ERCOT Residential Annual Validation ’06 Algorithm Review & Projected Changes

1. ERCOTResidential Annual Validation ’06 Algorithm Review & Projected Changes May 24, 2006

2. Recommendations from April PWG • No changes to the ERCOT algorithm are necessary based on LRS comparison • Assign default Profile Group by weather zone based on residential survey results • If the majority of new homes in a weather zone are electrically heated, assign RESHIWR as a default • Otherwise assign RESLOWR • Do not replace a Load Profile ID assignment with a default assignment regardless of weather zone

3. Background Information • During migration analysis discrepancies in data were found • Updated analysis resulted in a reduction of 2006 AV changes • Tested new methodology for classifying winter and shoulder months • Assignments made using new winter and shoulder month classification • Tested the new classification method using survey results, assignments were less accurate. No change recommended.

4. Projected Residential Changes for AV06

5. Projected Residential Changes for AV06

6. Estimates of Future Load Profile ID Migrations • Estimates below reflect migrations for 2006 as if all new algorithm changes had been made for 2005 Annual Validation • The estimated migration rates are an indicator of what can be expected for year-to-year migration starting in 2007 • Estimates were developed from a sample of every 25th ESIID (total of 212,666 ESIIDs)

7. Migration Review of AV 2005 Changes Allowed – 2005 Annual Validation Changes which were sent Disallowed – 2005 Annual Validation Changes which were not sent

8. Summary of Residential Analysis • 2006 AV estimated changes • 144,380 HIWR to LOWR • 694,756 LOWR to HIWR • 839,136 Total Changes • Projected year to year Migrations • 4.4% overall • 3.6% non default