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Bates RMR Exit Strategy Frontera Alternative Preliminary Economic Study

This study analyzes alternative solutions for Bates Power Plant, including an asynchronous tie with CFE, arrangement with Frontera, transmission upgrades, and demand participation. The study also includes an analysis of market forecasts and results comparing Bates with and without RMR contract.

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Bates RMR Exit Strategy Frontera Alternative Preliminary Economic Study

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  1. Bates RMR Exit Strategy Frontera Alternative Preliminary Economic Study ERCOT TAC 6/3/2004 Dan Woodfin Manager, Resource Planning ERCOT

  2. Solution Alternatives: • Continued RMR Contract with Bates (Current) • Asynchronous Tie with CFE and emergency service contract (2006) • Some type of arrangement with Frontera to forego option of selling to CFE and make available for OOM (more info on Prerequisites slide) • Transmission Upgrades (2009?) • Demand participation?

  3. Prerequisites for Frontera Option • Upgrades necessary to allow release of Bates 1 on 69kV system must be completed • Currently scheduled to be complete Dec ’05 • Protocol changes must be implemented to allow settlement of any special contract charges • Other performance obligations and criteria must be met by Frontera

  4. Analysis • Use market model to forecast for each hour: • Balancing Energy Market Prices • Hourly production level in bilateral/balancing energy market for Frontera and Bates • Post processing data in order to: • Calculate OOMC and OOME (net of balancing energy) for Frontera • RMR Costs (net of BENA credit) for Bates • Analysis Design • Year analyzed 2005 • Two cases each year: • Bates RMR as it is • Bates without RMR and retired

  5. Results • If Frontera agreed to make plant available for OOM, such that Bates could be released from RMR contract, the cost basis exists for ERCOT market to save uplift cost • Bates forecast uneconomic uplift is comparable to 2003 historic uplift

  6. Caveats • OOME and OOMC payment to Frontera may change due to load level and shape, bilateral schedule, and fuel prices • Simulations assume that Frontera is self-committed whenever it is economic in the Balancing Energy market • Simulations did not incorporate planned transmission outages • When ERCOT switches to nodal market, OOME and OOMC pricing may not apply • Analysis assumes Frontera is not under an RMR contract • Term of arrangement and analysis against other options needs to be completed

  7. Next Steps • Resolution of non-transmission policy issues and protocol development • Analysis against other options needs to be completed

  8. QUESTIONS?

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