Market Trials DAM/RUC/SASM Weekly Update July 23, 2010 http://nodal.ercot.com 1

Antitrust Admonition ANTITRUST ADMONITION ERCOT strictly prohibits Market Participants and their employees who are participating in ERCOT activities from using their participation in ERCOT activities as a forum for engaging in practices or communications that violate the antitrust laws. The ERCOT Board has approved guidelines for members of ERCOT Committees, Subcommittees and Working Groups to be reviewed and followed by each Market Participant attending ERCOT meetings. If you have not received a copy of these Guidelines, copies are available at the Client Relations desk. Please remember your ongoing obligation to comply with all applicable laws, including the antitrust laws. DISCLAIMER All presentations and materials submitted by Market Participants or any other Entity to ERCOT staff for this meeting are received and posted with the acknowledgement that the information will be considered public in accordance with the ERCOT Websites Content Management Operating Procedure. http://nodal.ercot.com 2

Agenda DAM/ RUC/SASM summary QSE Activities for Next Week General Reminders/Updates Environment Report Outages Known Issues Special Topic Question and Answers / General Discussion Appendix ERCOT asks that Market Participants log into the WebEx session using their company name and then their name. This will allow ERCOT to take roll-call offline. http://nodal.ercot.com 3

Market Trials 2010 Roadmap http://nodal.ercot.com 4

Submission Overview for Friday July 16 DAM submission overview 208 QSEs participated for Op Day 7/17 Energy Bids in the range of 39,024 to 69,660 MW per hour Cleared 29,423 to 43,791 MW energy per hr Cleared 10,893 to 14,516 PTP bids per hr Four major Load Zone prices ranged from $33.28 to $250.00 http://nodal.ercot.com 5

Submission Overview for Tuesday July 20 218 QSEs participated for Op Day 7/21 Energy Bids in the range of 28,680 to 46,548 MW per hour Cleared 21,199 to 30,377 MW energy per hr Cleared 14,147 to 16,510 PTP bids per hr Four major Load Zone prices ranged from $27.24 to $56.88. http://nodal.ercot.com 6

RUC Execution Overview for this week RUC overview for the week: http://nodal.ercot.com 7

Next Week’s Activities Next week – Op Days are 7/27 - 7/31 DAM executing on 7/26 - 7/30 No guardrails - Bids/offers should be reasonable COPs should reflect post go-live submissions throughout the week. Market participants are free to updates COPs as a result of nodal market processes the entire week. Operational Scenarios: No operational Scenarios scheduled Focused input day for OD 7/28 Request as much participation as possible from participants Operate as close as possible to post go-live Offers Bids PTP Bids Trades Etc. Week 11 Note: Dates are DAM execution days 7/26/2010 to 7/30/2010 Objective Network Constraints Included DAM 5x week DAM submissions No guardrails COP Updates Reflect nodal DRUC W/ each DAM HRUC Limited WRUC 2 x week SASM As needed Op Scenarios No Scenarios http://nodal.ercot.com 8

COP Changes for DAM/RUC COPs process for next week as a result of a request from participants Should reflect post go-live submissions throughout the week. Market participants are free to updates COPs as a result of nodal market processes the entire week. http://nodal.ercot.com 9

Next Week’s Activities DRUC executing on 7/26 - 7/30 after DAM WRUC, HRUC and SASM executing on 7/26-7/30 HRUC and SASM WRUC executing on Monday and Wednesday HRUC will be executed at 1 pm (target Operating Hours will be the balance of the Op Day) May be run for additional, non-supported hours SASM will be opened if needed based on system conditions Next week Again, next week ERCOT may do workarounds outside the normal business process to sidestep any issues that arise. Furthermore, we may approve the results of the RUC software even if the result is operationally unreasonable. The purpose of this is to exercise settlement and billing determinants related to RUC. Week 11 Note: Dates are DAM execution days 7/26/2010 to 7/30/2010 Objective Network Constraints Included DAM 5x week DAM submissions No guardrails COP Updates Reflect nodal DRUC W/ each DAM HRUC Limited WRUC 2 x week SASM As needed Op Scenarios No Scenarios http://nodal.ercot.com 10

Next Month’s Activities RUC Simulation Scenario ERCOT understands the need for QSEs to simulate following a RUC deployment for Operational and Settlement purposes ERCOT proposes the following scenario in August to test processes for when a Resource receives a RUC instruction and turns on as instructed the following day. For the scenario day, QSEs will have the opportunity to send ERCOT information for up to 3 resources that they want ERCOT to commit in the RUC In this manner the QSE can plan to turn on in zonal, and receive the Nodal RUC instruction to do so ERCOT will then use DRUC or HRUC to commit the resource in nodal systems The QSE can then: Decide to follow or not follow the RUC instruction from ERCOT nodal system Receive the Start-Up instruction and test their start-up procedures to comply with RUC instruction Determine the settlement impacts of following or not following the instruction Additional Scenarios to run in August VDI Commitments VDI RUC cancel AS insufficiency De-commitments http://nodal.ercot.com 11

General Reminders/Updates Network Model Update An updated settlement points and MP short name list was posted for the 7/1 load at http://nodal.ercot.com/readiness/markettrials/index.html Next scheduled load will be installed 7/23. Reminder regarding External Interfaces Specification v1.19N Posted at http://nodal.ercot.com/readiness/sandbox/index.html Delivered 7/22 The next planned release for the MMS release has been moved until 8/6/10 ERCOT will be continuing to run WRUC Please be aware that WRUC requires valid COP data seven days out in order to have a good solution during the study period ERCOT will continue to announce on the Market Call the operating days for the next week Less operating days during LFC test weeks August is open to run operating days as necessary to complete verifications A schedule of scenarios for August will be coming in a future market call ERCOT posted the redacted model. http://nodal.ercot.com 12

General Reminders/Updates Market Readiness Seminar #5 Focus will be on the remaining activities of Market Trials in August and September Although changes to the 168-Hour test have been discussed at NATF and the Board recently, ERCOT will be detailing August as well as discussing September’s activities to be discussed in upcoming Market forums Additionally, this seminar will also cover detailed information about Nodal Cutover Details about MRS #5 and how to attend are located at: http://www.ercot.com/calendar/2010/07/20100728-MT http://nodal.ercot.com 13

Market Participant Inbound Questions Support Metrics Market Participant Inbound Questions Last Week This Week * This week, 12 out of 155 questions were responded to outside of the 24 hour time frame. http://nodal.ercot.com 14

Day-to-day operations summary: Planned / Unplanned Outages 07/22/2010 8:00 A.M. – 07/26/2010 8:00 A.M. Migration activities are currently underway in the Nodal production environment and will intermittently affect availability of the following application services : Market Manager UI OS UI EWS ( Web Services) MIS CDR Reports Note: External interface specification 1.19N will take into effect upon completion of these planned activities 07/29/2010 10:00 A.M. – 07/29/2010 10:30 A.M. Site failover activities are being planned for Nodal Market and EMS applications. The outage duration is expected to last no more than 30 minutes from the start of the test. Unplanned Outages N/A http://nodal.ercot.com 15

Environment Report-Known Issues Full DAM/RUC/SASM known issues list will post every Friday night at http://nodal.ercot.com/readiness/markettrials/dam/index.html New DAM/RUC/SASM known issues When pressing 'query for existing submission' on the Create Energy Trade page, the system responded that an existing submission was found; however, there is no data in the Existing Transaction portion of the screen. http://nodal.ercot.com 16

Overall System Offers/Bids & Clearance Special Topics Overall System Offers/Bids & Clearance http://nodal.ercot.com 17

Special Topics http://nodal.ercot.com 18

Q&A Q&A / Open Forum http://nodal.ercot.com 19

Pre- and post-DAM reports Special Topics Appendix Appendix AS Info for the week Pre- and post-DAM reports Special Topics http://nodal.ercot.com 20

Submission Overview for July 17 http://nodal.ercot.com 21

Submission Overview for July 21 http://nodal.ercot.com 22

Note: Other All transactions will be supported. Trade submission and confirmation (Energy, Capacity and AS Trades) may be exercised at this time. DAM notifications will be active. Phase 2 Validation process will be active and supported. QSE transactions that do not follow the guidelines are subject to cancellation at ERCOT’s discretion. ERCOT may run DAM on non-supported days. No QSE participation is requested, and ERCOT staff will not be available to answer questions regarding the outputs of these non-supported processes. CRR information from the market trials auction will be integrated into the market system. CRR Offers (by NOIEs) must contain CRR IDs from this auction in order to be valid. http://nodal.ercot.com 23

Ancillary Services (AS) Plan Report Postings Posted by 6 am: Ancillary Services (AS) Plan Load Ratio Shares (these will be static based on Zonal production data as of October 16, 2009) * AS Obligations * Wind Generation Resource Power Potential (WGRPP) forecast * and Aggregated WGRPP forecast List of all Settlement Points and the mapping to Electrical Buses Load forecasts for ERCOT system, Weather Zones and Load Zones Load forecast distribution factors Distribution Loss Factors and forecasted Transmission Loss Factors Weather assumptions   * Denotes MIS Certified reports http://nodal.ercot.com 24

DAM Clearing Price for Ancillary Services (MCPC) Report Postings Posted after each DAM: Awards (AS Offers, Energy Offers, DAM Energy-Only Offers, DAM Energy Bids, CRR Offers, and PTP Obligation Bids) * DAM Clearing Price for Ancillary Services (MCPC) Day-Ahead hourly Settlement Point Prices (SPPs) Day-Ahead hourly Locational Marginal Prices (LMPs) Shadow Prices Quantity of AS Offers Aggregated AS Offer Curve Total quantity of energy (in MWh) bought and sold in DAM See DAM Handbook for a list of all DAM/RUC/SASM reports available starting in Phase 4.0 - http://nodal.ercot.com/readiness/markettrials/dam/index.html. See MIS Handbook for a comprehensive list of reports available - http://nodal.ercot.com/readiness/markettrials/mis/index.html. * Denotes MIS Certified reports http://nodal.ercot.com 25

Phase 2 Validation reports and process Special Topics Phase 2 Validation reports and process Phase 2 validation re-evaluates all submitted transactions at 7 am in the day-ahead with updated information, such as AS Obligation, CRR ownership, credit limits, etc. If there is a validation error, ERCOT will cancel the transaction We send a notification that a Phase 2 report is available for a particular transactions type, and notification containing the cancellation for the transaction. You can query for the Phase 2 report via web service or on the Reports page of the Market Manager in order to view the reason for the cancellation. Correct and resubmit prior to 10 am. Note that submissions are locked out during the Phase 2 process, which is currently taking about 10 minutes to complete. http://nodal.ercot.com 26

Day-Ahead Self Commitment Special Topics Day-Ahead Self Commitment DAM clearing engine treats your TPO differently if you submit Startup and Minimum Energy (SU/ME) costs as $0 vs. NULL If you submit with SU/ME as $0, DAM engine treats this as a normal offer where the QSE is not requesting SU/ME to be covered. HSL/LSL constraints will be respected. Also, if you are selected for an online Ancillary Service, you will also be awarded at least LSL on your offer curve. If you submit with SU/ME as NULL, DAM engine is signaled to ignore the HSL/LSL constraints for the resource. In this scenario, the offer curve submitted will start at 0 MW and go to the max MW quantity desired – again, DAM will ignore LSL/HSL constraints. If the offer curve submitted doesn’t start at 0 MW, it will be extended to 0 MW by DAM. If the resource is selected for Ancillary Services, no requirement to also award TPO at LSL (since no LSL constraint honored in this case). http://nodal.ercot.com 27

Special Topics Day-Ahead Self Commitment The purpose of the NULL: It allows a QSE to use part of a Resource to serve its own load, and then offer in the rest to the DAM and enable the offer to be co-optimized with its AS Offer. Example: A Resource has 100 MW LSL and 400 MW HSL, and the QSE has already committed 300 MW of the Resource through some other mechanism. The QSE wishes to offer the remaining 100 MW, which would otherwise be ignored due to the 100 MW LSL. Then going into real-time, so QSEs will need to update their TPO to cover the full capacity of the resource, from LSL to HSL, rather than from 0 MW. TPOs for real-time should always cover the entire capacity of the resource to avoid the proxy curve creation. To do the TPO update if the resource is awarded in the DAM, the QSE must provide a reason code, which is DSCM. This functionality came about due to TPTF subgroup on the issue. It has not yet been added to the protocols but will during our protocol traceability/cleanup effort. http://nodal.ercot.com 28

Bid/Offer efficiencies Special Topics Bid/Offer efficiencies ERCOT has identified efficiencies in Bid/Offers submission with regard to the format of submission This applies to all transaction that use a Bid ID or an Offer ID (Energy Only Offers, Energy Only Bids, PTP Obligation Bids, and CRR Offers) Preference is for QSEs to submit the same Bid/Offer ID for each hour in the submission, versus submitting a different Bid/Offer ID for every hour. The market system treats the submission the exact same way, regardless of which format is used Using the preferred format will optimize DAM system performance For xml examples detailing this issue, please view a document that will be posted along with this presentation on the calendar page at http://www.ercot.com/calendar/2010/04/20100409-MT This was discussed at NATF 4/6, we send an email to the nodal technical contacts that we have on file for all QSEs, and we will add it to the External Interfaces Specification http://nodal.ercot.com 29

JOUs and COP consistencies Special Topics JOUs and COP consistencies In DAM, if the different owners of the jointly-owned unit have submitted conflicting COP statuses for the current day, online statuses will overwrite offline statuses when DAM is determining the initial condition of the unit (i.e., is the unit online or offline at the start of the next operating day). In RUC, if the different owners have conflicting COP statuses for the next operating day: If any owner has OUT status for any hour then the unit is considered OUT. If all owners have submitted a COP, and at least one of them has an online status in a particular hour then the resource status for the unit is online (unless any owner has OUT) http://nodal.ercot.com 30

FAQ http://nodal.ercot.com 31 EWS Notification Delivery & Network Firewall Configuration EWS Notification deliveries are currently originating from the following ERCOT servers listed below. To meet system demand and scalability requirements, we will be adding additional servers to this mix. To prevent any service disruptions, as a result of addition of new servers, we recommend your network firewall rules be configured to allow traffic based on address range as opposed limiting them to specific IPs. Current IPs in Play: Data Center Location Internet IP WAN IP Taylor 66.128.17.125 66.128.17.128 192.168.172.126 192.168.172.128 Austin 66.128.16.125 192.168.175.115 Recommended IP Ranges: Data Center Location Internet IP Range WAN IP Range Taylor 66.128.17.0 - 255 192.168.172.0 - 255 Austin 66.128.16.0 - 255 192.168.175.0 - 255 http://nodal.ercot.com 31

Supplemental Materials Reference and Description Location Version External Interfaces Specification http://nodal.ercot.com/readiness/sandbox/index.html 1.19 Explanation of Market Submission Items http://nodal.ercot.com/readiness/markettrials/connectivity/index.html 0.26 Market Manager User Guide 0.06 MMS Requirements http://nodal.ercot.com/docs/pd/mms/index.html#req Various Market Connectivity Handbook 0.97 DAM/RUC Known Issues List http://nodal.ercot.com/readiness/markettrials/dam/index.html N/A Web Services XSDs 1.3.19 Sample Reports, Extracts, and DDLs http://nodal.ercot.com/readiness/reports/index.html DAM ERCOT Operating Procedures 2.0 DRUC/WRUC ERCOT Operating Procedures 0.2 http://nodal.ercot.com 32 Slide 32

Special Topic – Jointly Owned Units JOUs are modeled as a single physical unit DAM uses the separate logical resources when evaluating energy and ancillary services, but Network Security Monitoring (NSM), which is a sub-process of DAM, must consider the physical unit. http://nodal.ercot.com/docs/pd/ida/wp/sgrm/IDA041_White_Paper_for_Split_Generation_Resource_Modeling_v1.doc JOUs offering into DAM Owners offer their share into the DAM separately, but the physical unit must be committed together All owners have to offer in the unit (energy or AS) to the DAM or else it cannot be committed to any owner (one exception for a self-commitment scenario described below). DAM must make a commitment decision about the physical unit, which it cannot do without offers from all the owners. Self-commitment examples (assume three owners) – remember that self-committing by submitting Startup and Minimum Energy Costs as ‘NULL’ (leaving them out of the submission altogether rather than submitting zeroes) signals the DAM software that it doesn’t need to make a commitment decision and to ignore resource constraints. If two owners self-commit (startup/minimum energy costs are NULL) and the other submits nothing, the unit can be awarded without making a commitment decision. If one owner self-commits, another submits a TPO with startup/minimum energy costs, and the third submits nothing, the unit cannot be awarded If one owner self-commits, and the other two submit TPOs with startup/minimum energy costs, the unit can be awarded after making a commitment decision based on the resource constraints and the submitted startup/minimum energy costs. Note that if self-committed, do not submit an OFFNS offer. That offer negates the self-commitment and the DAM software will not consider it as a self-committed resource (since the QSE is requesting ERCOT to evaluate the unit offline) http://nodal.ercot.com 33