ROS Meeting

1. ROS Meeting April 9, 2003 Lee Westbrook

2. Need for Standard • Reactive compensation essential to voltage support • Compensation supplied at one level (generation, transmission, or distribution) affects that needed at other levels • Responsibilities must be clearly defined and assigned • Compliance must be monitorable

3. Past Standard Development Difficulties • Agreement difficult • Resulted in vague, unmeasurable responsibilities • Any specific responsibilities were “lowest common denominator” • Studies not definitive • Model and Data uncertainty • Few clear result “breakpoints” • No technical study can allocate reactive responsibility among generation, transmission, and distribution

4. Past Standard Development Difficulties (cont’d) • Cost recovery uncertainty and diversity • Diverse voltage control philosophies • Monitoring difficult (metering deficiencies)

5. Past Advantages • Integrated utilities could control voltage in an integrated fashion (i.e., operating and planning decisions could be made centrally for generation, transmission, and distribution) • Fewer remote generators, power transfers • Less dispatch variability • All generators had AVRs

6. Interim StandardNegative Perceptions • Need more information from a voltage study in progress • Need more definition of monitoring, compliance, and enforcement mechanisms • Cost allocation may not be equitable • Differing locational and functional requirements are discriminatory • ERCOT discretion deemed excessive

7. Interim StandardNegative Perceptions (cont’d) • Cost of monitoring/compliance too high • Inadequate justification of requirements • Exclusions (e.g., wind generators, generator grandfathering) deemed unjustified or inadequate • No specific DSP requirements, only TDSP • Inadequate generator testing requirements • Organization of standard confusing

8. Objectives • Ensure that reactive power capability is installed and deployed adequate to prevent unacceptable voltage or voltage instability in ERCOT under credible operating conditions • Ensure that the standard requires neither the installation of unneeded reactive power capability, nor the expenditure of compliance monitoring costs that are unnecessary • Provide ERCOT with a mechanism to address situations when the standard does not define market participant compliance responsibilities with sufficient clarity to provide what is needed for acceptable reliability • Ensure that different requirements on market participants who are similar except for geographic location are justified and documented

9. Objectives (cont’d) • Provide for application of the standard on an aggregated facility basis where reasonable • Provide for reduced requirements on existing facilities (e.g., grandfathering) only when justifiable considering cost and reliability • Provide an opportunity for market participants to refute an ERCOT finding of noncompliance • Create a standard that clearly states the obligations of market participants and is organized to allow them to locate all obligations easily • Distinguish between DSP and TSP requirements, since the organizations may not be integrated and the cost recovery mechanisms differ • Avoid staging and sunsetting of requirements if possible

10. Approach - RCVC TF • Segregate drafting into requirements, monitoring and compliance, and education • Create a document in parts to facilitate discussion, voting • Present to ROS with any non-consensus issues clearly delineated • Present to WMS, TAC, etc. • If approved, incorporate into OGRRs, PRRs, and ERCOT Procedures for normal processing

11. Technical Facts • Static reactive is needed to preserve dynamic reactive • Dynamic reactive is needed to survive disturbances • Static reactive is lower $/MVAR than dynamic reactive • The lower the voltage level, the lower the static reactive $/MVAR • Reactive power transport is ineffective over significant distance