2002. Mean and Median UFE values are similar indicating the UFE distributions are not skewed. From Initial to Final thru True-Up settlements, UFE gets closer to 0 indicating more complete usage data improves UFE. STATISTICAL RESULTS (CONTINUED) SR04

14. Generation Differences Between Initial and Final Settlements • 8.4% of the intervals had Initial to Final differences greater than 100 MW • Differences greater than 300 MW occurred for 1.0 % of the intervals GDF01

15. Generation Differences Between Final and True-Up Settlements • 5.5% of the intervals had Final to True-Up differences greater than 100 MW • Differences greater than 300 MW occurred for 0.1 % of the intervals GDF02

16. Change in Generation between Settlements GDF04

17. 2003 Distribution of UFE as Percent of ERCOT Load • The UFE percent moves in a positive direction from Initial to Final thru True-Up. UFD03

18. Initial Settlement with 95% Confidence Interval CIP01

19. Final Settlement with 95% Confidence Interval CIP02

20. True-Up Settlement with 95% Confidence Interval CIP03

21. Median Comparison By Settlement Type CIP04

22. UFE by Weekday General Observations • The UFE Percent of ERCOT Load graphs indicate UFE as a percent of load varies over a wide range between the Median, the 5th Percentile and 95th Percentile. • The difference between the Median, the 5th Percentile and 95th Percentile decreases from Initial to Final through True-Up settlements. • For all settlements there is a well-defined cyclical component across all days of the week. UFE is negative during the off-peak hours and positive during on-peak hours. • Median values move in a positive direction from Initial to Final through True-Up settlements across all days of the week indicating settlements based on more complete usage data result in a reduction in the over-estimation of load. CIP05

23. UFE Percent of ERCOT Load and ERCOT Load - Spring 2003 SEA01

24. UFE Percent of ERCOT Load and ERCOT Load - Summer 2003 SEA02

25. UFE Percent of ERCOT Load and ERCOT Load - Fall 2003 SEA03

26. UFE Percent of ERCOT Load and ERCOT Load - Winter 2003 SEA04

27. Seasonal Comparison of Medians Initial Settlement SEA05

28. Seasonal Comparison of Medians Final Settlement SEA06

29. Seasonal Comparison of Medians True-Up Settlement SEA07

30. Percent UFE vs ERCOT LoadInitial Settlement MPL01

31. Percent UFE vs ERCOT LoadFinal Settlement MPL02

32. Percent UFE vs ERCOT LoadTrue-Up Settlement MPL03

33. Comparison of Median Percent UFEBy Settlement Type MPL04

34. General ObservationsPercent UFE vs ERCOT Load • UFE = Generation – (Load + Losses) • There is a statistically significant relationship between load and UFE. • There is wide variability between the median, 5th and 95th percentiles of percent UFE for initial and final settlements. Variability decreases dramatically for the true up settlements. • As load increases, median UFE for all settlements moves in a positive direction indicating (Load + Losses) are over estimated at low load intervals and are progressively more under estimated as load increases. MPL05

35. General ObservationsPercent UFE vs ERCOT Load • UFE shifts in a positive direction from initial to final thru true-Up settlements indicating settlements based on more complete usage data result in a reduction in the over-estimation of load. • UFE is closest to zero between 30,000 to 40,000 MW. UFE for Initial settlement becomes worse than UFE for Final settlement at approximately 38,000 MW of ERCOT load. Similarly, UFE for Final settlement becomes worse than UFE for True-Up at approximately 34,000 MW of ERCOT load. • There is a well-defined cyclical component across all days of the week however the UFE cycles are out of phase with the load cycles MPL05

36. Transmission Plus Distribution Loss versus Total Load MPL07

37. Distribution Loss versus Distribution Load MPL08

38. Transmission Loss versus Total Actual Load MPL09

39. UFE Cost Analysis by Congestion Management Zone • UFE costs are calculated by multiplying the UFE (MWH) times the Market Clearing Price for Load (MCPEL)($/MWH) for each 15-minute interval in 2003. • MCPEL is a function of Congestion Zone. MCPEL is the same across all Congestion Zones if there is no congestion. • The CM Zones for 2003 are: Houston, North, South and West UCT01

40. UFE Cost Analysis by Congestion Management Zone • UFE cost values per interval are calculated for: • positive and negative UFE • the absolute value of UFE • the net value of UFE. • Median UFE cost analyses include: • Seasonal as defined in the Profile Assignment Decision Tree • Spring: March 1 – April 30 • Summer: May 1 – September 30 • Fall: October 1 – November 30 • Winter: December 1 – February 28 • Monthly • Hour of the week. UCT01

41. UFE Cost by Month across all CMZones UCT03

42. Absolute ValueUFE Cost by Month and CMZone UCT04

43. Net UFE Cost by Month and CMZone UCT05

44. SUM of UFE Dollars – SpringAbsolute Value and Net UFE UCT17

45. SUM of UFE Dollars – SummerAbsolute Value and Net UFE UCT18

46. SUM of UFE Dollars – FallAbsolute Value and Net UFE UCT19

47. SUM of UFE Dollars – WinterAbsolute Value and Net UFE UCT20

48. RESULTS and CONCLUSIONS • The total dollars for the absolute value of UFE in 2003 amounted to $307 million. The net UFE amounted to $157 million. • During 2003, there was a strong daily cyclical component to median UFE (related to load). • Median UFE tends to be negative during the off-peak intervals and positive during on-peak intervals. This pattern is similar for all days of the week. • Median UFE tends to be negative during low load intervals and moves in a positive direction as load increases. • Median UFE values move in a positive direction from initial to final thru true-up indicating settlements based on more complete usage data result in a reduction in the over-estimation of load. • There is less variance in UFE for true-up settlements when compared to initial and final settlements. • The pattern of median UFE is significantly different across seasons.

49. RECOMMENDATIONS • Continue with Load Research Project (PUCT Project 25516) • Improve Profile ID assignment process • Continue to improve usage data loading accuracy and timeliness • Increase the number of IDR’s • Evaluate Lagged Dynamic sampling techniques and their application to the ERCOT System • Continue to evaluate improvements to algorithms for missing IDR and NIDR data estimation • Continue to make improvements to loss estimations • Explore alternative methods for UFE allocation • UFE Zones • By Substation Assignment • By Weather Zone