History

1. Load Distribution Factor Calculation Updatefor Market Applications and studiesa Presentation for NATF 11/2/2010 - NATF 1 Texas Nodal

2. History • On 9/21 ERCOT notified NATF of our intention to implement Static load distribution factors at market opening. • On October 7th ERCOT briefed TAC on this intention, and received approval to this approach and the implementation document “Generating and Maintaining Load Distribution Factor Library from PI Historian” • Since these announcements an interest in how ERCOT assure the quality of these Load Distribution factors has been expressed in several forums. 11/2/2010 2 Texas Nodal

3. Load Distribution Factors • Nodal Protocols state in section 4.5 – Dam Execution and Results • (5) ERCOT shall determine the appropriate Load distributions to allocate offers, bids, and source and sink of CRRs at a Load Zone across the Electrical Buses that are modeled with Load in that Load Zone. The default distribution is the State Estimator hourly distribution for the seven days before the Operating Day. If ERCOT decides, in its sole discretion, to change this distribution for reasons such as anticipated weather events or holidays, ERCOT shall select a State Estimator distribution from a proxy day reasonably reflecting the anticipated distribution in the Operating Day. ERCOT may also modify this distribution to account for predicted differences in network topology between the proxy day and Operating Day. ERCOT shall develop a methodology, subject to Technical Advisory Committee (TAC) approval to describe the modification of the proxy day bus-load distribution for this purpose. 3 Texas Nodal

4. ERCOTs Proposal • ERCOT has concluded from the results of the market trials, that it is advisable to open the nodal DAM market using a stable set of bus-load distribution factors in place of the state estimator hourly distribution from 7 days prior to the operating day. • Use of filtered load distribution factors from 7 days previous allows telemetry errors to propagate into the DAM model • Through capture and testing of LDF’s for a proxy day, ERCOT can reduce or eliminate unexpected DAM results caused by load distribution factors. • ERCOT intents to open the market using a set of static, tested Load distribution factors. • ERCOT will capture state estimator results from a “proxy” day, and test these LDF’s with sample DAM executions in the lab with “typical” bid information. • ERCOT will examine the results, and iterate with adjusted distributions where unreasonable load distributions result. • ERCOT will utilize these “proxy” distributions for each day of the target month, or until revisions are required. 4 Texas Nodal

5. Quality Assurance at Nodal go-live • ERCOT is currently calculating the expected load distribution for RUC and comparing to actual loads for the equivalent time period on 1 weekday hour and one weekend hour each week. • This process is manual, and allows a review of the top ~20 residuals for the selected hours each week. • Thus far, the largest residuals have consistently been at locations representing large industrial facilities, DC tie lines, and other locations characterized by variable load. • Some locations appear to be associated with loss of telemetry and are being investigated. • Weather zones are being scaled to match the load forecast, and the tracking at the weather zone level is good. • Delivery of the EMIL report associated with load forecast may eliminate the need for this manual process. 11/2/2010 5 Texas Nodal

6. Quality Assurance sample 11/2/2010 6 Texas Nodal