1 Market Trials Open Market Participant Call Weekly Kick Off Aug 16, 2010

2 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.

3 This Week’s Activities RTM / LFC –Submit Energy Offer Curves representative of Zonal for the days of the LFC test (OD 8/19-8/21). QSEs can submit offer curves representative of post Go-live on all other days. –Next Full System Market and Reliability Test will occur 8/19-8/20 Please send any updates to contact information to (also let ERCOT know if a primary contact will be on vacation or out for any reason the day of the test) DAM / RUC –Week 16 (of phase 5): DAM will run five times this week for operational days 8/17/2010 through 8/21/2010 –SASM will be run for an AS insufficiency scenario –HRUC will occur 24x7 CRR –2010 September Market Notice and Auction Credit window opens on Monday, 8/16/2010 Outage Scheduler –REMINDER: 8/13/2010 ERCOT purged all test outages and ran the Zonal to Nodal import process –Market Notice will be released today notifying QSEs and TSPs to begin duel) entry for Outages effective for September and post Go-Live (12/1/2010) 9/1 to get all outages effective in September entered 9/17 to get all outages effective post Go-Live enter Week 16 Note: Dates are DAM execution daysEveryday Objective Exercise 5 days / week Network Constraints Included DAM 5x week DAM submissions No guardrails COP Updates Reflect Nodal for OD 8/17 and 8/18; Reflect Zonal for OD 8/19-21 (LFC test) DRUC W/ each DAM HRUC 24X7 WRUC Per protocols SASM For AS insufficiency scenario Op Scenarios AS insufficiency

Generation Startup & Ramp to LSL EVOLUTIONREAL TIME TELEMETRYCOMMENTS Generator not synchronized/Generator Breaker Status - “OPEN” For CCGRs all generator breakers “OPEN” Net real power = 0 gross real power = 0 Output breaker Status = OPEN Resource Status = OFF HSL = the QSE’s expected sustainable limit LSL = the QSE’s expected sustainable limit HEL = the QSE’s expected limit LEL = the QSE’s expected limit All AS Resource Responsibility = 0 All AS Schedules = 0 Generator synchronized/Generator Breakers closed and Gross real power < Plant Auxiliary Loads For CCGRs at least one generator breaker “CLOSED” Telemetered Net real power = 0 Gross real power ≥ 0 Breaker Status = Closed Resource Status = ON HSL = the QSE’s expected sustainable limit LSL = the QSE’s expected sustainable limit HEL = the QSE’s expected limit LEL = the QSE’s expected limit All AS Resource Responsibility = 0 All AS Schedules = 0

Generation Startup & Ramp to LSL EVOLUTIONREAL TIME TELEMETRYCOMMENTS Generator synchronized/Generator Output Breakers closed and Plant Auxiliary Loads ≤ Gross real power and Net real Power < 0.9 * LSL For CCGRs at least one generator breakers “CLOSED Net real power = MAX (0, Gross Generation Unit Output – (Generation Unit Auxiliary Load + the amount of station auxiliary load assigned to the Generation Unit, as determined by the QSE/Resource Entity) Gross real power ≥ 0 Resource Status = ON/ONOS/ONDSR Output breaker Status = Closed HSL = the QSE’s expected sustainable limit LSL = the QSE’s expected sustainable limit HEL = the QSE’s expected limit LEL = the QSE’s expected limit All AS Resource Responsibility = 0 All AS Schedules = 0 1.If a generator output is less than 90% LSL the OS is ignored and actual generation is used. OS like an EOC does not apply until the generation is greater than or equal to 90% LSL 2.If the Resource is providing Ancillary Service the Resource Net real Power must be ≥ 0.9 * LSL 3.When 0 ≤ Net Real Power is < 0.9 * LSL - RLC sets HDL=LDL= Net Real Power = Base Point 4.Generation Resources whose Net real power is not within 0.9 * LSL cannot be released to SCED for dispatch and may not carry On-Line AS. Generator synchronized/Generator Breakers closed and Plant Auxiliary Loads ≤ Gross real power and Net real Power ≥ 0.9 * LSL For CCGRs at least one generator breaker is “CLOSED” Net real power = MAX (0, Gross Generation Unit Output – (Generation Unit Auxiliary Load + the amount of station auxiliary load assigned to the Generation Unit, as determined by the QSE/Resource Entity) Gross real power ≥ 0 Output breaker status = Closed Resource Status = ON/ONOS/ONDSR/ONREG/ONOSREG /ONDSRREG/ONTEST as appropriate HSL = the QSE’s expected sustainable limit LSL = the QSE’s expected sustainable limit HEL = the QSE’s expected limit LEL = the QSE’s expected limit All AS Resource Responsibility = the amount of QSE assigned AS Resource Responsibility for each AS All AS Schedules = the amount of QSE assigned AS Resource Responsibility for each AS Resource is released to SCED for dispatch according to its EOC or Output Schedule. The total telemetered AS Resource Responsibility assigned by the QSE must be ≤ telemetered (HSL- LSL). If AS Resource Responsibility for Regulation is non-zero, the Resource Status must be ONREG or ONOSREG or ONDSRREG A On-Line Generation Resource may carry AS Resource Responsibility for AS other than Regulation in any Resource Status other than ONTEST Assumes no AS deployments other than Reg-Up or Reg-down. If the Resource Status is ONTEST all AS Resource Responsibility and AS Schedules must = 0.

Generation Shutdown from Power Operations EVOLUTIONREAL TIME TELEMETRYCOMMENTS Preparation for Shutdown Evolution: Net real Power ≥ 0.9 * LSL & operating under SCED dispatch Net real power = MAX (0, Gross Generation Unit Output – (Generation Unit Auxiliary Load + the amount of station auxiliary load assigned to the Generation Unit, as determined by the QSE/Resource Entity) Gross real power ≥ 0 Output breaker status = CLOSED Resource Status = ON/ONOS/ONDSR/ONREG/ONOSREG/ONDSRR EG/ONTEST as appropriate HSL = the QSE’s expected sustainable limit LSL = the QSE’s expected sustainable limit HEL = the QSE’s expected limit LEL = the QSE’s expected limit All AS Resource Responsibility = the amount of QSE assigned AS Resource Responsibility for each AS All AS Schedules = the amount of QSE assigned AS Resource Responsibility for each AS Assumes no AS deployments other than Reg-Up or Reg-down. Move all AS Responsibility from the resource being shutdown (coordinate this action with ERCOT operators in accordance with Protocol requirements) End state: All AS Resource Responsibility, AS Schedules and Participation factors = 0.

Generation Shutdown from Power Operations EVOLUTIONREAL TIME TELEMETRYCOMMENTS Execute Shutdown Evolution: Net real Power ≥ 0.9 * LSL & operating under SCED dispatch Net real power = MAX (0, Gross Generation Unit Output – (Generation Unit Auxiliary Load + the amount of station auxiliary load assigned to the Generation Unit, as determined by the QSE/Resource Entity) Gross real power ≥ 0 Output breaker status = CLOSED Resource Status = ON/ONOS/ONDSR/ONTEST as appropriate HSL = Expected Net Real Power on the Resource’s shutdown ramp LSL = the QSE’s expected sustainable limit HEL = HSL (optional) LEL = the QSE’s expected limit All AS Resource Responsibility & AS Schedules = 0 The QSE will use the telemetry HSL value to control the resource’s power reduction Set the resource’s HSL telemetry to the expected Net Real Power on the Resource’s shutdown ramp < Net Real Power For this condition Net Real Power > HSL telemetry: RLC sets HDL = LDL = Min (Max (Net Real Power – (SDRAMP*5)), LSL), HSL). This will result in a SCED Base Point = BP = Min(HSL, (Net Real Power – SDRAMP * 5) and SCED will follow the HSL telemetry down. Use care to not allow the HSL telemetry to become greater than Net real power during the shutdown. A Generation Resource shutting down should not show any “reserve” on the unit. ERCOT system limitations require that HSL not be set equal to LSL. Therefore, continue to repeat the above sequence, as necessary, until the Resource Net Real Power is within a 5 min ramp interval of LSL. At this time continue the shut down by manually unloading the Generation Resource in preparation for opening the generator output breaker. When the net real power is below 0.9 * LSL, the RLC sets HDL=LDL=net real power and SCED sends a Base Point equal to the net real power telemetry (UDBP is also set to net real power). Essentially, the SCED base points follow the QSE’s manual dispatch of the resource to the point where it is removed from the ERCOT grid. For shutdowns requiring manual ramping because of equipment problems, the QSE may manually dispatch the unit as necessary. End State for Generation shutdown Resource Status = OFF or OUT, as appropriate Generator output breaker status = OPEN Assumes the Resource is will not be assigned Off-Line Non-Spin AS Responsibility. If the Resource is assigned Off-Line Non-Spin Responsibility then Resources Status = OFFNS; and the AS Resource Responsibility and Schedule = the assigned amount.

Generation Shutdown from Power Operations ONTEST Alternative EVOLUTIONREAL TIME TELEMETRYCOMMENTS Execute Shutdown Evolution: Net real Power ≥ 0.9 * LSL & operating under SCED dispatch Net real power = MAX (0, Gross Generation Unit Output – (Generation Unit Auxiliary Load + the amount of station auxiliary load assigned to the Generation Unit, as determined by the QSE/Resource Entity) Gross real power ≥ 0 Output breaker status = CLOSED Resource Status = ONTEST HSL = Expected Net Real Power on the Resource’s shutdown ramp LSL = the QSE’s expected sustainable limit HEL = HSL (optional) LEL = the QSE’s expected limit All AS Resource Responsibility & AS Schedules = 0 The QSE will set the Resources Status = ONTEST For this condition: RLC sets LDL = HDL = Net Real Power = Base Point (BP). SCED will follow the Resource Real Net Power down. When the net real power is below 0.9 * LSL, the RLC sets HDL=LDL=net real power and SCED sends a Base Point equal to the net real power telemetry (UDBP is also set to net real power). Essentially, the SCED base points follow the QSE’s manual dispatch of the resource to the point where it is removed from the ERCOT grid. End State for Generation shutdown Resource Status = OFF or OUT, as appropriate Generator output breaker status = OPEN Assumes the Resource is will not be assigned Off-Line Non-Spin AS Responsibility. If the Resource is assigned Off-Line Non-Spin Responsibility then Resources Status = OFFNS; and the AS Resource Responsibility and Schedule = the assigned amount.

Generation Shutdown from Power Operations OFF Alternative EVOLUTIONREAL TIME TELEMETRYCOMMENTS Execute Shutdown Evolution: Net real Power ≥ 0.9 * LSL & operating under SCED dispatch Net real power = MAX (0, Gross Generation Unit Output – (Generation Unit Auxiliary Load + the amount of station auxiliary load assigned to the Generation Unit, as determined by the QSE/Resource Entity) Gross real power ≥ 0 Output breaker status = CLOSED Resource Status = OFF HSL = Expected Net Real Power on the Resource’s shutdown ramp LSL = the QSE’s expected sustainable limit HEL = HSL (optional) LEL = the QSE’s expected limit All AS Resource Responsibility & AS Schedules = 0 The QSE will set the Resources Status = OFF For this condition: RLC sets LDL = HDL = (Net Real Power – SCED Down Ramp Rate*5) = Base Point SCED will dispatch the Resource Real Net Power down. QSE is expected to follow the SCED Base Point as it ramps the resource to LSL in accordance with the resource’s down ramp rate. When the net real power is below 0.9 * LSL, the RLC sets HDL=LDL=net real power and SCED sends a Base Point equal to the net real power telemetry (UDBP is also set to net real power). Essentially, the SCED base points follow the QSE’s manual dispatch of the resource to the point where it is removed from the ERCOT grid. End State for Generation shutdown Resource Status = OFF or OUT, as appropriate Generator output breaker status = OPEN Assumes the Resource is will not be assigned Off-Line Non-Spin AS Responsibility. If the Resource is assigned Off-Line Non-Spin Responsibility then Resources Status = OFFNS; and the AS Resource Responsibility and Schedule = the assigned amount.

10 LFC – Proper Use of RBST/LBST Raise and Lower Block Status Raise Block Status (RBST) and Lower Block Status (LBST) points are used to block Ancillary Service deployments in LFC due to emergency resource conditions and communicate to ERCOT the deficiency in real-time RBST/LBST does NOT excuse a resource’s obligation/responsibility to provide AS RBST/LBST should be used for emergency situations only and should not be used during normal operations Examples of emergency situations: unexpected plant equipment failures, resource dropping off LFC into Local Mode, or any other unforeseen complication that causes a resource to lose capability to adjust output in accordance with ERCOT’s LFC signal Examples of normal operations: duct burner firing, mill starts, any other predictable scenario RBST/LBST will NOT affect SCED base point, only AS dispatch RBST/LBST will effectively freeze your UDBP signal. Ideally, RBST/LBST should only be enabled until SCED runs again, by which time the resource should’ve had time to update their HSL, LSL, and AS telemetry to reflect their deficiency due to the problem RBST/LBST should NOT be set to automatically enable when unit output reaches HSL/LSL. This could interfere with desired deployment of AS.

Follow-up from Friday’s RTM Call 11 RARF update notification to MPs –ERCOT Registration will deploy RARF processing procedures in conjunction with 9/1/2010 Go-Live of Nodal Network Operations Model protocol. –NOM Update Schedule will go live on 9/1/2010 on ERCOT.com. –RE may specify a Model Ready Date (MRD) on TML Service Request when submitting RARF update. –If no MRD is specified the date will default to the next NOM update according to the published schedule 90-days out. –ERCOT Registration will include the MRD in a notice to the RE that the RARF passed CIM screening rules. –If RE needs an earlier MRD they will respond to the notice with requested date. –ERCOT will provide notice MRD is accepted or rejected.

Follow-up from Friday’s RTM Call Near-term HRUC commitments –Follow-up on Friday’s question from the market about difficulty updating COPs after receiving HRUC commitments. 12