1

• Financial Market (Just like DAM)

- Energy Only

- No physical obligation, No ERCOT deployments

• Customers/LSEs strategies:

- Buy their supply at an “up to price”

- Sell back supply “at or above price”

Hour Ahead MarketFocus on Demand Response

EDF TRADING

DAM DRUC Hour-Ahead Operating HourAdjustment PeriodDay-Ahead Operations Operating Period

Hour-Ahead Operating HourAdjustment Period Operating Period

Submit bid/offers

Run Hour Ahead Mkt

Notice to Participants Known Price

2

• HAM is a market solution for demand response. It is in addition to It allows the demand response to extract value from the market. Provides Load what they have asked for:

- Notice Period to curtail

- Known Price

- No ERCOT performance criteria

• The HAM is another market run by ERCOT for each hour, one hour ahead of each hour.

- Closer to real-time, the better information

- HAM is in addition to DAM

• Requires a three settlement system

- DAM settlement

- HAM settlement (DAM awards settle at HAM price)

- RT settlement (HAM awards settle at RT price.

• Requires two steps of PTP Obligations

- DAM to HAM

- HAM to RT

• PTP Obligation award in DAM should cover your collateral in the PTP in the HAM. Allowing carrying CRR hedge to RT.

A Few Details

EDF TRADING

3

Load Example OneCustomer Arranges for supply in the forward marketOffers to Sell Back Supply at VOLL

4

ERCOT

LSE

Customer

$

energy

energyLoad QSE

$

TransactingQSEs

energy

$

imbalance

imbalance

Base TransactionsExplanation via Follow the Energy and $

5

ERCOT

LSE

Customer

$300

10 MWH

10 MW

HLoad QSE

$300

TransactingQSEs

10 MWH

$300

$0

0 MWH

Energy Trade Transaction10 MW customer with Energy price at $30/MWH

6

ERCOT

LSE

Customer

$4500

6 MWH

Net 6 M

WH

Load QSE $300

Transacting QSEs

$4800

4 MWH

HAM Transactions Customer offers to sell 4 MW @ $1000 @ zoneHAM clears $1200 @ zone

MW$ $4800

10 MWH

$300

7

ERCOT

LSE

Customer

$4500

6 MWH

6 MW

H

Load QSE4 MWH shortin HAM @$4800

Transacting QSEs

$0

0 MWH

RT Transactions Customer reduces Consumption to 6 MW No imbalance

MW$ $4500

10 MWH

$300

8

RT Transactions Customer Consumes 7 MW creating an imbalance Zonal clearing price is $3000

ERCOT

LSE

Customer

$1500

7 MWH

7 MW

H

Load QSE4 MWH shortin HAM @ $4800

Transacting QSEs

$3000

1 MWH

MW$ $4500

10 MWH

$300

$3000

9

• $ exchange could be exact, as shown

- Fits large industrial

• $ exchange could be a flat payment to customer for curtailment

- Fits residential

• REPs and Customers may structure the transaction that best fits their needs.

Exchange of $ between LSE and Customer

10

Load Example TwoCustomer Buys from the Spot MarketBids in the HAM at an Up to Price

11

ERCOT

LSE

Customer

$0

0 MWH

?? MW

HLoad QSE

$??

TransactingQSEs

0 MWH

$0

$0

0 MWH

Energy Trade Transaction

12

ERCOT

LSE

Customer

$300

10 MWH

10 MW

H

Load QSE $300

Transacting QSEs

$300

10 MWH

HAM Transactions Customer bids to buy 10 MW @ $35 @ zoneHAM clears $30 @ zone

MW$

0 MWH

$0

13

ERCOT

LSE

Customer

$300

10 MWH

10 MW

H

Load QSE10 MWH longin HAM

Transacting QSEs

$0

0 MWH

RT Transactions Customer Consumes 10 MW, no imbalance RT Zonal Price is $100

MW$ $300

0 MWH

$0

14

ERCOT

LSE

Customer

$400

11 MWH

11 MW

H

Load QSE10 MWH longin HAM

Transacting QSEs

$100

1 MWH

RT Transactions Customer Consumes 11 MW RT Zonal Price is $100

MW$ $300

0 MWH

$0

$100