Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 1 Day-Ahead Market Energy Settlements Business Requirements Settlements and Billing July 11, 2006

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 2 Agenda Relevant Charge Type & Related Calculations Highlights of Business Requirements –Calculation Map –Calculation –Outstanding Issues or Assumptions

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 3 Charge Type & Related Calculations Charge Type Calculations: –Day-Ahead Energy Payment (PR and PR (a)) –Day-Ahead Energy Charge (PR and PR (b)) –Settlement of PTP Obligations Bought in DAM (PR and PR (e)) Related Calculations: –Day-Ahead Obligation Price (PR 4.6.3, PR , PR ) –Day-Ahead Congestion Rent (PR ) –Day-Ahead Energy Revenue (PR , PR , PR ) –RMR Day-Ahead Energy Revenue Total (PR , PR )

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 4 Day-Ahead Energy Payment Highlights (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 5 Day-Ahead Energy Payment Highlights (2) Requirement IDFR1 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #) PR (1), PR (a) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate Day-Ahead Energy Sale Amount by QSE and Settlement Point for each Operating Hour of the Operating Day. DAESAMT_ _ =(-1) * DASPP_ * DAES_ _ Requirement IDFR2 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (1) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate Day-Ahead Energy Sale Amount QSE Total per QSE by QSE for each Operating Hour of the Operating Day. DAESAMTQSETOT_ = DAESAMT_ _ Requirement IDFR3 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate Day-Ahead Energy Sale Amount Total for each Operating Hour of the Operating Day. DAESAMTTOT= DAESAMT_ _

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 6 Day-Ahead Energy Charge Highlights (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 7 Day-Ahead Energy Charge Highlights (2) Requirement IdFR10 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (1), PR (b) Traceability to Sub-Process Maps Will be completed August 31, 2006 Description: Calculate Day-Ahead Energy Purchase Amount by QSE and Settlement Point for each Operating Hour of the Operating Day. DAEPAMT_ _ =DASPP_ * DAEP_ _ Requirement IdFR11 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (1) Traceability to Sub-Process Maps Will be completed August 31, 2006 Description: Calculate Day-Ahead Energy Purchase Amount to QSE by QSE for each Operating Hour of the Operating Day. DAEPAMTQSETOT_ =DAEPAMT_ _ Requirement IdFR12 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process Maps Will be completed August 31, 2006 Description: Calculate Day-Ahead Energy Purchase Amount Total for each Operating Hour of the Operating Day. DAEPAMTTOT= DAEPAMT_ _

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 8 Settlement of PTP Obl. Bought in DAM Highlights (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 9 Settlement of PTP Obl. Bought in DAM Highlights (2) Requirement IdFR19 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (1) Traceability to Sub-Process Maps Will be completed August 31, 2006 Description: Calculate the Day-Ahead Real-Time Obligation Amount charge or payment by QSE, source Settlement Point, and sink Settlement Point, for an Operating Day and Operating Hour: DARTOBLAMT_ _ _ =DAOBLPR_ _ * RTOBL_ _ _ Requirement IdFR20 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (1) Traceability to Sub-Process Maps Will be completed August 31, 2006 Description: Calculate the Day-Ahead Real-Time Obligation Amount QSE Total per QSE by Source Settlement Point, and Sink Settlement Point, for an Operating Day and Operating Hour: DARTOBLAMTQSETOT_ =DARTOBLAMT_ _ _ This summation occurs on source and sink Settlement Point pairs. Requirement IdFR21 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process Maps Will be completed August 31, 2006 Calculate the Day-Ahead Real-Time Obligation Amount Total for an Operating Day and Operating Hour: DARTOBLAMTTOT=DARTOBLAMT_ _ _ This summation occurs on source and sink Settlement Point pairs, and QSEs.

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 10 Day-Ahead Obligation Price Highlights (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 11 Day-Ahead Obligation Price Highlights (2) Additional Comments: The Payments and Charges for PTP Obligations with Refund Settled in DAM Charge Type ( ) utilizes a DAOBLRPR data cut. Because the calculation for DAOBLPR and DAOBLRPR are the same, DAOBLPR will be used by the PTP Obligations with Refund Settled in DAM calculation, and will refer to these requirements accordingly. Assumption: The Day-Ahead Obligation Price should not be a published bill determinant because it may reveal where QSEs are purchasing PTP Obligations Requirement IdFR28 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (1), PR (3), PR (3) Traceability to Sub-Process Maps Will be completed August 31, 2006 Description: Calculate the Day-Ahead Obligation Price by source Settlement Point and sink Settlement Point for an Operating Day and Operating Hour, for all source Settlement Point and sink Settlement Point combinations with at least one corresponding RTOBL, DAOBL, or DAOBLR data cut for any QSE: DAOBLPR_ _ =DASPP_ – DASPP_

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 12 Day-Ahead Congestion Rent Highlights (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 13 Day-Ahead Congestion Rent Highlights (2) Requirement IdFR35 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process Maps Will be completed August 31, 2006 Description: Calculate Day-Ahead Congestion Rent for the Operating Day and Operating Hour. DACONGRENT= DAESAMTTOT + RMRDAEREVTOT + DAEPAMTTOT + DARTOBLAMTTOT

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 14 Day-Ahead Energy Revenue Highlights (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 15 Day-Ahead Energy Revenue Highlights (2) Requirement ID FR44 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #) PR (1), PR , PR Traceability to Sub-Process Maps Will be completed August 31, 2006 Description: Calculate the Day-Ahead Energy Revenue by QSE, Resource, and Settlement Point, for each Operating Hour of the Operating Day. DAEREV_ _ _ =(-1) * DASPP_ * DAESR_ _ _ Requirement ID FR51 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #) PR , PR Traceability to Sub-Process Maps Will be completed August 31, 2006 Description: Calculate the RMR Day-Ahead Energy Revenue Total for each Operating Hour in the Operating Day, using the DAEREV data calculated for RMR Units only, for that Operating Day: RMRDAEREVTOT= DAEREV_ _ _

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 16 Summary The following Protocol versions were used as the basis of the DAM Energy Settlements requirements: –Section 4 (May 5, 2006 version included in the May 2006 filing), –Section 6 (May 5, 2006 version included in the May 2006 filing), –Section 7 (September 23, 2005 version included in the September 2005 filing), and –Section 9 (May 5, 2006 version included in the May 2006 filing).