Price Responsive Load / Retail DR 2013 Analysis Report Overview ERCOT Staff & Frontier Associates

1. Price Responsive Load / Retail DR 2013 Analysis Report OverviewERCOT Staff & Frontier Associates WMS Meeting July 9, 2014

2. Why it’s important to understand retail DR & price response • Impacts on the long term load forecast • Return on investment in the advanced metering infrastructure • Ability to track growth of these products is a key metric in measuring the success of the ERCOT retail market • This project seeks to start quantifying Load response that occurs outside of ERCOT/TDSP operations – ergo, does not include: • Load Resources in Ancillary Services • ERS • TDSP Load Management Programs PUC Subst. Rule §25.505(e) (5): Load Serving Entities (LSEs) shall provide ERCOT with complete information on load response capabilities that are self-arranged or pursuant to bilateral agreements between LSEs and their customers. DR/Price Response Summary Report

3. History of the 2013 data collection project • Phase 1 – Survey • ‘Your response to the survey will allow ERCOT to gain a better understanding of the amount of responsive Load and numbers of retail energy consumers actively responding to Load reduction signals.’ • Results presented in Aug. 2012 to RMS and DSWG • Phase 2 – Data collection • REPs provided lists of ESI IDs enrolled in various DR/dynamic pricing products (snapshot June 15, 2013) • Separate survey to REPs collected event data • Phone calls with NOIEs reporting DR-type programs • Phase 3 – Analysis • After data collection, evaluation of data • Phase 4 – Report to Market We are here! DR/Price Response Summary Report

4. Data Evaluation • ERCOT retained Frontier Associates for analysis and reporting • Jointly defined approach & data requirements • All data anonymized; Frontier signed NDA • Analyzed behavior by customers in products with significant enrollment (except for Time of Use) • Goal: quantify potential demand reductions that can be expected from customers during events: • Wholesale price spikes (3 tiers) • Actual and potential 4CP intervals DR/Price Response Summary Report

5. Product types & REP-reported enrollment 1 TOU products are incentives for long-term behavioral shifts rather than event-based demand response. We deemed analysis to be beyond the scope of this initial project and will revisit after 2014 reporting is in. 2 4CP response may be self-initiated or initiated in response to a signal from a third party; REP advisories are likely only a small subset of the total. Therefore, 4CP analysis (discussed later in this slide deck) was approached differently. DR/Price Response Summary Report

6. Methodologies • Frontier Associates used a variety of baseline analyses to try to quantify load reductions, including: • ERCOT ERS ‘Middle-8-of-10’ with event-day adjustment • Regression with event-day adjustment • Pricing events (LZ SPPs) were grouped into 3 categories: • $300 - $999 MWh • $1,000 - $2,999 MWh • >$3,000 MWh • Frontier’s 4CP analysis looked at aggregated load of ESI IDs in competitive choice areas connected at transmission voltage • 319 total ESI IDs • ERCOT Staff (C. Raish) conducted a separate 4CP analysis using a different (bottom-up) methodology -- same database plus certain distribution-connected loads DR/Price Response Summary Report

7. Challenges & disclaimer • Dearth of sustained high wholesale price events last summer • One interval at the SWCAP in all of 2013 • REPs’ self-reported events often involved only a small subset of total enrolled customers • 4CP response and price response have the potential to occur simultaneously • This was not an issue in 2013, but historically the two have coincided at times • Product types are evolving and we’re still learning • For these reasons, 2013 results should be considered a big step in the right direction, but not a definitive quantification of retail DR and price response capability in ERCOT DR/Price Response Summary Report

8. Response to wholesale price spikes (>$3,000) (1) Includes an estimate for industrials within NOIE service areas. Frontier Associates: DR/Price Response Summary Report

9. Response during actual and potential 4CP intervals Frontier Associates: Notes: (1) Analysis of aggregated load of transmission-connected customers in competitive choice areas. Historical baseline calculation yields an estimate of 251 MW. Regression analysis suggests a reduction of 201 MW on average over the past 5 years. (2) Based on a review of savings estimates reported by NOIEs (no independent data analysis). (3) Estimated value for industrials with IDR meters served at distribution voltage plus industrials within NOIE service areas. DR/Price Response Summary Report

10. ERCOT’s additional 4CP analysis • ERCOT (Carl Raish) conducted a more detailed analysis, identifying individual ESI IDs based on their behavior on near- and actual 4CP days • Both transmission- and distribution-connected IDR-metered Loads • Notable: • Many Loads reduce usage during the entire day on a potential 4CP day • Slight majority of Loads concentrate on HE 1700 DR/Price Response Summary Report

11. ERCOT’s additional 4CP analysis • Distribution-connected IDR-metered Loads contributed an average of 127 MW of 4CP response in 2013 • 27 percent of estimated total DR/Price Response Summary Report

12. Next steps: on to 2014 • Timeline for 2014 data collection project • 9/30: Snapshot date for REPs to capture ESI IDs enrolled in the various product types • 11/1: REPs submit ESI ID list files to ERCOT • Oct./Nov.: ERCOT dialogue with participating NOIEs • 11/15: REPs submit error-corrected files to ERCOT • 11/15: ERCOT surveys REPs to gather REP-specific event information • Continue looking at Time of Use enrollment • Most popular product type, but data analysis could be extremely complicated • Different hourly pricing buckets (e.g., free nights, weekends) • Start and stop dates become very important • What can we accomplish without asking REPs for a burdensome amount of new data? • More market discussion after 2014 data received DR/Price Response Summary Report

13. Questions? ON OFF pwattles@ercot.com 512/248-6578 craish@ercot.com 512/248-3876 jayz@frontierassoc.com 512/372-8778 x103 DR/Price Response Summary Report