Loads in SCED

1. Loads in SCED Comments submitted by Luminant Energy Company, LLC

2. Objective: • Maximize opportunities for load participation from eligible existing and future load resources • Create an economically efficient method for price formation associated with Load Real-time (RTM) energy bids

3. Key Issues: • The proposed five-minute response time to SCED instruction may discourage participation from existing load control programs • All load resources should be treated equitability and comparable to traditional resources (where practical)

4. Key Issues: • Voluntary response from non-controllable load should retain its right to curtail as desired • Performance metrics should be reasonable, repeatable, verifiable, and benchmarked at least seasonally.

5. For improved participation and price formation, focus on equitable treatment and achievable standards • Equitable Treatment: • Response expectations consistent with achievable current program standards • All Load Resources must submit or accept a proxy RTM Energy Bid and be dispatched by SCED • Restoration time for loads should be consistent with other products • Performance Stds, M&V • No punishment for “over-performance” from energy products • Capacity values should be tested and verified no less than seasonally • Tested and qualified LRs should be benchmarked against metered or calculated capacity EFFICIENT AND INCLUSIVE MARKET DESIGN FOR LOADS

6. Detailed Approach: Response Expectations Issue: Existing load response programs (e.g. interruptible thermostats, pool pumps, water heaters, etc) may take longer than 5-minutes to provide response. Proposed Solution: Allow loads to submit their five-minute ramp rate to be achievable over ten-minutes. Consequence of no action: Existing load control programs will likely not participate in Loads in SCED v.2

7. Detailed Approach: Equitable Treatment RTM Energy Bids Issue: Current protocols allow certain loads to be dispatched by out-of-market instructions, potentially dampening prices during times of scarcity. Proposed Solution: All load resources should be required to submit or accept an ERCOT proxy assigned a Real-time Energy Bid. Consequence of no action: Loads dispatched by an out of market instruction will continue to attenuate prices, potentially when the marginal benefit of an addition MW of resource is equal approaching VOLL

8. Detailed Approach: Equitable Treatment RTM Energy Bids Load Resources providing • RRS • RRS by High-set UFR • Offline/Online Non-Spin May submit RTM Energy Bids consistent with existing floors and ceilings for generators, and retain dispatcher control / frequency response of ancillary services

9. Example: Deployment of RRS with RTM Energy Bids, SCED Dispatch • Upon EEA Level 1, release RRS to SCED. • RTM Energy Bids for RRS capacity released to SCED shall be consistent with the appropriate ceilings and floors • RTM Energy Bids will be slightly less than the SWOC, randomly separated by a penny, to ensure timely deployment of loads, as needed, by SCED, before RRS provided by generation resources

10. Retaining Reliability Tools • The ERCOT dispatcher will retain control of the release of RRS Capacity to SCED, and • Loads providing RRS via high-set under-frequency relays will still deploy to a drop in system frequency, until such capacity is dispatched in an Energy Emergency Alert Level II.

11. Equitable Treatment of Loads: Recovery after deployment Current Nodal Protocols* allow loads separating from the system by high-set under-frequency relay up to three hours to return to service. Luminant’s proposal retains this restoration time, but further stipulates that the deployed load should contribute to price formation as if it were any other deployed resource in the RT offer stack. (Deployed load added back to GTDB) *Section 8.1.1.4.2 Paragraph (1) (d)

12. Update to Generation to be Dispatched (GTBD) A decrease in load associated with a successful deployment of a load resource (analogous to a decrease in system demand) will decrease GTDB, and move the System Lambda down the System incremental cost curve. Luminant proposes adding back deployed load resources to the GTBD calculation to ensure efficient price formation.

13. Performance Standards / M&V For Energy Bids: Luminant agrees that failure to curtail consumption beyond the stated willingness to buy creates adequate economic incentive to perform. However, repeated instances of non-performance to qualified controllable resources should be penalized by disqualification.

14. Performance Standards / M&V For Ancillary Service Resource Responsibilities: Luminant agrees that more stringent penalties are necessary to ensure adequate response. However, to accommodate “blocky” loads and Controllable Load Resources not independently metered from passive load on the same meter, Luminant suggests eliminating penalties for “over-performance.”

15. Performance Standards: Example 1 Total Available Load Resource Capacity, = MPC-LPC, determined by algorithm MPC MPC B B Total Metered Load, = Net Power Flow, = Powertelem, = C Total Metered Load, = Net Power Flow, = Powertelem, = C LPC LPC Passive, non-controllable load, calculated as C-B A A Passive Load Decreases In this example, if passive load curtails consumption coincident with a deployment of a Controllable Load Resource (CLR), the metered response may suggest that the CLR “over-performed” to a SCED instruction.

16. Performance Standards: Example 2 Total Available Load Resource Capacity, = MPC-LPC, determined by algorithm MPC MPC Curtailment achieved Base Point B B Total Metered Load, = Net Power Flow, = Powertelem, = C LPC LPC Passive, non-controllable load, calculated as C-B A A In this example, if a load over-performs to its Base Point, Luminant suggests that this load is not subject to Base Point Deviation Charges. Luminant believes that absent this change, “blocky” loads will be discouraged from participating in Loads in SCED.

17. Measurement and Verification Numerous existing aggregations of residential controllable load are not independently metered. Interruptible thermostats, pool pumps, and other aggregated residential loads depend on a time of day / seasonal algorithm to determine available and achieved capacity in real-time.

18. Measurement and Verification To attract participation from existing load control programs, Luminant suggests that: • Controllable loads providing Ancillary Services not independently metered from passive loads behind the same meter qualify based upon a seasonal demonstration of the efficacy of the calculated capacity values. • Qualified controllable loads providing Ancillary Services are accountable for satisfying Controllable Load Resource Energy Deployment Performance (CLREDP*). Failure to meetCLREDP standards shall disqualify a CLR. * Consistent with the recommendations in this presentation, Luminant proposed modifying the CLREDP standards to only penalize under-response

19. Summary: Luminant’s proposal, as presented, is designed to • Maximize participation of existing load aggregations, while • Actively contributing to efficient price formation.

20. Summary Specifically, to create an equitable market for loads, Luminant suggests: • Establish performance expectations and verification requirements such that existing programs can participate • Allow M&V by algorithm, and seasonal verification • Remove penalties for over-performance for loads providing RRS • Assume that, for energy-only RTM Energy bids, exceeding one’s own willingness to buy is sufficient economic incentive for adequate performance

21. Summary Specifically, to create an equitable market for loads, Luminant suggests: • Require all controllable load resources either submit or accept by proxy a RTM Energy bid and be dispatched by SCED. • Allow dispatcher deployment, and SCED dispatch of all Loads providing Ancillary Services • Retain restoration time for CLRs providing RRS, while counting that deployed load as a dispatched resource in GTDB

22. Questions?