March 23, 2017 TAC Update to COPS

1. March 23, 2017TACUpdate to COPS Michelle Trenary April 12, 2017

2. 2017 TAC Goals and Initiatives • 2017 TAC Goals Approved • Located on the TAC web page at http://ercot.com/committee/tac • 2017 TAC Initiatives Approved • Subsynchronous Oscillation (SSO) – ROS • Load participation in price formation – WMS • Outage Coordination Improvements – ROS • Switchable Generation – WMS • Distributed Energy Resources – WMS • Real-Time Cooptimization – WMS • Future of Smart Meter Texas – RMS • Review of Planning Processes – ROS 2

3. PRS Update • NPRR776, Voltage Set Point Communication, Effective Date: Upon system implementation Approved • NPRR799, Updates to Outages of Transmission Facilities, Effective Date: May 1, 2017 Approved • NPRR802, Settlement Clean-up, Effective Date: May 1, 2017 Approved • NPRR804, Remove Posting Requirements for Private Use Network Diagrams, Effective Date: May 1, 2017 Approved • NPRR808, Three Year CRR Auction, Effective Date: Upon system implementationApproved • NPRR809, Generic Transmission Constraint (GTC) or Generic Transmission Limit (GTL) for New Generation Interconnection, Effective Date: Upon system implementationApproved • NPRR810, Applicability of RMR Incentive Factor on Reservation and Transportation Costs Associated with Firm Fuel Supplies, Effective Date: Upon system implementation for revisions to Section 6.6.6.1 and May 1, 2017 for revisions to Section 3.14.1.13 Approved • NPRR812, Alignment of Currently Published Reports, Effective Date: Upon system implementation Approved • NPRR813, Updated Terminology Related to Annual Market Settlement Operational Audits, Effective Date: May 1, 2017 Approved • NPRR818, Allow Curtailment of Certain DC Tie Load Prior to Declaring Emergency Condition, URGENT, Effective Date: April 5, 2017 Approved 3

4. PRS Update • 2017 PRS Goals Approved • Located on the PRS web page at http://ercot.com/committee/prs • 2017 Other Binding Documents List Approved • “Other Binding Documents List Approved by TAC” may be found on the Market Rules web page at http://www.ercot.com/mktrules/obd • NPRR798, Additional CRR Accounts Request Rejected by PRS Revision Requests Tabled by TAC • PGRR052, Stability Assessment for Interconnecting Generation, Effective Date: Upon system implementation, but no earlier than August 1, 2017Approved • Appeal of NOGRR149, Revision to Definition of Transmission OperatorTabled until the August TAC Meeting 4

5. ROS Update • PGRR054, Stability Limits in the Full Interconnection Study, Effective Date: May 1, 2017 Approved • PGRR055, Planning Guide Revision Request Process, Effective Date: May 1, 2017 Approved • NOGRR166, Removal of the Daily Grid Operations Summary Reports, Effective Date: April 1, 2017 Approved TAC reviewed the Revised Impact Analysis and acknowledged the Market Data Working Group’s (MDWG’s) work to reduce the cost to implement NOGRR084, and that the market had determined that the Daily Grid Operations report is not needed. • NOGRR167, Alignment with NPRR776, Voltage Set Point Communication, Effective Date: Upon system implementation of NPRR776, Voltage Set Point Communications Tabled until NPRR776 is considered • ROS Procedures Approved • Updated the Working Groups and Task Forces • Located on the ROS web page at http://www.ercot.com/committee/ros • ROS 2017 GoalsApproved • Located on the ROS web page at http://www.ercot.com/committee/ros 5

6. COPS Update • LPGRR060, Load Profiling Guide Cleanup Related to LPGRR057, Effective Date: April 1, 2017 Approved • LPGRR061, Modifications to Annual Validation Timelines, Effective Date: April 1, 2017 Approved • COPS 2017 Goals Approved • Located on the COPS web page at http://www.ercot.com/committee/cops 6

7. WMS Update • WMS 2017 Goals Approved • Located on the WMS web page at http://www.ercot.com/committee/wms • Multi-Interval Real-Time Market Feasibility Study (MIRTM) Endorsed • Considering the results of the limited analysis, ERCOT and stakeholders find that the MIRTM study demonstrates that the estimated costs are in excess of the measured benefits and therefore insufficient to support a recommendation to move forward with MIRTM at this time. • Study conclusions presented to the BOD April 4, 2017 • Switchable Generation Resources Update • WMS plans to vote on the white paper in April or May • Possibility of combining of the QMWG and the CMWG • There will be a trial of coordinated meetings for now 7

8. ERCOT Reports • Virtual Weather Zone Discussion, Calvin Opheim • ERCOT is ready to work on providing the Valley forecast to MPs • ERCOT will work through the WMS and ROS on this project • 2017 Seasonal Adjustment Factor (SAF), Mark Ruane • Analytical approach reviewed • CWG/MCWG reviewed the proposed calculation and voted to endorse 2017 SAF factors at follows: • NPRR800, Revisions to Credit Exposure Calculations to Use Electricity Futures Market Prices, will eliminate the SAF (Implementations before Summer 2018) 8

9. ERCOT Reports • Market Continuity Framework, Mark Ruane Market Restart Definition: The processes by which ERCOT market-related systems and activities are returned to normal operation following a trigger event that disables a significant portion of the necessary data and/or infrastructure for operations of markets for a period of time. Draft Principles: • ERCOT will use existing crisis communication and business continuity procedures to foster orderly and timely communication of information with the Texas Legislature, the Public Utility Commission of Texas (PUCT), other Texas state government entities, local government, federal government, Market Participants and stakeholders, the media, and the general public. • In a market continuity situation ERCOT shall act in accordance with the State of Texas Emergency Management Plan (Annex L). • Limited settlements functionality is expected while restoring ERCOT markets. To the extent data is available, reconciliation settlements will be produced after ERCOT market operations are fully restored. 9

10. ERCOT Reports Draft Principles (Cont.): • Payments will be made in as timely a manner as possible to support recovery of market functionality. • As necessary, Resources that support grid restoration will be made whole to their actual or proxy costs. • Actual based on approved startup and Mitigated Offer Curves • Proxy based on an approximation of actual startup and Mitigated Offer Curves • Credit and collateral requirements will be reviewed with consideration to facilitate market restart. This could include relaxation of credit requirements and release of cash or other collateral to provide short-term Market Participant liquidity. • If additional liquidity is required ERCOT may seek emergency funding to pay Resources before other alternatives are considered. • Restart of the Real-Time Market will be prioritized before other markets/activities. 10

11. ERCOT Reports Draft Principles (Cont.): • CRR auctions and other functions will start only after RTM and DAM are restored. CRR Auctions will be rescheduled on a best efforts basis. • Retail operations will initially rely on the existing Safety Net process as documented in the Retail Market Guide. • Potential Mass Transitions arising in consequence of the event will be suspended. • In cases where due to the market outage there are DAM awards with no corresponding RTM, or CRRs with no corresponding DAM outcomes, these results will be invalidated. • DAM/CRR bids/offers may be restricted until such time as the system is deemed stable. • Market restart costs (such as Resource compensation) will be uplifted on a Load Ratio Share basis after market recovery; potentially on an installment basis to avoid financial disruption. Next Steps: - ERCOT will work to add Market Continuity details to Protocols or OBDs 11

12. ERCOT Reports • Greens Bayou RMR Update, Mark Ruane • GBY5 RMR budget presented • Estimates for full term of RMR Agreement • WMS Requested ERCOT present updated estimated costs at the September WMS meeting 12

13. ERCOT Reports • Review of Transmission Loss Factors, Dan Jones • TLFs increased from the 2016/17 forecasted to the 2017/18 forecasted • TLFs are determined based on the four seasonal SSWG cases for the upcoming year • Changes affecting the level of TLFs were a reduction in the 2017/18 cases of approximately 2.9 GW of generation dispatch in the Houston area, compensated by increased generation dispatch across the rest of ERCOT • These changes increased the flows of power across the ERCOT grid and into the Houston area, thereby producing higher overall transmission losses • Actual transmission losses are not directly accounted for in settlement • Should ERCOT explore improvements to the accuracy of TLFs? Yes, TAC assigned this to the WMS and the ROS 13

14. ERCOT Reports • Annual ERS Report to TAC, Mark Patterson • Procurement Summary Trends • Capacity offered and procured • Number of ERS Resources • Cumulative Individual Sites Participating in ERID Process • 2016 ERS Procurement Overview 14

15. ERCOT Reports • Under Frequency Load Shedding (UFLS) Workshop Update • Workshop held on February 20, 2017 • ERCOT will move forward with drafting changes • Oversight assigned to the ROS • Distributed Energy Resources • White paper completed and issued to ROS and WMS • ERCOT requested review of the White paper 15

16. ERCOT Reports • Changes to Energy Emergency Alert (EEA) Level 3 • Market notice sent on March 22, 2017 (M-A032217-01 Operations) • Alignment with NERC Standard means ERCOT will declare an EEA Level 3 when “the energy deficient BA is unable to meet minimum Contingency Reserve requirements.” • ERCOT’s minimum Contingency Reserve is 1375 MW, however Protocols declare an EEA 3 at 1000 MW or when frequency cannot be maintained at a minimum of 59.8 Hz • ERCOT will prepare for reflecting these changes in the Protocols 16

17. Questions? 14