Protocol Revision Subcommittee Presentation to the ERCOT Technical Advisory Committee February 7, 2008

PRS Summary 3 PRRs for Approval (IAs only) 3 PRRs for Approval (IAs only) 4 NPRRs for Approval 4 NPRRs for Approval Activity Update Activity Update Appeals Process Appeals Process Goals Goals

PRR 740 – Creating Amendment to Standard Form Market Participant Agreement Purpose(ERCOT) Adds new form amendment to the Protocols Benefit Allows Market Participants to amend their Standard Form Agreement (SFA) without submitting a new SFA Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS unanimously recommended approval; all Market Segments were present Effective Date April 1, 2008

PRR 740 – Creating Amendment to Standard Form Market Participant Agreement Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 749 – Rule Change to the REC Trading Program -- URGENT Purpose(ERCOT) Amends Protocols regarding Renewable Energy Credits including account qualification, award formulas and introduces compliance premiums. Benefit Conforms to PUC Subst. R , Goal for Renewable Energy Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS unanimously recommended approval (revised by Luminant, FPL Energy, Austin Energy & PRS); all Market Segments were present Effective Date March 1, 2008

PRR 749 – Rule Change to the REC Trading Program -- URGENT Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 750 – Unannounced Generation Capacity Testing -- URGENT Purpose(ERCOT) Replaces the current seasonal testing requirement with unannounced generation resource testing and requires QSEs to seasonally update their resource High Sustainable Limits (HSL) Benefit Improved accuracy in reporting Market Impact Possibility of increased OOME cost associated with unannounced test System Change NoN/A AssumptionsN/A PRS Vote PRS recommended approval with 1 abstention from MOU segment (revised by Luminant, LCRA, ERCOT Staff & PRS); all Market Segments were present Effective Date March 1, 2008

PRR 750 – Unannounced Generation Capacity Testing -- URGENT Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

NPRR 084 – Creating Amendment to Standard Form Market Participant Agreement Purpose(ERCOT) Adds new form amendment to the Protocols (PRR 740) Benefit Allows Market Participants to amend their Standard Form Agreement (SFA) without submitting a new SFA Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS unanimously recommended approval; all Market Segments were present Effective Date Upon Texas Nodal implementation; no impact to nodal budget or implementation

NPRR 085 – Revision of Digital Certificate Procedures Purpose(ERCOT) Documents that MPs must generate their own USA and digital certificate holder lists for audit purposes; automates digital certificate transactions (i.e., enroll, renew, revoke, audit) (PRR 741) Benefit Increased ERCOT IT system security; streamlines and improves current processes; automation facilitates MP certificate management without ERCOT staff interaction Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS unanimously recommended approval; all Market Segments were present Effective Date Upon Texas Nodal implementation; no impact to nodal budget or implementation

NPRR 088 – Revision to , Monitoring of a Counter-Party’s Creditworthiness and Credit Exposure by ERCOT Purpose (Reliant Energy, IPM) Ensures that ERCOT will receive and accept as sufficient from the QSE, financial statements of a QSE or a guarantor if a guarantee is being provided for the purpose of determining a QSE’s creditworthiness (PRR 744) Benefit Conforms the Protocols to industry standard credit practices Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS recommended approval with 1 opposing vote (MOU) and 2 abstentions (IREP, Coop); all Market Segments were present Effective Date Upon Texas Nodal implementation; no impact to nodal budget or implementation

NPRR 090 – Corrections of FIP-FOP in Energy Offers Purpose (ERCOT for TPTF) Corrects the submission and use of Fuel Index Price (FIP) and Fuel Oil Price (FOP) percentages in energy offers Benefit Ensures correct mitigated levels of start-up offers, minimum energy offers and energy offer curves will result in better market price signals and eliminate likely disputes regarding use of incorrect values Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS recommended approval with 1 opposing vote and 1 abstention (revised by PRS); all Market Segments were present Effective Date Upon Texas Nodal implementation; no impact to nodal budget or implementation; critical to project timeline

PRR/NPRR Summary Revision Requests Recommended for Approval Revision Requests Recommended for Approval PRR 740 – Creating Amendment to Standard Form Market Participant Agreement PRR 740 – Creating Amendment to Standard Form Market Participant Agreement PRR 749 – Rule Change to the REC Trading Program – URGENT PRR 749 – Rule Change to the REC Trading Program – URGENT PRR 750 – Unannounced Generation Resource Testing -- URGENT PRR 750 – Unannounced Generation Resource Testing -- URGENT NPRR 084 – Creating Amendment to Standard Form Market Participant Agreement NPRR 084 – Creating Amendment to Standard Form Market Participant Agreement NPRR 085 – Revision of Digital Certificate Procedures NPRR 085 – Revision of Digital Certificate Procedures NPRR 088 – Revision to , Monitoring of Counter-Party’s Creditworthiness and Credit Exposure by ERCOT NPRR 088 – Revision to , Monitoring of Counter-Party’s Creditworthiness and Credit Exposure by ERCOT NPRR 090 – Corrections of FIP-FOP in Energy Offers NPRR 090 – Corrections of FIP-FOP in Energy Offers

PRS Activities Update & Goals Appeals Process Appeals Process PRR 753, PRR Appeals Process was submitted by ERCOT and will be reviewed by PRS on a normal timeline PRR 753, PRR Appeals Process was submitted by ERCOT and will be reviewed by PRS on a normal timeline PRS suggests the ERCOT Board could base an appeals process for non-PRR TAC decisions on the outcome of PRR 753 PRS suggests the ERCOT Board could base an appeals process for non-PRR TAC decisions on the outcome of PRR 753 Goals (Not approved by PRS) Goals (Not approved by PRS) Process PRRs and NPRRs (Section 21 requirement) Process PRRs and NPRRs (Section 21 requirement) Facilitate and make recommendations for 2009 Project Priorities as requested by ERCOT Facilitate and make recommendations for 2009 Project Priorities as requested by ERCOT Review NPRRs necessary for “go-live” and collaborate with ERCOT PMO to structure a process for “releasing” NPRRs to be included in “go-live plus ‘x’” Review NPRRs necessary for “go-live” and collaborate with ERCOT PMO to structure a process for “releasing” NPRRs to be included in “go-live plus ‘x’” PRS reported a process for “parking” NPRRs not necessary to “go- live” in May 2007 to TAC PRS reported a process for “parking” NPRRs not necessary to “go- live” in May 2007 to TAC PRS deferred developing a process for NPRR releases until 2008 PRS deferred developing a process for NPRR releases until 2008