ERCOT Demand Side ERCOT Demand Side Working GroupWorking Group

Mary Anne Brelinsky

Eagle Energy Partners

The Demand Side Working GroupThe Demand Side Working Group

Created in 2001 as a “Task Force” by Created in 2001 as a “Task Force” by directive of the Public Utility directive of the Public Utility Commission of TexasCommission of Texas

In 2002 the Demand Side Task Force In 2002 the Demand Side Task Force was converted into a permanent was converted into a permanent Working GroupWorking Group

A broad range of Commercial and A broad range of Commercial and Industrial consumers, LSEs and REPs, Industrial consumers, LSEs and REPs, TDSPs, and Generators participate in TDSPs, and Generators participate in DSWG meetings and initiativesDSWG meetings and initiatives

DSWG MissionDSWG Mission

The Demand Side Working Group’s The Demand Side Working Group’s mission is to identify and promote mission is to identify and promote

opportunities for demand-side resources to opportunities for demand-side resources to participate in ERCOT markets and to participate in ERCOT markets and to

recommend adoption of Protocols and recommend adoption of Protocols and Protocols revisions that foster optimum Protocols revisions that foster optimum

load participation in all markets.load participation in all markets.

ERCOT Committee StructureERCOT Committee Structure

DSWG is a chartered DSWG is a chartered subcommittee working subcommittee working groupgroup

Currently the Demand Currently the Demand Side Working Group Side Working Group reports to ERCOT’s reports to ERCOT’s Wholesale Market Wholesale Market Subcommittee (WMS)Subcommittee (WMS)

DSWG meets either DSWG meets either monthly or bi-monthly monthly or bi-monthly depending on number or depending on number or items or projects items or projects impacting working groupimpacting working group

Provide updates and Provide updates and reports at monthly WMS reports at monthly WMS meetingsmeetings

Agenda is posted at Agenda is posted at http://www.ercot.com/committees/board/tac/whttp://www.ercot.com/committees/board/tac/wms/dswg/index.htmlms/dswg/index.html

Nelson Nease

Structure of the DSWGStructure of the DSWG

A Chairman is elected annually by A Chairman is elected annually by the Demand Side Working Group and the Demand Side Working Group and then is affirmed by the WMSthen is affirmed by the WMS 2006 Chairman – Mary Anne Brelinsky 2006 Chairman – Mary Anne Brelinsky

with Eagle Energy Partnerswith Eagle Energy Partners

One or more Vice Chairs are elected One or more Vice Chairs are elected annually and are affirmed by WMSannually and are affirmed by WMS 2006 Vice Chair - Nelson Nease with 2006 Vice Chair - Nelson Nease with

Nucor SteelNucor Steel

Load Participation in ERCOTLoad Participation in ERCOT

The current ERCOT market rules allow demand The current ERCOT market rules allow demand side participation under three general classes side participation under three general classes of services:of services:

Voluntary Load ResponseVoluntary Load Response

““Voluntary Load Response” refers to a customer’s independent decision Voluntary Load Response” refers to a customer’s independent decision to reduce consumption from its scheduled or anticipated level in to reduce consumption from its scheduled or anticipated level in response to price signalsresponse to price signals

Voluntary response applies to situations where the customer has not Voluntary response applies to situations where the customer has not formally offered this response to the market formally offered this response to the market

This practice has also been known as “passive load response” and This practice has also been known as “passive load response” and sometimes as “self-directed load response.”sometimes as “self-directed load response.”

Voluntary Loads gain financially from the ERCOT markets by reducing Voluntary Loads gain financially from the ERCOT markets by reducing consumption when prices are high however, a Load’s ability to receive consumption when prices are high however, a Load’s ability to receive extra financial compensation depends entirely on its contractual extra financial compensation depends entirely on its contractual relationship with its REP (and QSE) relationship with its REP (and QSE)

Any advanced metering, communication, or curtailment Any advanced metering, communication, or curtailment infrastructure required for load participation is a contractual matter infrastructure required for load participation is a contractual matter between the load and its REP, and does not involve ERCOTbetween the load and its REP, and does not involve ERCOT

The QSE (and thus, REP) are reimbursed by ERCOT only for the The QSE (and thus, REP) are reimbursed by ERCOT only for the energy imbalance and do not receive capacity paymentsenergy imbalance and do not receive capacity payments

Because the load is not recognized by ERCOT as a resource, it is not Because the load is not recognized by ERCOT as a resource, it is not subject to being curtailed involuntarily during emergency situationssubject to being curtailed involuntarily during emergency situations

Balancing Up LoadBalancing Up Load

““Balancing Up Loads” Balancing Up Loads” or BULS, refer to loads that contract with a or BULS, refer to loads that contract with a QSE to formally submit offers to ERCOT to provide balancing energy by QSE to formally submit offers to ERCOT to provide balancing energy by reducing their electricity use reducing their electricity use

BULs are paid only if they actually deploy (reduce energy use) in BULs are paid only if they actually deploy (reduce energy use) in response to selection by ERCOT, but if deployed they receive two response to selection by ERCOT, but if deployed they receive two separate forms of compensation:separate forms of compensation:

An energy payment for actual load reduction delivered, based on An energy payment for actual load reduction delivered, based on prevailing Market Clearing Price for Energy (MCPE) prevailing Market Clearing Price for Energy (MCPE)

A capacity payment based on the Market Clearing Price for A capacity payment based on the Market Clearing Price for Capacity (MCPC) in the Non-Spinning Reserves market; the Capacity (MCPC) in the Non-Spinning Reserves market; the payment is an additional reward for BULs submitting bids into the payment is an additional reward for BULs submitting bids into the balancing energy market, even though they are not actually balancing energy market, even though they are not actually providing Non-Spinning Reservesproviding Non-Spinning Reserves

Payments are made to a load’s QSE who may pass the value on to Payments are made to a load’s QSE who may pass the value on to its REP who may in turn pass the value along to the Loadits REP who may in turn pass the value along to the Load

Many variations in products offered by REPs are available and the Many variations in products offered by REPs are available and the load customer has choices on how it may receive value for its load customer has choices on how it may receive value for its interruptible load. interruptible load.

Load Acting as a ResourceLoad Acting as a Resource

““Load Acting as a Resource”Load Acting as a Resource”, or LaaR, refers to loads , or LaaR, refers to loads with interruptible capabilities that qualified with ERCOT with interruptible capabilities that qualified with ERCOT to provide operating reserves; and are eligible for a to provide operating reserves; and are eligible for a capacity payment, regardless of whether the Resource capacity payment, regardless of whether the Resource is actually deployedis actually deployed

The value of a LaaR’s consumption reduction is equal to The value of a LaaR’s consumption reduction is equal to an increase in generation by a generating plantan increase in generation by a generating plant

Responsive ReserveResponsive Reserve: : Requires that an Under Frequency Relay (UFR) be Requires that an Under Frequency Relay (UFR) be installed that opens the load feeder breaker automatically on detection of an installed that opens the load feeder breaker automatically on detection of an under frequency conditionunder frequency condition

Non-Spin Reserve:Non-Spin Reserve: Requires that interruptible loads be manually Requires that interruptible loads be manually interrupted (e.g., opening a circuit breaker ) with 30 minutes noticeinterrupted (e.g., opening a circuit breaker ) with 30 minutes notice

Regulation Up and Down Service:Regulation Up and Down Service: Requires that interruptible loads Requires that interruptible loads through automatic controls respond to signals provided by ERCOT through automatic controls respond to signals provided by ERCOT

Balancing Energy Up: Balancing Energy Up: Requires that loads be able to respond through Requires that loads be able to respond through manual or automatic operations to interrupt load within 10 minutesmanual or automatic operations to interrupt load within 10 minutes

Replacement Reserve Service: Replacement Reserve Service: Loads that were planning to be on-line Loads that were planning to be on-line but not providing any other Ancillary Servicebut not providing any other Ancillary Service

Load Participation in LaaRLoad Participation in LaaR

LaaR's Registered for ERCOT AS Market

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2006 DSWG Initiatives/Goals2006 DSWG Initiatives/Goals

How Do You Participate?How Do You Participate?

Membership is not limited to ERCOT Membership is not limited to ERCOT members; anyone can participate in members; anyone can participate in DSWG meetingsDSWG meetings

Every member has an opportunity Every member has an opportunity to voice opinions and participateto voice opinions and participate

To add items of interest to our To add items of interest to our agenda please contact Mary Anne agenda please contact Mary Anne Brelinsky or Steve KreinBrelinsky or Steve Krein

Your Participation Is ImportantYour Participation Is Important

What is done now for Nodal will impact What is done now for Nodal will impact your ability to participate for years to your ability to participate for years to comecome

There are many Nodal Protocols issues There are many Nodal Protocols issues that will affect the market rules for that will affect the market rules for participation (i.e. whether your load is participation (i.e. whether your load is suitable, physically and /or financially, suitable, physically and /or financially, for providing Ancillary Services)for providing Ancillary Services)

If you have a stake, you cannot afford If you have a stake, you cannot afford not to participatenot to participate