Demand Side Working Group March 5, 2010 Mary Anne Brelinsky EDF Trading North America

1 Antitrust Admonition

2 Demand Side Working Group Agenda

DSWG Goals

4 Suspension of Dynamic Scheduling During EEA

5 Update: Performance Protocol Revision to

6 Performance Protocol Revision to ERCOT Actions for Non-Compliance ERCOT may revoke any or all Ancillary Service qualifications of any QSE providing an Ancillary Service (s) for continued failure to comply with required performance standards. ERCOT may revoke the Ancillary Service qualification of any LaaR for failure to comply with the required performance standards. Specifically, if a LaaR that is providing RRS fails to respond with at least ninety-five-percent (95%) of its scheduled capacity within ten (10) minutes of an ERCOT Dispatch Instruction, that response shall be considered a failure. Two (2) LaaR performance failures within any rolling one (1) year period shall result in disqualification of that LaaR. After six (6) months of disqualification, the LaaR may reapply for qualification provided it submits a corrective action plan to ERCOT that identifies actions taken to correct performance deficiencies and the disqualified LaaR successfully passes a new actual deployment qualification test as specified in Section , General Capacity Testing Requirements. Failure to deliver energy resulting from a valid Dispatch Instruction is cause for ERCOT, at ERCOT’s option, to withhold payment for any Ancillary Services purchased and not delivered. TRE will make information relative to each QSE’s performance as well as ERCOT’s performance, available to Market Participants on a monthly basis, subject to the provisions of Section 1.3.1, Restrictions on Protected Information.

7 LaaR Zonal Market versus Nodal Market ProvisionZonal MarketNodal Market Provisional Qualification Allowed for 90 days. (6.10.1)Allowed for 90 days. ( (4)) Revocation of Provisional Qualification Provisional qualification as described herein may be revoked by ERCOT at any time for any non-compliance with provisional qualification requirements. (6.10.1) Provisional qualification as described herein may be revoked by ERCOT at any time for any non-compliance with provisional qualification requirements. ( (5)) Qual. TestActual load shed test required (PRR 714)Actual load shed test required ( (12)) Net Dependable Capability Testing NoneGeneral capacity testing must be used to verify a Resource’s Net Dependable Capability. Net Dependable Capability is the maximum sustained capability of a Resource as demonstrated by performance testing. Each QSE for the Load Resources that it represents may not provide ERCOT a Maximum Power Consumption (MPC) greater than that Resource’s Net Dependable Capability without a text description indicating the reason for the increase. Qualification tests allow the Resource and QSE to demonstrate the minimum capabilities necessary to deploy an Ancillary Service. ( (2)) Unannounced Testing by ERCOT Unannounced load shed test conducted by ERCOT if not deployed or successfully tested in previous 365 days None Performance monitoring/ evaluation Portfolio-based. If a QSE portfolio deploys % of its obligation within 10 minutes, all LaaRs that deployed successfully are deemed to have passed (thus, not subject to annual test for 365 days). LaaRs within the portfolio that did not deploy are not credited with a successful deployment (thus, still subject to annual testing). If a QSE portfolio does not achieve its % deployment within 10 minutes, all LaaRs that failed to deploy are considered to have failed the deployment (a strike, and still subject to annual test). LaaRs within the portfolio that did deploy their obligation within 10 minutes are considered to have deployed successfully (thus, not subject to annual test for 365 days). Resource-specific.

8 LaaR Zonal Market versus Nodal Market (cont.) ProvisionZonal MarketNodal Market Penalty for non- performance (QSE) ERCOT may revoke any or all Ancillary Service qualifications of any QSE providing an Ancillary Service (s) for continued failure to comply with required performance standards. ( ) ERCOT may require a Market Participant to develop and implement a corrective action plan to address its failure to meet performance criteria in this Section. The Market Participant must deliver a copy of this plan to ERCOT and must report to ERCOT periodically on the status of the implementation of the corrective action plan. (8.4(1)) Continued qualification as a QSE is contingent upon compliance with all applicable requirements in these Protocols. ERCOT may suspend a QSE’s rights as a Market Participant when ERCOT reasonably determines that it is an appropriate remedy for the Entity’s failure to satisfy any applicable requirement. (16.2.1(6)) Penalty for non- performance (LaaR/LR) ERCOT may revoke the Ancillary Service qualification of any LaaR for failure to comply with the required performance standards. Specifically, if a LaaR that is providing Responsive Reserve Service fails to respond with at least 95% of its scheduled capacity within ten (10) minutes of an ERCOT Dispatch Instruction, that response shall be considered a failure. Two LaaR performance failures within any rolling one-year period shall result in disqualification of that LaaR. After six (6) months of disqualification, the LaaR may reapply for qualification provided it submits a corrective action plan to ERCOT that identifies actions taken to correct performance deficiencies and the disqualified LaaR successfully passes a new actual deployment qualification test as specified in Section , General Capacity Testing Requirements. ( ) ERCOT may revoke any or all Ancillary Service qualifications of any Generation Resource or Load Resource for continued material non- performance in providing Ancillary Service capacity or energy. (8.4(2)) POTENTIAL AGENDA ITEMS FOR THE SUBGROUP:  Produce recommendation to DSWG on whether to sponsor PRR and NPRR, or NPRR only.  Consider implications of proration on resource-specific RRS offers.  Add unannounced testing provisions for Load Resources.  Provide more detailed definition of a performance failure.  Determine appropriate penalties for LR performance failures.  Determine appropriate penalties for QSE performance failures.

9 Next Meeting and Schedule for 2010 DSWG Scheduled Meetings and Meeting Details: April 09, 2010 May 07, 2010 June 04, 2010 July 16, 2010 August 13, 2010 September 10, 2010 October 08, 2010 November 05, 2010 December 03, 2010