EILS Update DSWG ERCOT Staff October 9, 2009. 2 2 EILS Update to DSWGOctober 9, 2009 Contents...

EILS Update

DSWG

ERCOT Staff

October 9, 2009

22

EILS Update to DSWGOctober 9, 2009

Contents

• Procurement results: Current & historical• Price comparison: EILS to Ancillary Services• Recap of VOLL discussion• Procurement schedule for Feb.-May 2010 Contract Period• Process flow improvements (Carl & Diana)• Procurement & settlement issues:

– Load & unique meter identification– Meter data submittal– Dispute process

• New issues– All or nothing bid options– Re-constitution of aggregations within a Contract Period– Substitutions

• Compliance issues

33


Current Bid Cycle

Time PeriodBusiness Hours 1

Business Hours 2

Business Hours 3

Non-Business Hours

Definition8 AM to 1 PMMon-Fri except Holidays

1 PM to 4 PMMon-Fri except Holidays

4PM to 8 PMMon-Fri except Holidays

All other hours

EILS Procured 360.9 MW 353.3 MW 268.0 MW 334.5 MW

# of EILS Resources

61(includes 37

aggregations)

59(includes 35

aggregations)

75(includes 46

aggregations)

55(includes 35

aggregations)

Avg. Cost per MW per Hour

$ 8.02 $ 8.12 $ 8.87 $ 7.77

• Oct. 2009 – Jan. 2010 Contract Period Procurement Results

• Projected cost for this Contract Period: $ 7.79 million• Max. cost for 2009 program year: $18.35 million

44


EILS Procurement Trends (Business Hours 1)Business Hours 1

262 310 271 164 276 361

8

11 90

0

96

55

0

75

150

225

300

375

450

Feb-May08 Jun-Sept08 Oct08-Jan09 Feb-May09 Jun-Sept09 Oct09-Jan10

MW Bid, Not Procured

MW Procured

55



262 219 288 168 155 353

8

12

86

074

58

0

75

150

225

300

375

450



MW Procured

66



262

216

290

163

237

268

8

11

86 137

0

75

150

225

300

375

450



MW Procured

77


EILS Procurement Trends (Non-Business Hours)

Non Business Hours

185

216

272

138

256

335

104

110

86

73

40

0

75

150

225

300

375

450



MW Procured

88


Number of EILS Procured Resources

0

10

20

30

40

50

60

70

80

Feb-May08 June-Sept08 Oct08-Jan09 Feb-May09 Jun-Sept09 Oct09-Jan10

Nu

mb

er o

f R

eso

urc

es

BH1 BH2 BH3 NB

EILS Procurement Trends (Number of Resources)

EILS Resources include individual Loads and aggregations

99


EILS Procurement Trends

• Cumulative unique ESI IDs offered into EILSNumber of ESIIDs Bid (Cumulative)

28

380

417

478

729

946

0

75

150

225

300

375

450

525

600

675

750

825

900

975

1050

febmay08 junsep08 oct08jan09 febmay09 junsep09 oct09jan10

1010


A/S Price Comparison: Business Hours 1

36.09

29.98

14.75

7.70 7.07

26.64 26.88

11.09

7.19 6.59

16.58

6.304.021.56 2.44

$0

$10

$20

$30

$40

$50

$60

$70

$80

Feb-May08 Jun-Sept08 Oct-08-Jan09 Feb-May09 Jun-Sept09

$/M

WH

RRS URS NSRS EILS

1111



36.09

55.52

7.45

22.34

26.64

51.76

9.92

5.45

22.78

16.58 16.39

9.84

13.44

2.57 2.17$0

$10

$20

$30

$40

$50

$60

$70

$80


$/M

WH

RRS URS NSRS EILS

1212



36.09

75.78

23.54

14.77

25.3526.64

64.76

25.29 25.48

16.5818.61

2.86 1.83

7.02

13.83

$0

$10

$20

$30

$40

$50

$60

$70

$80


$/M

WH

RRS URS NSRS EILS

1313


A/S Price Comparison: Non-Business Hours

24.92 24.10

18.07

8.206.37

21.14 21.08

13.54

9.006.476.21

3.53

12.00

1.69 2.20$0

$10

$20

$30

$40

$50

$60

$70

$80


$/M

WH

RRS URS NSRS EILS

1414


Average Monthly Fuel Price

$0

$2

$4

$6

$8

$10

$12

$14

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

08 08 08 08 08 08 08 08 08 08 08 08 09 09 09 09 09 09 09 09 09

$/M

WNatural gas price trend

2008 2009

EILS Costs & Benefits(Value of Lost Load discussion)

1616


EILS Costs & Benefits

• In August, VP of System Operations Kent Saathoff briefed the ERCOT Board responding to questions raised earlier about EILS costs and benefits

• The same issue had been raised in early 2007 when EILS Protocols were being considered

• ERCOT Staff’s response to a series of questions posed by PRS included a discussion of EILS in the context of Value of Lost Load (VOLL)– Response is summarized here

1717


Value of Lost Load

• ERCOT Staff analyzed several VOLL studies from other markets

• VOLL estimates range from $2,240 / MWh to $20,000/ MWh

• Based on methodologies from the 2003 Northeast Blackout, direct VOLL for the April 17, 2006, ERCOT load shedding event can be estimated at between $14.8 million and $22.4 million

• VOLL is a mathematically-calculated estimation of direct economic loss due to loss of electric service

• VOLL does not capture broader, intangible societal costs associated with firm load shedding that are very difficult to quantify in monetary terms, such as:

– Potential risk to human health and safety posed by blackouts – Effect on consumer confidence in the electric grid and market– Negative national publicity to the region– Financial and business communities’ outlook with potential impacts to future

economic development and gross domestic product

1818


Cost of EILS

• In its first two program years EILS has incurred a total maximum cost of $34.9 million, under a two-year cost cap of $100 million

• Assuming EILS would only be used in potential loss of load events that statistically could occur approximately once in ten years, it would not be justified based on VOLL alone.

• However, since VOLL does not quantify all the intangible costs of a loss of load event, EILS can be viewed in a broader context as an additional hedge against firm load shedding

1919


EILS Additional Value

• The PUCT expanded the EILS mission in the 2007 rule amendments:

• ‘The commission … finds value in having resources that have not participated in demand response programs being enabled to do so by this program. The commission encourages ERCOT to make an effort to attract such customers to the program.’

• ‘The commission … agrees … that it is in the public interest for the commission to expand the scope of demand-response through the implementation of EILS.’

-- Preamble to the Order adopting amendments

to Subst. Rule §25.507, Nov. 1, 2007

(Project 34706)

2020


Future of EILS

• Kent concluded:

– Any significant changes to or discontinuation of EILS will require revision of PUC Subst. Rule §25.507

– ERCOT Staff is open to any suggestions to modify or improve the program within the parameters of the PUCT Rule

– There is a Demand Side Working Group of the WMS that is another appropriate stakeholder forum to have such discussions

EILS Administration

2222


Procurement Schedule: Feb-May 2010 Contract Period

Date Action

Mon Nov 2 2009DRAFT Technical Requirements & Scope of Work posted to EILS web page. Market Participant comments accepted through Nov. 16.

Fri Nov 20 2009Request for Proposal (RFP) Issued. FINAL Technical Requirements & Scope of Work posted to EILS web page.

Wed Nov 25 2009 Last date for QSEs to request preliminary baseline reviews.

Mon Nov 30 2009Resource ID process begins — submittal of Resources for baseline assignment &

capacity pre-screening.

Wed Dec 16 2009Resource IDs due by 3:00 pm in order to get a Default Baseline assignment. Submittals received after 3:00 pm will be eligible for Alternate Baseline only.

Thu Dec 17 2009 Last date to submit EILS Resource IDs.

Fri Dec 18 2009QSEs receive baseline assignment & capacity pre-screening information for prospective

EILS Resources.

Thu Jan 7 2010 BIDS & Self Provision Offers Due

Wed Jan 20 2010EILS Award Notifications and contract materials distributed to awarded QSEs.Market Notice with summary of EILS awards released

Thu Jan 28 2010 Signed contracts must be returned to ERCOT

Mon Feb 1 2010 First day of Contract Period.

Mon May 31 2010 Last day of Contract Period.

Mon July 5 2010 Deadline for submitting NOIE or non-TDSP interval meter data to ERCOT.

Thu July 15 2010 ERCOT provides unofficial availability and event performance data to QSEs.

Mon July 26 2010 Deadline for QSEs to identify any discrepancies with ERCOT’s unofficial data.

Mon Aug 9 2010 Settlement date for this Contract Period.

Key dates

only.

Full draft schedule is posted to the web page for this DSWG meeting.

2323


Process flow improvements

• Carl & Diana slides

2424


Procurement & settlement issues

• Load identification

– Need naming conventions, especially for Loads in NOIE territories

• Unique meter identification

– Need naming convention to assure continuity

– Applies to submetered Loads, NOIE Loads, and PUN Loads

• Meter data submittal

– Starting now, ERCOT staff will require monthly submittal of submeter data

• Settlement issues

– 10-day window to notify ERCOT informally of any disagreement with availability and performance results

– Also the deadline for identifying mitigating factors

– Formal settlement disputes must be filed within 10 Business Days after the settlement is posted

2525


New issues

• All-or-nothing bid options– Some participants have requested ability to opt out if not

selected for all Time Periods– Numerous possible permutations could complicate

administration• Re-constitution of aggregations within a Contract Period

– Should ESI IDs be allowed to float among aggregations for different Time Periods?

– Many implications for administration and testing• Substitution provisions

– Current provisions were written to accommodate unplanned outages

2626


Compliance

• Subst. R. 25.507 (e)– (e) Compliance. QSEs representing EILS resources are subject

to penalties for failure to meet their obligations under this section. ERCOT shall withhold all or part of an EILS resource’s capacity payment for a contract period and suspend participation in EILS for six months if the EILS resource fails to make its committed load available during its committed hours, or fails to meet its load reduction obligations in an EILS deployment event. In order to be reinstated after the suspension the load must demonstrate its capability of performing the service by satisfactorily performing a test conducted by ERCOT.

• Suspensions apply to all Time Periods, not just those in which the EILS Resource failed

• Suspensions apply to all Loads within an aggregation– ERCOT does not have tools to determine which Loads caused

an aggregation to fail

2727


Compliance (cont.)

• 12 EILS Resources totalling ~38 MW are currently suspended due to availability factors of <95% for Feb.-May ’09 Contract Period– ERCOT considers availability to be the responsibility of the

Load, not the QSE• PUC Oversight & Enforcement division has requested that

ERCOT file a Complaint with the TRE for any availability or performance failures

2828


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