Commercial Operations Subcommittee (COPS) Update to TAC Michelle Trenary 1/26/2017

1. Commercial Operations Subcommittee (COPS)Update to TACMichelle Trenary1/26/2017

2. Voting Item for TAC COPS Leadership Confirmation • Chair: Michelle Trenary (Tenaska Power Services, Independent Power Marketer) • Vice-Chair: Heddie Lookadoo (Reliant Energy Retail Services, Independent Retail Electric Provider)

3. COPS Voting Items NPRR802, Settlements Cleanup • COPS voted to approve comments in support of NPRR802 • Clarifies current ERCOT practices and cleans up Protocol language • Clarifies how Reliability Unit Commitment (RUC) Resources that have opted out of RUC Settlement are treated in the calculation of Real-Time On-Line Reserve Capacity • Codifies the methodology to be used when Base Point data has been corrupted due to issues with ERCOT’s Energy Management System (EMS) • Clarifies that Resources receiving Emergency Base Points are not charged for Base Point deviation during the relevant Settlement Interval(s) • Corrects descriptions of variables used in Ancillary Service imbalance Settlement to agree to the associated Settlement formulas • Cleans up references in Section 9, Settlement and Billing, that refer to paragraphs of Section 7.9.3.3, Shortfall Charges to CRR Owners, that have been removed from the Protocols

4. 2017 COPS Goals (Draft) • Maintain settlements stability in alignment with Protocol Section 8.2, ERCOT Performance Monitoring (2) Paragraphs (c), Settlement Stability and (g) Load Uplift Amounts • Improve Commercial Operations processes to accommodate changes in the ERCOT Market design • Work with ERCOT staff to develop Market improvements and Protocols that support increased Commercial Operations data transparency and data availability • Maintain and update the Commercial Operations Market Guide and the Nodal Settlements Handbook • Work with ERCOT staff and Transmission and Distribution Service Provider staff to address issues and facilitate improvements to market rules pertaining to load profiling as reflected in the ERCOT Protocols and the Load Profiling Guide • Perform Retail Load Profiling Annual Validation • Work with ERCOT staff to review Market Communications/Notifications and identify process improvements • Work with ERCOT staff to implement improvements to the Market Information System (MIS) and External Web Services (EWS), data access points for market participants, information security classifications, data extracts and Commercial Operations reports *2016 COPS Accomplishments - See Appendix A*

5. ERCOT Reports IT Report(s) • See Appendix B Settlements Timeline for 2016 Holiday Period Provided • At the request of COPS, ERCOT staff sent market notice M-A121616-01 Settlements, ERCOT Settlements Timeline for 2016 Holiday Period, on 12/16/2016 to provide the information to all MPs • ERCOT Holiday Schedule 2017-2019 presented to COPS (Included in Appendix C) 4th Quarter Settlement Stability Report • See Appendix D

6. 2016 “4CP” Coincident Peak Load • Market Notice M-A120216-01 Operations, ERCOT has posted the 2016 Planned Service Four Coincident Peak Load Calculation Report • Mark Ruane informed COPS that ERCOT’s determination of the 4CP peak interval for the month of July 2016 was affected by a system anomaly • The 4CP Report shows that the July 4CP peak interval occurred at IE 16:00 on July 14. However, during this interval – at 15:50 – the East DC Tie tripped offline while importing approx. 581 MW. • Due to the DC Tie trip, ERCOT deployed additional generation to replace the lost capacity. • ERCOT’s determines each month’s peak demand by summing total generation and total scheduled DC Tie imports (This methodology is also used by other system operators in North America). • On July 14, the import value for IE 16:00 was not equal to the scheduled imports, because both the scheduled import value along with the replacement generation was counted. • ERCOT followed Protocols to determine the 4CP and does not have the authority to alter the outcome. • ERCOT notified the PUCT in Docket No. 46604 of what happened and is working with SPP staff, the DC Tie operator, to improve the e-Tag curtailment notification process. • ERCOT determined that if the system demand value for IE 16:00 had been corrected to account for the DC Tie trip, the July 4CP would have been IE 16:30 on the same day.

7. DAM Make-Whole Calculation Issue • Mark Ruane informed COPS that a material increase in DAM Make-Whole payments was noticed after the implementation of NPRR617, Energy Offer Flexibility on June 22, 2016. • Upon review, it was determined that the increase resulted from a mismatch between how Startup and Minimum Energy Costs were being used by the DAM clearing engine and Settlements. • The mismatch affected Resources that submitted Three-Part offers with null values for Startup and Minimum Energy for the entire day but failed to meet all the qualifications to be considered self-committed by DAM Protocol Section 4.4.9.1 (3). • As implemented, if an affected Resource was committed by the DAM, the Settlement system would consider the Startup and Minimum Energy values as null, while the clearing engine valued them at zero. • As a result, the Make-Whole payment was based on the Startup Cap amount (generic or verifiable cost) rather than zero. • After discovering the issue, ERCOT determined that none of the impacted Operating Days met the 2% threshold for Resettlement of the DAM per Protocol Section 9.2.5 (2). • A code fix was implemented effective OD November 16, 2016 forward. • ERCOT staff is also evaluating additional means of monitoring Settlement outcomes to more rapidly identify implementation issues or other anomalies in the future.

8. CSWG Referrals COPS referred review of the 2% Resettlement Rule to the CSWG (Protocol Sections 9.2.5 (2) and 9.5.6 (2)) • The Communications and Settlements Working Group will review the 2% Resettlement Rule for both the DAM and RTM and recommend language changes if appropriate • Considerations will include: • Equity for large and small Market Participants • Intention of addressing a rare data error on a single day versus an issue that impacts multiple days over several months • Impact of Resettlement • ERCOT staff is planning to create a draft NPRR to: • Remove reference to “data error” because this is not a defined term • Ensure language is consistent in Protocol Sections 9.2.5 and 9.5.6 • Clarify that ERCOT will annually review the 2% with TAC or COPS and QMWG

9. Working Group Activities MDWG reported on several on-going efforts: • NOGRR166, Daily Grid Operations Summary Report, which replaces NOGRR084 • Draft ERCOT Data Strategy and MIS Changes Visibility Whitepaper • Request to assist with additional functionality that would simplify the process of data gathering from TDSPs for CRs (Recommended by Kathy Scott (CenterPoint)) • API Quick Start Guide PWG reported on two draft LPGRRs: • LPGRR060, Load Profiling Guide Clean Up Related to LPGRR057 • LPGRR061, Modifications to Annual Validation Timeline

10. The next COPS meeting is scheduled for February 8, 2017 Initially thought to be WebEx only, but could also be Cancelled Questions?

11. Appendix A – COPS 2016 Accomplishments • Maintain settlements stability in alignment with Protocol Section 8.2, ERCOT Performance Monitoring, Paragraphs (2) (c), Settlement Stability, and (2) (g), Load Uplift Amounts • Reviewed Non-Registered Distributed Generation Installed Capacity and Current DG Registration Threshold Quarterly • Updated TAC quarterly • NPRR719 and COPMGRR040 moved reporting requirements into the Protocols • ERCOT moved responsibility from Data Loading and Aggregation Dept. to System Planning Dept. • COPS Leadership reviewed the Settlement Stability Report to TAC each quarter • Updated TAC quarterly • Improve Commercial Operations processes to accommodate changes in the ERCOT Market design • Held first WebEx only COPS meeting in October 2016 • Updated the COPS Procedures document, removing the MISUG and adding the MDWG • Submitted NPRR742, Prior Month Data Cut for Balancing Account, to include a missing piece of information in the ERCOT extracts

12. Appendix A – COPS 2016 Accomplishments • Work with ERCOT staff to develop Market improvements and Protocols that support increased Commercial Operations data transparency and data availability • Facilitated a Settlements Seminar for stakeholders on February 16, 2016; Topics included ERCOT Settlement Processes, CRR Balancing Account and Settlement Impacts for 2016 NPRRs and ERCOT Credit • Facilitated a follow-up presentation on ERCOT Credit Reports • Approved the 2016 Market Data Transparency Service Level Agreement • Reviewed NPRR419, Revisions to Real-Time Energy Imbalance Amount and RMR Adjustment Amount and identified rounding issues • Reviewed and approved NPRR617, Energy Offer Flexibility/NPRR700, Utilizing Actual Fuel Costs in Startup Offer Caps • Reviewed and approved NPRR662, Proxy Energy Offer Curves • Reviewed and approved NPRR696, Price Correction Process Following a SCED Failure • Reviewed and approved NPRR744, RUC Trigger for Reliability Deployment Price Adder • Reviewed and approved NPRR746, Adjustments Due to Negative Load • Reviewed and approved NPRR794, Relocation of Unregistered DG Reporting Requirements • Reviewed and approved NPRR802, Settlements Clean-up

13. Appendix A – COPS 2016 Accomplishments • Maintain and update the Commercial Operations Market Guide and the Nodal Settlements Operating Guide • 2016 COPMGRRs • COPMGRR041, Updates to Market Notice Communication Process • COPMGRR042, Update to COPS Organizational Structure, Creation of MDWG and Updates to PWG Responsibilities • COPMGRR043, Administrative Changes for July 1, 2016 Commercial Operations Market Guide – Section 21 Alignment • COPMGRR044 (NPRR794), Relocation of Unregistered Distributed Generation (DG) Reporting Requirements (To be considered by TAC in early 2017) • COPMGRR045, Administrative Changes for January 1, 2017 Commercial Operations Market Guide – Alignment with Section 21 • Work with ERCOT staff and Transmission and Distribution Service Providers to address issues and facilitate improvements to market rules pertaining to load profiling as reflected in the ERCOT Protocols and the Load Profiling Guide (LPG) • LPGRR057/NPRR781, Alignment with NPRR781, Updates to Nodal Protocols Section 18, Load Profiling, to Align with Current Market Processes • Modified Distributed Generation standard report template in Appendix D, Profile Decision Tree • Proposed and implemented Annual Validation Changes • Start Annual validation process for RES and BUS in March 30th, as opposed to June 30th and still conclude in the Fall • Completed annual review and analysis of UFE for 2015 • Reviewed ERCOT’s Zip Code Analysis to determine any impacts on Settlement, Operations, Load Profiling Guide and the Annual Validation Process

14. Appendix A – COPS 2016 Accomplishments • Perform Retail Load Profiling Annual Validation • Completed review of 2016 Profile ID Annual Validation for Residential and Business • Submitted draft LPGRR, Modifications to Annual Validation Timelines • Completed all 2016 Annual Validation activities • Completed review of Reporting Compliance and Non-Compliance • Work with ERCOT staff to review Market Communications/Notifications and identify process improvements • COPMGRR041, Updates to Market Notice Communication Process; ERCOT staff initiated changes to Appendix A, Market Communications Cleanup Effort • Work with ERCOT staff to implement improvements to the Market Information System (MIS) and External Web Services (EWS), data access points for market participants, information security classifications, data extracts and Commercial Operations reports • Monitored ERCOT Digital Certificates and Windows 10 issues • Monitored and reported on Secure Sockets Layer (SSL) Certificate Upgrade • Worked with ERCOT staff on NOGRR166 (f.k.a. NOGRR084), Daily Grid Operations Summary Report • Completed Reports to be Automated Project • Multi-year project • 15 reports recommended to be discontinued (8 NPRRs)

15. Appendix A – COPS 2016 Accomplishments • Work with ERCOT staff to implement improvements to the Market Information System (MIS) and External Web Services (EWS), data access points for market participants, information security classifications, data extracts and Commercial Operations reports (Continued) • NPRR754, Revise Load Distribution Factors Report Posting Frequency • Began work on the MIS Changes Visibility assignment from TAC • Raised awareness of issues related to down-stream impacts of data product changes • Whitepaper being drafted • Updated TAC on Upcoming MIS Changes • Implemented a new process to publish and maintain a historical archive for Missed Postings • Continued work to define and propose solutions for the External Web Services (EWS) Modifications Project • First steps toward a “push” model • Presented proposal to other Subcommittees • Worked with ERCOT on their publication of an API Quick-Start Guide • Updated the Disclosure Data User Guide for 60-day and 48-day Disclosure Data • Worked with ERCOT to publish the new CRR Balancing Accounts Extract User Guide

16. Appendix B – IT Reports Service Availability – November and December • Market Data Transparency IT systems met all SLA targets Incidents & Maintenance – November • 11/08/16 – Planned Maintenance (Site Failover – MPIM, Retail API) • 11/09/16 – Planned Maintenance (Site Failover – External Web Services) • 11/10/16 – Planned Maintenance (Site Failover – MIS) • 11/10/16 – 11/14/16 • After a scheduled Site Failover on 11/10/16, 867_03 data was not being loaded into the Settlement system • 867_03 data was manually loaded on 11/14/16 • By 11/14/16 @ 1:10 pm all 867_03 data from 11/10/16 – 11/13/16 was loaded into the appropriate ERCOT systems Incidents & Maintenance – December • 12/29/16 – External Web Services (EWS) GetReportList outage (MIS was not impacted)

17. Appendix C – ERCOT Holiday Schedule 2017 • New Year’s Day – Monday, January 2 • Memorial Day  - Monday, May 29 • Independence Day -  Tuesday, July 4 • Labor Day – Monday, September 4 • Thanksgiving Day – Thursday, November 23 • The day after Thanksgiving – Friday, November 24 • Christmas Day    Monday, December 25 • One day in December (determined annually by the Company)  Tuesday, December 26 2018 • New Year’s Day   Monday, January 1 • Memorial Day  - Monday, May 28 • Independence Day  - Wednesday, July 4 • Labor Day – Monday, September 3 • Thanksgiving Day – Thursday, November 22 • The day after Thanksgiving  - Friday, November 23 • Christmas – Tuesday, December 25 • One day in December (determined annually by the Company)  - Monday, December 24

18. Appendix C – ERCOT Holiday Schedule 2019 • New Year’s Day – Tuesday, January 1 • Memorial Day  - Monday, May 27 • Independence Day - Thursday, July 4 • Labor Day – Monday, September 2 • Thanksgiving Day – Thursday, November 28 • The day after Thanksgiving  - Friday, November 29 • Christmas Day - Wednesday, December 25 • One day in December (determined annually by the Company)  - Tuesday, December 24

19. 8.2(2)(c)(i) Track number of price changes Appendix D – 2016 4th Quarter Settlement Stability Report Notes: There were no price changes in Q4 2016. The price changes reported on this slide display the price corrections that have been done after the Settlement Statement has posted for the Operating Day.

20. 8.2(2)(c)(ii) Track number and types of disputes submitted8.2(2)(c)(iii) Compliance with timeliness of response to disputes Appendix D – 2016 4th Quarter Settlement Stability Report • Submitted but not resolved disputes may be: • Not started • Open • Rejected • Withdrawn

21. 8.2(2)(c)(iv) Other Settlement metrics Appendix D – 2016 4th Quarter Settlement Stability Report NOTE: ERS Final settlement OD data is not represented in graph. The percent spike in July 2016 from the Final to the True-up is due to ERCOT receiving the RMR’s actual costs and those being lower than the standby amount. Average percent change

22. 8.2(2)(c)(iv) Other Settlement metrics Appendix D – 2016 4th Quarter Settlement Stability Report

23. 8.2(2)(c)(iv) Other Settlement metrics Appendix D – 2016 4th Quarter Settlement Stability Report

24. 8.2(2)(c)(v) Availability of ESIID consumption data Appendix D – 2016 4th Quarter Settlement Stability Report

25. 8.2(2)(c)(v) Availability of ESIID consumption data Appendix D – 2016 4th Quarter Settlement Stability Report The percent spike from 11/18-12/9 is due to a TDSP not providing data prior to the initial.

26. 8.2(2)(c)(v) Availability of ESIID consumption data Appendix D – 2016 4th Quarter Settlement Stability Report

27. 8.2(2)(c)(v) Availability of ESIID consumption data Appendix D – 2016 4th Quarter Settlement Stability Report

28. 8.2(2)(c)(v) Availability of ESIID consumption data Appendix D – 2016 4th Quarter Settlement Stability Report

29. 8.2(2)(c)(v) Availability of ESIID consumption data Appendix D – 2016 4th Quarter Settlement Stability Report

30. 8.2(2)(g) Net Allocation to Load (Board Report)- Totals and $/MWh Appendix D – 2016 4th Quarter Settlement Stability Report NET ALLOCATION TO LOAD (MM) AUCTION REVENUE PER CONGESTION MANAGEMENT ZONE ($MM) * The total ERS charges have been evenly allocated across the contract period. ** The $/MWh value as calculated per PR 8.2 (2) g