Texas Nodal 1 Texas Nodal Settlements Mini-Market - CRR July 31, 2007

Texas Nodal 2 Roadmap Introduction of CRR in Texas Nodal Market Nodal Settlements Mini-Market – CRR –Day-Ahead Market CRR Settlements –Real-Time CRR Settlements –Daily CRR Balancing Account

Texas Nodal 3 Texas Nodal - Texas Nodal CRR Introduction - July 31, 2007

Texas Nodal 4 What is a CRR? Congestion Revenue Rights –Definition: A Congestion Revenue Right (CRR) is a financial instrument that entitles the CRR Owner to be charged or to receive compensation for congestion rents that arise when the ERCOT Transmission Grid is congested in the Day-Ahead Market (DAM) or in Real-Time (RT). CRRs do not represent a right to receive, or obligation to deliver, physical energy. –Types of CRRs: Point-to-Point (PTP) CRR: –Obligations (some maybe PCRRs) –Options (some maybe PCRRs) –Obligations with Refund (all PCRRs) –Options with Refund (all PCRRs) Flowgate Right (FGR)

Texas Nodal 5 CRR Traits Traits of a CRR –Acquired in 3 Time of Use Blocks: Weekday Peak (5*16, excluding holidays) Weekend Peak (2*16, including holidays) Off Peak (7*8) Same MW amount for each hour in the TOU block –Defined in Unit of MW –Financially Binding (Owners are paid/charged regardless of their actual energy schedule or generation) –Do not represent a right for physical delivery

Texas Nodal 6 PTP CRR PTP CRR : –PTP Obligation, PTP Option, PTP Obligation with Refund, PTP Option with Refund –Described from a Source (Injection) Settlement Point to a Sink (Withdrawal) Settlement Point: –Source/Sink Settlement Point can be: Resource Node Load Zone Trading Hub

Texas Nodal 7 PTP Obligation PTP Obligation can be either a payment or charge to CRR Owners depending on the direction of congestion in relation to the PTP Obligation. –A revenue entitlement from ERCOT to CRR Owners when congestion is in the same direction as the PTP Obligation Sink Source 150 MW LMP = $20/MWh LMP = $30/MWh Limit: 100 MW 50 MW 100 MW PTP Obligation Price = LMP sink – LMP source = 10 $/MW

Texas Nodal 8 PTP Obligation - continued PTP Obligation can be either a payment or charge to CRR Owners depending on the direction of congestion in relation to the PTP Obligation. –A charge to CRR Owners when congestion is in the opposite direction as the PTP Obligation Source Sink 150 MW LMP = $20/MWh LMP = $30/MWh Limit: 100 MW PTP Obligation Price = LMP sink – LMP source = - 10 $/MW 50 MW 100 MW

Texas Nodal 9 PTP Option PTP Option never results in a charge to CRR Owners. –A revenue entitlement from ERCOT to CRR Owners when congestion is in the same direction as the PTP Option Sink Source 150 MW LMP = $20/MW LMP = $30/MW Limit: 100 MW 50 MW 100 MW PTP Option Price = Max(0, LMP sink – LMP source ) = 10 $/MW per hour Same Value as PTP Obligation

Texas Nodal 10 PTP Option - continued PTP Option never results in a charge to CRR Owners. –Zero value when congestion is in the opposite direction as the PTP Option Source Sink 150 MW LMP = $20/MW LMP = $30/MW Limit: 100 MW 50 MW 100 MW PTP Option Price = Max(0, LMP sink – LMP source ) = 0 $/MW per hour PTP Obligation would be negative value

Texas Nodal 11 PTP CRR with Refund PTP Obligations with Refund and PTP Options with Refund –It is evaluated in the same manner as a PTP Obligation or PTP Option. –All are PCRRs. –The NOIE will be paid the minimum of: PCRR Actual Usage or PCRR with refund MW amount.

Texas Nodal 12 Flowgate Right Flowgate –Predefined directional network element or a predefined bundle of directional network elements Flowgate Right –McCamey Area flowgates are the only flowgates where FGRs are available in ERCOT –It never results in a charge to CRR Owners

Texas Nodal 13 CRR Acquisition Day-Ahead Market CRR Market Settlements Annual / Monthly CRR Auction Bilateral Market McCamey Area Flowgate Rights Allocations PCRR Allocation PTP Obligation

Texas Nodal 14 Texas Nodal Overview: Settlements Mini-Market - CRR July 31, 2007

Texas Nodal 15 Settlement Mini-Market CRR Overview “Settlements Mini-Market – CRR” cover: –CRR Settlements in Day-Ahead Market –CRR Settlements in Real-Time (when there’s Day-Ahead Market) –CRR Settlements in Real-Time (when there’s no Day-Ahead Market) –Daily CRR Balancing Account Settlements “Settlements Mini-Market – CRR” set Scenarios for: –CRR Types: Point-to-Point Obligation Point-to-Point Obligation with Refund Point-to-Point Option Point-to-Point Option with Refund Flowgate Right –CRR Account Owners: NOIE CRR Owner Non-NOIE CRR Owner –Power Company –Financial Institute

Texas Nodal 16 Mini-System DescriptionSettlement Point PointSettlement Point Type ResourceLoadElectrical Bus Bus 4060_RN Resource NodeMandy_G1--Bus _RN Resource NodeRMR_G1--Bus _RN Resource Node ANNA_GT5, INO_NUKEUMIT1--Bus _RN Resource Node WIND1, WIND2, WIND3--Bus 6 NORTH_LZLoad Zone--Load A & BBus 1 & 3 SOUTH_LZLoad Zone--Load C & DBus 4 & 5 WEST_LZLoad Zone--Load E & FBus 2 & 6 NORTH_HUBTrading Hub-- Bus 1 & 3 SOUTH_HUBTrading Hub-- Bus 4 & 5 WEST_HUBTrading Hub-- Bus 2 & 6 ERCOT_345HUBTrading Hub-- Bus 1, 2, 3, 4 & 5

Texas Nodal 17 Mini-System Description – ContinuedBranchFromToReactance (X) (X) Line Limit (MW) Bus1-Bus Bus1-Bus Bus6-Bus Bus3-Bus Bus2-Bus Bus6-Bus Bus4-Bus Bus5-Bus Bus2-Bus Bus3-Bus Bus1-Bus Bus2-Bus Bus5-Bus Bus2-Bus Bus3-Bus Bus4-Bus

Texas Nodal 18 Texas Nodal Settlements Mini-Market - CRR Day-Ahead Market - CRR Settlements July 31, 2007

Texas Nodal 19 Day-Ahead CRR Settlement Overview DA CRR Settlement Scenarios: Unconstrained Network (No Congestion) –Interval 2, Interval 6, and Interval 20 Constrained Network (with Congestion) –Other Intervals

Texas Nodal 20 High-Level Day-Ahead CRR Settlement Dependencies

Texas Nodal 21 Day-Ahead CRR Global Calculations Global Calculations –Day-Ahead Option (DAOPT) and Day-Ahead Option with Refund (DAOPTR) –Minimum Resource Price for Source Settlement Point (MINRESPR) –Maximum Resource Price for Sink Settlement Point (MAXRESPR) –Day-Ahead Obligation Price (DAOBLPR) –Obligation Deration Price (OBLDRPR) –Day-Ahead Obligation Hedge Value Price (DAOBLHVPR) –Day-Ahead Option Price (DAOPTPR) –Option Deration Price (OPTDRPR) –Day-Ahead Option Hedge Value Price (DAOPTHVPR)

Texas Nodal 22 Day-Ahead CRR Charge Types Day-Ahead Market Charge Types (5) –Payments and Charges for PTP Obligations Settled in DAM (DAOBLAMT) –Payments and Charges for PTP Obligations with Refund Settled in DAM (DAOBLRAMT) –Payments for PTP Options Settled in DAM (DAOPTAMT) –Payments for PTP Options with Refund Settled in DAM (DAOPTRAMT) –Payments for FGR Settled in DAM (DAFGRAMT)

Texas Nodal 23 Day-Ahead Obligation Price (DAOBLPR) –Day-Ahead Obligation Price (DAOBLPR) is the difference between the Day-Ahead Settlement Point Prices at the sink Settlement Point and the source Settlement Point DAOBLPR = DASPP_ - DASPP_ –The value of DAOBLPR ($/MW per hour) could be negative, zero, or positive Example: CRRHour Ending DASPP at Sink ($/MWh) DASPP at Source ($/MWh) DAOBLPR ($/MW per Hr) PTP Obligation: 4060_RN → 4071_RN PTP Obligation: 4060_RN → 4071_RN PTP Obligation: 4060_RN → 4071_RN DASPP = Day-Ahead Settlement Point Price; DAOBLPR = Day-Ahead Obligation Price = Source Settlement Point; = Sink Settlement Point

Texas Nodal 24 Day-Ahead Option Price (DAOPTPR) –Day-Ahead Option Price (DAOPTPR) is the positive difference between the Day-Ahead Settlement Point Prices at the sink Settlement Point and the source Settlement Point DAOPTPR = Max(0, DASPP_ - DASPP_ ) –The value of DAOPTPR ($/MW per hour) shall always be ≥ zero Example: CRRHour Ending DASPP at Sink ($/MWh) DASPP at Source ($/MWh) DAOPTPR ($/MW per Hr) PTP Option: 4060_RN → SOUTH_HUB PTP Option: 4060_RN → SOUTH_HUB PTP Option: 4060_RN → SOUTH_HUB DASPP = Day-Ahead Settlement Point Price; DAOBLPR = Day-Ahead Obligation Price = Source Settlement Point; = Sink Settlement Point

Texas Nodal 25 Obligation Deration Price (OBLDRPR) –For PTP Obligations that has a positive value (i.e., DAOBLPR > 0) and either its source or sink is a Resource Node, the PTP Obligation payment may be reduced (derated) due to directional network elements that are oversold in previous CRR auctions. Obligation Deration Price (OBLDRPR) is one of the prices calculated for CRR deration. OBLDRPR_ _ =  {Max (0, DAWASF_ _ - DAWASF_ _ ) c * DASP_ * DRF_ } Example: Table 1: Day-Ahead Weighted Average Shift Factor (Hour Ending 18) Table 2: Day-Ahead Shadow Price and Deration Factor (Hour Ending 18) Table 3: Calculated Obligation Deration Price (Hour Ending 18) Settlement Point DA Weighted Shift Factor (DAWASF) Constraint I (BASE SBus4ToBus3) Constraint II (BASE SBus3ToBus2) Constraint III (BASE SBus6ToBus2) Constraint IV (BASE SBus4ToBus5) Constraint V (BASE SBus6ToBus1) 4060_RN (Slack Bus) _RN Constraint DASP ($/MW per Hr) DRF I II III00.12 IV00.03 V CRR OBLDRPR ($/MW per Hr) PTP Obligation: 4060_RN → 4071_RN0.83 DAWASF = Day-Ahead weighted average shift factor for source/sink Settlement Point for the Constraint DASP = Day-Ahead Shadow Price for the Constraint DRF = Deration Factor for the Constraint = Source Settlement Point; = Sink Settlement Point ; = A Constraint

Texas Nodal 26 Option Deration Price (OPTDRPR) –For PTP Options with a source or a sink that is a Resource Node, the PTP Option payment may be reduced (derated) due to directional network elements that are oversold in previous CRR auctions. Option Deration Price (OPTDRPR) is one of the prices calculated for CRR deration. OPTDRPR_ _ =  {Max (0, DAWASF_ _ - DAWASF_ _ ) c * DASP_ * DRF_ } Example: Table 1: Day-Ahead Weighted Average Shift Factor (Hour Ending 18) Table 2: Day-Ahead Shadow Price & Deration Factor (Hour Ending 18) Table 3: Calculated Option Deration Price (Hour Ending 18) Settlement Point DA Weighted Shift Factor Constraint I (BASE SBus4ToBus3) Constraint II (BASE SBus3ToBus2) Constraint III (BASE SBus6ToBus2) Constraint IV (BASE SBus4ToBus5) Constraint V (BASE SBus6ToBus1) 4060_RN (Slack Bus) SOUTH_HUB Constraint DASP ($/MW per Hr) DRF I II III00.12 IV00.03 V CRR OPTDRPR ($/MW per Hr) PTP Option: 4060_RN → SOUTH_HUB0.45 DAWASF = Day-Ahead weighted average shift factor for source/sink Settlement Point for the Constraint DASP = Day-Ahead Shadow Price for the Constraint DRF = Deration Factor for the Constraint = Source Settlement Point; = Sink Settlement Point ; = A Constraint

Texas Nodal 27 Minimum Resource Price (MINRESPR) –Minimum Resource for Resource located at source Settlement Point (MINRESRPR) If a Generation Resource is RMR unit, MINRESRPR = (FIP + RMRCEFA) * RMRCHRLSL (RMRCEFA and RMRCHRLSL are RMR Contract specified values)  If a Generation Resource is not RMR unit, and belongs to: Nuclear, Hydro, Coal and Lignite, Wind, or Other Renewable generating units, MINRESRPR = MINRESPRVALUE If a Generation Resource is not RMR Unit, and belongs to: Combined Cycle, Gas-Steam Supercritical Boiler, Gas-Steam Reheat Boiler, Gas-Steam Non-Reheat or Boiler without Air-Preheater, Simple Cycle, or Diesel generating units, MINRESRPR = FIP * MINRESHR (MINRESPRVALUE, and MINRESHR are specified by Nodal Protocols for various Resource Types) –Minimum Resource Price for source Settlement Point (MINRESPR) The lowest Minimum Resource Price for the types of Resources (MINRESRPR) located at the source Settlement Point ($/MWh) r n MINRESPR_ = MIN (MINRESRPR_ _ ) Example: R=r 1 Settlement Point Resource Resource Type FIP ($/MMBtu) MINRESPRVALUE ($/MWh) MINRESHR (MMBtu/MWh) MINRESRPR ($/MWh) MINRESPR ($/MWh) 4072_RN NO_NUKEUMIT1Nuclear ANNA_GT5 Simple Cycle ≤ 90MW MINRESPRVALUE = Minimum Resource Price for Resource Type specified by Protocols; MINRESHR = Minimum Resource Price Heat Rate specified by Protocols FIP = Fuel Index Price

Texas Nodal 28 –Maximum Resource for Resource located at sink Settlement Point (MAXRESRPR) If a Generation Resource is RMR unit, MAXRESRPR = (FIP + RMRCEFA) * RMRCHRHSL (RMRCEFA and RMRCHRHSL are RMR Contract specified values)  If a Generation Resource is not RMR unit, and belongs to: Nuclear, Hydro, Coal and Lignite, Wind, or Other Renewable generating units, MAXRESRPR = MAXRESPRVALUE If a Generation Resource is not RMR Unit, and belongs to: Combined Cycle, Gas-Steam Supercritical Boiler, Gas-Steam Reheat Boiler, Gas-Steam Non-Reheat or Boiler without Air-Preheater, Simple Cycle, or Diesel generating units, MAXRESRPR = FIP * MAXRESHR (MAXRESPRVALUE, and MAXRESHR are specified by Nodal Protocols for various Resource Types) –Maximum Resource Price for sink Settlement Point (MAXRESPR) The highest Maximum Resource Price for the types of Resources (MAXRESRPR) located at the sink Settlement Point ($/MWh) r n MAXRESPR_ = MAX (MAXRESRPR_ _ ) Example: R=r 1 Maximum Resource Price (MAXRESPR) Settlement Point Resource Resource Type FIP ($/MMBtu) MAXRESPRVALUE ($/MWh) MAXRESHR (MMBtu/MWh) MAXRESRPR ($/MWh) MAXRESPR ($/MWh) 4072_RN NO_NUKEUMIT1Nuclear ANNA_GT5 Simple Cycle ≤ 90MW MAXRESPRVALUE = Maximum Resource Price for Resource Type specified by Protocols; MAXRESHR = Maximum Resource Price Heat Rate specified by Protocols FIP = Fuel Index Price

Texas Nodal 29 Day-Ahead Obligation Hedge Value Price (DAOBLHVPR) For PTP Obligations that has a positive value (i.e., DAOBLPR > 0) and either its source or sink is a Resource Node, the PTP Obligation payment may be reduced (derated) due to directional network elements that are oversold in previous CRR auctions. Day-Ahead Obligation Hedge Value Price (DAOBLHVPR) is one of the prices calculated for CRR deration. Calculation of DAOBLHVPR depends on the source and sink Settlement Point pair configuration If source Settlement Point is a Load Zone/Hub and sink Settlement Point is a Resource Node –DAOBLHVPR_ _ = Max (0, MAXRESPR_ – DASPP_ ) If source Settlement Point is a Resource Node and sink Settlement Point is a Load Zone/Hub –DAOBLHVPR_ _ = Max (0, DASPP_ – MINRESPR_ ) If both source and sink Settlement Points are Resource Nodes –DAOBLHVPR_ _ = Max (0, MAXRESPR_ – MINRESPR_ ) Example: Table 1: Day-Ahead Settlement Point Price, Minimum Resource Price, & Maximum Resource Price (Hour Ending 18) Table 2: Calculated Day-Ahead Obligation Hedge Value Price (Hour Ending 18) Settlement PointSettlement Type DASPP ($/MWh) Minimum Resource Price ($/MWh) Maximum Resource Price ($/MWh) 4060_RN Resource Node _RN Resource Node CRR DAOBLHVPR ($/MW per Hr) PTP Obligation 4060_RN → 4071_RN MINRESPR = Minimum Resource Price for source Settlement Point MAXRESPR = Maximum Resource Price for sink Settlement Point DASPP = Day-Ahead Settlement Point Price

Texas Nodal 30 Day-Ahead Option Hedge Value Price (DAOPTHVPR) For PTP Options with a source or a sink that is a Resource Node, the PTP Option payment may be reduced (derated) due to directional network elements that are oversold in previous CRR auctions. Day-Ahead Option Hedge Value Price (DAOPTHVPR) is one of the prices calculated for CRR deration. Calculation of DAOPTHVPR depends on the source and sink Settlement Point pair configuration If source Settlement Point is a Load Zone/Hub and sink Settlement Point is a Resource Node –DAOPTHVPR_ _ = Max (0, MAXRESPR_ – DASPP_ ) If source Settlement Point is a Resource Node and sink Settlement Point is a Load Zone/Hub –DAOPTHVPR_ _ = Max (0, DASPP_ – MINRESPR_ ) If both source and sink Settlement Points are Resource Nodes –DAOPTHVPR_ _ = Max (0, MAXRESPR_ – MINRESPR_ ) Example: Table 1: Day-Ahead Settlement Point Price, Minimum Resource Price, & Maximum Resource Price (Hour Ending 18) Table 2: Calculated Day-Ahead Option Hedge Value Price (Hour Ending 18) Settlement PointSettlement Type DASPP ($/MWh) Minimum Resource Price ($/MWh) Maximum Resource Price ($/MWh) 4060_RN Resource Node SOUTH_HUB Trading Hub CRR DA OPTHVPR ($/MW per Hr) PTP Option 4060_RN → SOUTH_HUB 0 MINRESPR = Minimum Resource Price for source Settlement Point MAXRESPR = Maximum Resource Price for sink Settlement Point DASPP = Day-Ahead Settlement Point Price

Texas Nodal 31 Day-Ahead Option (DAOPT) and Day-Ahead Option with Refund (DAOPTR) –Day-Ahead Option (DAOPT) and Day-Ahead Option with Refund (DAOPTR) DAOPT – CRR Owner’s PTP Options that are settled in the Day-Ahead Market for a source and sink Settlement Point pair (MW) DAOPT = OPT – RTOPT DAOPTR – NOIE CRR Owner’s PTP Options with Refund that are settled in the Day-Ahead Market (MW) DAOPTR = OPTR – RTOPTR Example: OPT – CRR Owner’s PTP Options, acquired through PCRR Allocations, CRR Auctions, and CRR Bilateral Trades, with the source and sink pair, prior to Day-Ahead Market execution OPTR – NOIE CRR Owner’s PTP Options with Refund, acquired through PCRR Allocations by NOIEs, with the pair of source and sink, prior to Day-Ahead Market execution RTOPT / RTOPTR– NOIE CRR Owner’s PTP Options / PTP Options with Refund with the pair of source and sink, settled in Real-Time CRRCRR OwnerHour Ending OPT / OPTR (MW) RTOPT / RTOPTR (MW) DAOPT (MW) PTP Option: 4060_RN → SOUTH_HUB (OPT_CO2_4060_RN_SOUTH_HUB) CO2 (Power Co.) PTP Option: 4072_RN → SOUTH_LZ (OPT_CO4_4072_RN_SOUTH_LZ) CO4 (NOIE)

Texas Nodal 32 Day-Ahead Obligation Amount (DAOBLAMT) –Day-Ahead Obligation Amount (DAOBLAMT) is the payment or charge to a CRR Owner for its PTP Obligations with the pair of source/sink settled in the Day-Ahead Market Exception: For a PTP Obligation that has a positive value (DAOBLPR > 0) and source or sink at a Resource Node, the payment may be reduced due to directional network elements that are oversold in previous CRR auctions. –If DAOBLPR ≤ 0 OR both source and sink Settlement Points are Load Zones/Hubs DAOBLAMT = (-1) * DAOBLTP –If DAOBLPR > 0 AND either source or sink Settlement Point is a Resource Node DAOBLAMT = (-1) * Max {(DAOBLTP – DAOBLDA), Min (DAOBLTP, DAOBLHV)} Where: DAOBLTP = DAOBLPR * DAOBL ; DAOBLDA = OBLDRPR * DAOBL; DAOBLHV = DAOBLHVPR * DAOBL Example: Table 1: Calculated Day-Ahead Obligation Target Payment, Day-Ahead Obligation Derated Amount, & Day-Ahead Obligation Hedge Value (Hour Ending 18) Table 2: Calculated Day-Ahead Obligation Amount (Hour Ending 18) CRR Owner CRR DAOBL (MW) DAOBLPR ($/MW per Hr) DAOBLTP ($) OBLDRPR ($/MW per Hr) DAOBLDA ($) DAOBLHVPR ($/MW per Hr) DAOBLHV ($) CO1 PTP Obligation 4060_RN → 4071_RN , , CRR Owner CRRSource Point TypeSink Point Type DAOBLAMT ($) CO1 PTP Obligation 4060_RN → 4071_RN Resource Node - $ 1, DAOBL= Day-Ahead Obligation; DAOBLPR = Day-Ahead Obligation Price; DAOBLTP = Day-Ahead Obligation Target Payment; OBLDRPR = Obligation Deration Price; DAOBLDA = Day-Ahead Obligation Derated Amount; DAOBLHVPR = Day-Ahead Obligation Hedge Value Price; DAOBLHV = Day-Ahead Obligation Hedge Value “-” is a payment

Texas Nodal 33 Day-Ahead Obligation Other Calculations –Other Output Bill Determinants DAOBLCROTOT_ =   Min (0, DAOBLAMT_ ) SRSP SKSP DAOBLCHOTOT_ =   Max (0, DAOBLAMT_ ) SRSP SKSP DAOBLAMTOTOT_ = DAOBLCROTOT_ + DAOBLCHOTOT_ DAOBLCRTOT =  DAOBLCROTOT_ CO DAOBLCHTOT =  DAOBLCHOTOT_ CO

Texas Nodal 34 Day-Ahead Option Amount (DAOPTAMT) –Day-Ahead Option Amount (DAOPTAMT) is the payment to a CRR Owner for its PTP Options with the pair of source/sink settled in the Day-Ahead Market Exception: For a PTP Option that source or sink at a Resource Node, the payment may be reduced due to directional network elements that are oversold in previous CRR auctions. –If both source and sink Settlement Points are Load Zones/Hubs DAOPTAMT = (-1) * DAOPTTP –If either source or sink Settlement Point is a Resource Node DAOPTAMT = (-1) * Max {(DAOPTTP – DAOPTDA), Min (DAOPTTP, DAOPTHV)} Where: DAOPTTP = DAOPTPR * DAOPT; DAOPTDA = OPTDRPR * DAOPT; DAOPTHV = DAOPTHVPR * DAOPT Example: Table 1: Calculated Day-Ahead Option Target Payment, Day-Ahead Option Derated Amount, & Day-Ahead Option Hedge Value (Hour Ending 18) Table 2: Calculated Day-Ahead Option Amount (Hour Ending 18) CRR Owner CRR DAOPT (MW) DAOPTPR ($/MW per Hr) DAOPTTP ($) OPTDRPR ($/MW per Hr) DAOPTDA ($) DAOPTHVPR ($/MW per Hr) DAOPTHV ($) CO2 PTP Option 4060_RN → SOUTH_HUB CRR OwnerCRRSource Point TypeSink Point Type DAOPTAMT ($) CO2 PTP Option 4060_RN → SOUTH_HUB Resource NodeTrading Hub - $ DAOPT= Day-Ahead Option; DAOPTPR = Day-Ahead Option Price; DAOPTTP = Day-Ahead Option Target Payment; OPTDRPR = Option Deration Price; DAOPTDA = Day-Ahead Option Derated Amount; DAOPTHVPR = Day-Ahead Option Hedge Value Price; DAOPTHV = Day-Ahead Option Hedge Value

Texas Nodal 35 Day-Ahead Option Other Calculations –Other Output Bill Determinants DAOPTAMTOTOT_ =   DAOPTAMT_ SRSP SKSP DAOPTAMTTOT =  DAOPTAMTOTOT_ CO

Texas Nodal 36 Day-Ahead FGR Amount (DAFGRAMT) - MCFRI –If all directional network elements associated with the FGR are Competitive Constraints, the payment to each CRR Owner for its FGRs determined by the principle network element of each flowgate for a given hour is: DAFGRAMT = (-1) * DAFGRTP –If one or more directional network elements associated with MCFRI are Non-Competitive, the payment to each CRR Owner for its FGRs determined by the principle network element of each flowgate for a given hour is: DAFGRAMT = (-1) * Max {(DAFGRTP – DAFGRDA), Min (DAFGRTP, DAFGRHV)} Where: DAFGRTP = DAFGRPR * DAFGR; DAFGRHV = DAFGRHVPR * DAFGR; DAFGRDA = FGRDRPR * DAFGR Example: Table 1: Calculated Day-Ahead FGR Target Payment, Day-Ahead FGR Derated Amount, & Day-Ahead FGR Hedge Value (Hour Ending 11) Table 2: Calculated Day-Ahead FGR Amount (Hour Ending 11) CRR Owner FGR DAFGR (MW) DRF DAFGRPR ($/MW per Hr) DAFGRTP ($) FGRDRPR ($/MW per Hr) DAFGRDA ($) DAFGRHVPR ($/MW per Hr) DAFGRHV ($) CO5MCFRI CRR OwnerFGR DA FGR Amount ($) CO5MCFRI1- $ DAFGR= Day-Ahead FGR; DAFGRPR = Day-Ahead FGR Price; DAFGRTP = Day-Ahead FGR Target Payment; FGRDRPR = FGR Deration Price; DAFGRDA = Day-Ahead FGR Derated Amount; DAFGRHVPR = Day-Ahead FGR Hedge Value Price; DAFGRHV = Day-Ahead FGR Hedge Value

Texas Nodal 37 Day-Ahead FGR Other Calculations –Other Output Bill Determinants DAFGRAMTOTOT_ =  DAFGRAMT_ _ F DAFGRAMTTOT =  DAFGRAMTOTOT_ CO

Texas Nodal 38 Day-Ahead Obligation with Refund Amount (DAOBLRAMT) –ERCOT shall pay the owner of a PTP Obligation with Refund the difference in the Day-Ahead Settlement Point Prices between the sink Settlement Point and the source Settlement Point, subject to a charge for refund, when the price difference is positive (DAOBLRAMT) Exception: The payment of PTP Obligations with Refund may be further reduced due to transmission elements that are oversold in previous CRR Auctions –If DAOBLPR ≤ 0: DAOBLRAMT = (-1) * DAOBLRTP –If DAOBLPR > 0: DAOBLRAMT = (-1) * Max {(DAOBLRTP – DAOBLRDA), Min (DAOBLRTP, DAOBLRHV)} Where: DAOBLRTP = DAOBLPR * Min (DAOBLR, OBLRACT); DAOBLRDA = OBLDRPR * Min (DAOBLR, OBLRACT); DAOBLRHV = DAOBLHVPR * Min (DAOBLR, OBLRACT) Example: Table 1: Calculated Day-Ahead Obligation with Refund Target Payment, Day-Ahead Obligation with Refund Derated Amount, & Day-Ahead Obligation with Refund Hedge Value (Hour Ending 11) Table 2: Calculated Day-Ahead Obligation Amount (Hour Ending 11) CRR Owner CRR OBLRACT (MW) DAOBLR (MW) DAOBLPR ($/MW per Hr) DAOBLRTP ($) OBLDRPR ($/MW per Hr) DAOBLRDA ($) DAOBLRHV ($/MWh) DAOBLRHV ($) CO4 PTP Obligation with Refund 4060_RN → NORTH_LZ CRR Owner CRR DAOBLRAMT ($) CO4 PTP Obligation with Refund 4060_RN → NORTH_LZ OBLRACT = Obligation with Refund Actual Usage DAOBLR= Day-Ahead Obligation with Refund; DAOBLPR = Day-Ahead Obligation Price; DAOBLRTP = Day-Ahead Obligation with Refund Target Payment; OBLDRPR = Obligation Deration Price; DAOBLRDA = Day-Ahead Obligation with Refund Derated Amount; DAOBLHVPR = Day-Ahead Obligation with Refund Hedge Value Price; DAOBLRHV = Day-Ahead Obligation Hedge Value

Texas Nodal 39 Day-Ahead Obligation with Refund Other Calculations –Other Output Bill Determinants DAOBLRCROTOT_ =   Min (0, DAOBLRAMT_ ) SRSP SKSP DAOBLRCHOTOT_ =   Max (0, DAOBLRAMT_ ) SRSP SKSP DAOBLRAMTOTOT_ = DAOBLRCROTOT_ + DAOBLRCHOTOT_ DAOBLRCRTOT =  DAOBLRCROTOT_ CO DAOBLRCHTOT =  DAOBLRCHOTOT_ CO

Texas Nodal 40 Day-Ahead Option with Refund Amount (DAOPTRAMT) –ERCOT shall pay the owner of a PTP Option with Refund the difference in the Day-Ahead Settlement Point Prices between the sink Settlement Point and the source Settlement Point, if positive, subject to a charge for refund (DAOPTRAMT) Exception: The payment of PTP Options with Refund may be further reduced due to transmission elements that are oversold in previous CRR Auctions DAOPTRAMT = (-1) * Max {(DAOPTRTP – DAOPTRDA), Min (DAOPTRTP, DAOPTRHV)} Where: DAOPTRTP = DAOPTPR * Min (DAOPTR, OPTRACT * DAOPTR / (DAOPTR + RTOPTR)) DAOPTRDA = OPTDRPR * Min (DAOPTR, OPTRACT * DAOPTR / (DAOPTR + RTOPTR)) DAOPTRHV = DAOPTHVPR * Min (DAOPTR, OPTRACT * DAOPTR / (DAOPTR + RTOPTR)) Example: Table 1: Calculated Day-Ahead Option with Refund Target Payment, Day-Ahead Option with Refund Derated Amount, & Day-Ahead Option with Refund Hedge Value (Hour Ending 24) Table 2: Calculated Day-Ahead Option with Refund Amount (Hour Ending 24) CRR Owner CRR OPTRACT (MW) DAOPTR (MW) RTOPTR (MW) DAOPTPR ($/MWh) DAOPTRTP ($) OPTDRPR ($/MW per Hr) DAOPTRDA ($) DAOPTHVPR ($/MWh) DAOPTRHV ($) CO3 PTP Option with Refund: 4072_RN → NORTH_LZ CRR OwnerCRR DAOPTRAMT ($) CO3 PTP Option with Refund: 4072_RN → NORTH_LZ - $ OPTRACT = Option with Refund Actual Usage DAOPTR= Day-Ahead Option with Refund; RTOPTR= Real-Time Option with Refund; DAOPTPR = Day-Ahead Option Price; DAOPTRTP = Day-Ahead Option with Refund Target Payment; OPTDRPR = Option Deration Price; DAOPTRDA = Day-Ahead Option with Refund Derated Amount; DAOPTHVPR = Day-Ahead Option with Refund Hedge Value Price; DAOPTRHV = Day-Ahead Option Hedge Value

Texas Nodal 41 Day-Ahead Option other Calculations –Other Output Bill Determinants DAOPTRAMTOTOT_ =   DAOPTRAMT_ SRSP SKSP DAOPTRAMTTOT =  DAOPTRAMTOTOT_ CO

Texas Nodal 42 Texas Nodal Settlements Mini-Market - CRR Real-Time - CRR Settlements July 31, 2007

Texas Nodal 43 High-Level Real-Time CRR Settlement Dependencies

Texas Nodal 44 Real-Time CRR Calculations Global Calculations –Real-Time Obligation Price (RTOBLPR) –Real-Time Option Price (RTOPTPR) –Real-Time Option Hedge Value Price (RTOPTHVPR)

Texas Nodal 45 Real-Time CRR Charge Types Real-Time Charge Types (when DAM is executed) –Payments and Charges for Real-Time Obligations Settled in Real- Time (RTOBLAMT) –Payments for NOIE’s PTP Options Settled in Real-Time (RTOPTAMT) –Payments for NOIE’s PTP Options with Refund Settled in Real- Time (RTOPTRAMT) Real-Time Charge Types (when DAM is not executed) –No-DAM Real-Time Obligation Amount (NDRTOBLAMT) –No-DAM Real-Time Option Amount (NDRTOPTAMT) –No-DAM Real-Time Option with Refund Amount (NDRTOPTRAMT) –No-DAM Real-Time FGR Amount (NDRTFGRAMT) –No-DAM Real-Time Obligation with Refund Amount (NDRTOBLRAMT)

Texas Nodal 46 Real-Time Obligation Price (RTOBLPR) –Real-Time Obligation Price (RTOBLPR) is the difference between the Real-Time Settlement Point Prices at the sink Settlement Point and the source Settlement Point 4 RTOBLPR =  (RTSPP_ - RTSPP_ ) i / 4 i = 1 Example: CRRInterval RTSPP at Sink ($/MWh) RTSPP at Source ($/MWh) RTOBLPR ($/MW per Hr) PTP Obligation: 4071_RN  SOUTH_LZ 3 i= 9  i=10  i=11  0.97 i=12  i= 9  i=10  i=11  i=12  PTP Obligation: 4071_RN  SOUTH_LZ 24 i=93  i=94  i=95  i=96  i=93  i=94  i=95  i=96  i = 15-minute Settlement Interval; RTSPP = Real-Time Settlement Point Price ; RTOBLPR = Real-Time Obligation Price = Source Settlement Point; = Sink Settlement Point

Texas Nodal 47 Real-Time Option Price (RTOPTPR) –Real-Time Option Price (RTOPTPR) is the difference between the Real-Time Settlement Point Prices at the sink Settlement Point and the source Settlement Point 4 RTOPTPR =  Max (0, RTSPP_ - RTSPP_ ) i / 4 i = 1 Example: CRRInterval RTSPP at Sink ($/MWh) RTSPP at Source ($/MWh) RTOPTPR ($/MW per Hr) PTP Option: 4072_RN  NORTH_LZ 17 i=65  7.46 i=66  6.06 i=67  2.71 i=68  5.73 i=65  i=66  i=67  i=68  PTP Option: 4072_RN  NORTH_LZ 19 i=73  i=74  i=75  i=76  i=73  i=74  i=75  9.81 i=76  i = 15-minute Settlement Interval; RTSPP = Real-Time Settlement Point Price ; RTOPTPR = Real-Time Option Price = Source Settlement Point; = Sink Settlement Point

Texas Nodal 48 Real-Time Option Hedge Value Price (RTOPTHVPR) –For PTP Options with a source or a sink that is a Resource Node, the PTP Option payment may be reduced (derated) due to directional network elements that are oversold in previous CRR auctions. Real-Time Option Hedge Value Price (RTOPTHVPR) is one of the prices calculated for CRR deration. –Calculation of RTOPTHVPR depends on the source and sink Settlement Point pair configuration If source Settlement Point is a Load Zone/Hub and sink Settlement Point is a Resource Node 4 RTOPTHVPR =  Max (0, MAXRESPR_ – RTSPP_ ) i / 4 i=1 If source Settlement Point is a Resource Node and sink Settlement Point is a Load Zone/Hub 4 RTOPTHVPR =  Max (0, RTSPP_ – MINRESPR_ ) i / 4 i=1 If both source and sink Settlement Points are Resource Nodes 4 RTOPTHVPR =  Max (0, MAXRESPR_ – MINRESPR_ ) i / 4 i=1 MAXRESPR = Maximum Resource Price for sink Settlement Point MINRESPR = Minimum Resource Price for source Settlement Point RTSPP = Real-Time Settlement Point Price for source/sink Settlement Point

Texas Nodal 49 Real-Time Obligation Amount (RTOBLAMT) –ERCOT shall pay or charge the QSE of each PTP Obligation acquired in the Day- Ahead Market the difference in Real-Time Settlement Point Prices between the sink Settlement Point and the source Settlement Point RTOBLAMT = (-1) * RTOBLPR * RTOBL RTOBLAMTQSETOT_ =   RTOBLAMT_ _ _ SRSP SKSP Example: Table 1: Calculated Real-Time Obligation Amount (Hour Ending 2) CRR OwnerCRR RTOBL (MW) RTOBLPR ($/MW per Hr) RTOBLAMT ($) QSE1 PTP Obligation 4060_RN  NORTH_HUB QSE2 PTP Obligation SOUTH_HUB  NORTH_LZ $ RTOBL = Real-Time Obligation RTOBLPR = Real-Time Obligation Price = Source Settlement Point = Sink Settlement Point

Texas Nodal 50 Real-Time Option Amount (RTOPTAMT) –ERCOT shall pay the NOIE CRR Owner that owns a PTP Option that was declared before Day-Ahead Market execution by the NOIE to be settled in Real-Time and not cleared in the Day-Ahead Market, the positive difference in Real-Time Settlement Point Prices between the sink and the source. (RTOPTAMT) Exception: For a PTP Option that source or sink at a Resource Node, the payment may be reduced due to directional network elements that are oversold in previous CRR auctions. –If both source and sink Settlement Points are Load Zones/Hubs RTOPTAMT = (-1) * RTOPTTP –If either source or sink Settlement Point is a Resource Node RTOPTAMT = (-1) * Max {(RTOPTTP – RTOPTDA), Min (RTOPTTP, RTOPTHV)} Where RTOPTTP = RTOPTPR * RTOPT; RTOPTDA = OPTDRPR * RTOPT; RTOPTHV = RTOPTHVPR * RTOPT Example: Table 1: Calculated Real-Time Option Target Payment, Real-Time Option Derated Amount, & Real-Time Option Hedge Value (Hour Ending 11) Table 2: Calculated Real-Time Option Amount (Hour Ending 11) CRR Owner CRR RTOPT (MW) RTOPTPR ($/MW per Hr) RTOPTTP ($) OPTDRPR ($/MW per Hr) RTOPTDA ($) RTOPTHVPR ($/MW per Hr) RTOPTHV ($) CO4 PTP Option 4072_RN → SOUTH_LZ CRR Owner CRR RTOPTAMT ($) CO4 PTP Option 4072_RN → SOUTH_LZ - $ RTOPT = Real-Time Option RTOPTPR = Real-Time Option Price RTOPTTP = Real-Time Option Target Payment OPTDRPR = Option Deration Price RTOPTDA = Real-Time Option Derated Amount RTOPTHVPR = Real-Time Option Hedge Value Price RTOPTHV = Real-Time Option Hedge Value

Texas Nodal 51 Real-Time Option Amount (RTOPTAMT) (continued) –Other Output Bill Determinants RTOPTAMTOTOT_ =   RTOPTAMT_ _ _ SRSP SKSP RTOPTAMTTOT =  RTOPTAMTOTOT_ CO

Texas Nodal 52 Real-Time Option with Refund Amount (RTOPTRAMT) –ERCOT shall pay the NOIE that owns a PTP Option with Refund that was allocated to that NOIE as a PCRR and that was, declared before Day-Ahead Market execution by the NOIE to be settled in Real-Time but not cleared in the Day-Ahead Market, for MW quantity up to the pro-rata actual usage based on the positive difference in Real-Time Settlement Point Prices between the sink and source. Exception: The payment of PTP Options with Refund may be further reduced due to transmission elements that are oversold in previous CRR auctions RTOPTRAMT = (-1) * Max {(RTOPTRTP – RTOPTRDA), Min (RTOPTRTP, RTOPTRHV)} Where RTOPTRTP = RTOPTPR * Min (RTOPTR, OPTRACT * (RTOPTR / (DAOPTR + RTOPTR))) RTOPTRDA = OPTDRPR * Min (RTOPTR, OPTRACT * (RTOPTR / (DAOPTR + RTOPTR))) RTOPTRHV = RTOPTHVPR * Min (RTOPTR, OPTRACT * (RTOPTR / (DAOPTR + RTOPTR))) OPTRACT = Option with Refund Actual Usage –Other Output Bill Determinants RTOPTRAMTOTOT_ =   RTOPTRAMT_ SRSP SKSP RTOPTRAMTTOT =  RTOPTRAMTOTOT_ CO

Texas Nodal 53 Real-Time Option with Refund Amount (RTOPTRAMT) (continued) Example: Table 1: Calculated Real-Time Option w/ Refund Target Payment, Real-Time Option w/ Refund Derated Amount, & Real-Time Option w/ Refund Hedge Value (Hour Ending 2) Table 2: Calculated Real-Time Option w/ Refund Amount (Hour Ending 2) CRR Owner CRR RTOPTRAMT ($) CO3 PTP Option w/ Refund 4072_RN → SOUTH_LZ - $ CRR Owner CRR OPTRACT (MW) RTOPTR (MW) DAOPTR (MW) RTOPTPR ($/MW per Hr) RTOPTRTP ($) OPTDRPR ($/MW per Hr) RTOPTRDA ($) RTOPTHVPR ($/MW per Hr) RTOPTRHV ($) CO3 PTP Option w/ Refund 4072_RN  NORTH_LZ OPTRACT: Option with Refund Actual Usage RTOPTR = Real-Time Option with Refund DAOPTR = Day-Ahead Option with Refund RTOPTPR = Real-Time Option Price RTOPTRTP = Real-Time Option with Refund Target Payment OPTDRPR = Option Deration Price RTOPTRDA = Real-Time Option with Refund Derated Amount RTOPTHVPR = Real-Time Option Hedge Value Price RTOPTRHV = Real-Time Option with Refund Hedge Value

Texas Nodal 54 No DAM Real-Time Obligation Amount (NDRTOBLAMT) –When the Day-Ahead Market is not executed, ERCOT shall pay or charge the owner of each PTP Obligation based on the difference in Real-Time Settlement Point Prices between the sink Settlement Point and the source Settlement Point. –ERCOT does not reduce the “No DAM PTP Obligation” payment for transmission elements that are oversold in previous CRR auctions NDRTOBLAMT = (-1) * RTOBLPR * DAOBL NDRTOBLAMTOTOT_ =   NDRTOBLAMT_ _ _ SRSP SKSP NDRTOBLAMTTOT =  NDRTOBLAMTOTOT_ CO

Texas Nodal 55 No DAM Real-Time Option Amount (NDRTOPTAMT) –When the Day-Ahead Market is not executed, ERCOT shall pay the owner of each PTP Option based on the positive difference in Real-Time Settlement Point Prices between the sink Settlement Point and the source Settlement Point –ERCOT shall not reduce the “No DAM PTP Option” payment due to transmission elements that are oversold in previous CRR auctions. NDRTOPTAMT = (-1) * NDRTOPTTP NDRTOPTTP = RTOPTPR * OPT NDRTOPTAMTOTOT_ =   NDRTOPTAMT_ _ _ SRSP SKSP NDRTOPTAMTTOT =  NDRTOPTAMTOTOT_ CO

Texas Nodal 56 No DAM Real-Time Option with Refund Amount (NDRTOPTRAMT) –When the Day-Ahead Market is not executed, ERCOT shall pay the NOIE owner of each PTP Option with Refund that was allocated to that NOIE as a PCRR, for the quantity up to the actual usage based on the positive difference in Real-Time Settlement Point Prices between the sink Settlement Point and the source Settlement Point –ERCOT shall not reduce the “No DAM PTP Options with Refund” payment due to transmission elements that are oversold in previous CRR auctions NDRTOPTRAMT = (-1) * NDRTOPTRTP NDRTOPTRTP = RTOPTPR * MIN (OPTR, OPTRACT) NDRTOPTRAMTOTOT_ =   NDRTOPTRAMT_ _ _ SRSP SKSP NDRTOPTRAMTTOT =  NDRTOPTRAMTOTOT_ CO

Texas Nodal 57 No DAM Real-Time FGR Amount (NDRTFGRAMT) –In the event that ERCOT is unable to execute the Day-Ahead Market, ERCOT shall pay the owner of the FGR an amount based on the time-weighted Shadow Price of each SCED interval for each directional network element associated with the FGR for each contingency (including the null contingency or base case) normalized to the impact of the principal network element of the FGR (the normal rating of which is used to determine the total MW amount for the flowgate) NDRTFGRAMT = (-1) * NDRTFGRTP NDRTFGRTP = NDRTFGRPR * DAFGR NDRTFGRAMTOTOT_ =  NDRTFGRAMT_ _ F NDRTFGRAMTTOT =  NDRTFGRAMTOTOT_ CO

Texas Nodal 58 No DAM Real-Time Obligation with Refund Amount (NDRTOBLRAMT) –In the event that ERCOT is unable to execute the Day-Ahead Market, ERCOT shall pay or charge the NOIE owner of a PTP Obligation with Refund, for the quantity up to the actual usage based on the difference in the Real-Time Settlement Point Prices between the sink Settlement Point and the source Settlement Point NDRTOBLRAMT = (-1) * NDRTOBLRTP NDRTOBLRTP = RTOBLPR * Min (DAOBLR, OBLRACT) NDRTOBLRAMTOTOT_ =   NDRTOBLRAMT_ _ _ SRSP SKSP NDRTOBLRAMTTOT =  NDRTOBLRAMTOTOT_ CO

Texas Nodal 59 Texas Nodal Settlements Mini-Market - CRR - CRR Balancing Account - July 31, 2007

Texas Nodal 60 Daily CRR Balancing Account Daily CRR Balancing Account Calculations and Charge Types –Credit to CRR Balancing Account (CRRBACR) –Day-Ahead Shortfall Charges to CRR Owners (DACRRSAMT) –Real-Time Shortfall Charges to CRR Owners (RTCRRSAMT) Scenarios in Settlements Mini-Market: –DA Congestion Rent > Net Amount due to CRR Owners (CRR Balancing Account Credit) (Interval 1, Interval 3 ~5, Interval 7~ 10, Interval 12 ~ 16, Interval 19, Interval 21 ~ 24) –DA Congestion Rent < Net Amount due to CRR Owners (Short-Pay CRR Owners) (Interval 11, Interval 17, Interval 18)

Texas Nodal 61 Credit to CRR Balancing Account (CRRBACR) greaterIf the Day-Ahead Congestion Rent (DACONGRENT) is greater than the total payment to all CRR Owners for the CRRs settled in the Day-Ahead Market for any Operating Hour, a credit is put into the CRR Balancing Account for that Operating Hour CRRBACR = Max (0, (DACONGRENT + DACRRCRTOT + DACRRCHTOT)) Where: Day-Ahead CRR Credit Total  DACRRCRTOT = DAOBLCRTOT + DAOBLRCRTOT + DAOPTAMTTOT+ DAOPTRAMTTOT + DAFGRAMTTOT Day-Ahead CRR Charge Total  DACRRCHTOT = DAOBLCHTOT + DAOBLRCHTOT Example: Interval DACONGRENT ($) DACRRCRTOT ($) DACRRCHTOT ($) CRRBACR ($) 1$ $ $ DACONGRENT = Day-Ahead Congestion Rent DACRRCRTOT = Day-Ahead CRR Credit Total DACRRCHTOT = Day-Ahead CRR Charge Total

Texas Nodal 62 Day-Ahead Shortfall Charges to CRR Owners (DACRRSAMT) lessFor each Operating Hour, if the Day-Ahead Congestion Rent (DACONGRENT) is less than the total payment to all CRR Owners for the CRRs settled in the Day-Ahead Market, a charge will be made to each CRR Owner for any of its CRRs settled in the Day-Ahead Market or Real-Time Market that have positive settlement prices, except for CRRs bought in the Day-Ahead Market DACRRSAMT = DACRRSAMTTOT * CRRCRRSDA Where: DACRRSAMTTOT = Day-Ahead CRR Shortfall Amount Total = (-1) * Min (0, DACONGRENT + DACRRCRTOT + DACRRCHTOT) CRRCRRSDA = CRR Credit Ratio Share Day-Ahead per CRR Owner = (DAOBLCROTOT + DAOBLRCROTOT + DAOPTAMTOTOT + DAOPTRAMTOTOT + DAFGRAMTOTOT) / (DACRRCRTOT + RTOPTAMTTOT + RTOPTRAMTTOT) Example: Table 1: Calculated Day-Ahead CRR Shortfall Amount Total Table 2: Calculated Day-Ahead CRR Shortfall Amount Charges to CRR Owner Interval DACONGRENT ($) DACRRCRTOT ($) DACRRCHTOT ($) DACRRSAMTTOT ($) 11$ $ $ $ Interval CRR Owner CRRCRRSDA DACRRSAMT ($) 11CO DACONGRENT = Day-Ahead Congestion Rent DACRRCRTOT = Day-Ahead CRR Credit Total DACRRCHTOT = Day-Ahead CRR Charge Total DACRRSAMTTOT = Day-Ahead CRR Shortfall Amount Total CRRCRRSDA = CRR Credit Ratio Share Day-Ahead

Texas Nodal 63 Real-Time Shortfall Charges to CRR Owners (RTCRRSAMT) lessFor each Operating Hour, if the Day-Ahead Congestion Rent (DACONGRENT) is less than the total payment to all CRR Owners for the CRRs settled in the Day-Ahead Market, a charge will be made to each CRR Owner for any of its CRRs settled in the Day-Ahead Market or Real-Time Market that have positive settlement prices, except for CRRs bought in the Day-Ahead Market RTCRRSAMT = DACRRSAMTTOT * CRRCRRSRT Where: DACRRSAMTTOT = Day-Ahead CRR Shortfall Amount DACRRSAMTTOT = (-1) * Min (0, DACONGRENT + DACRRCRTOT + DACRRCHTOT) CRRCRRSRT = CRR Credit Ratio Share Real-Time per CRR Owner CRRCRRSDA = (RTOPTAMTOTOT + RTOPTRAMTOTOT) / (DACRRCRTOT + RTOPTAMTTOT + RTOPTRAMTTOT) Example: Table 1: Day-Ahead CRR Shortfall Amount Total Table 2: Calculated Real-Time CRR Shortfall Amount Charges to CRR Owner Interval DACRRSAMTTOT ($) 11 $ Interval CRR Owner CRRCRRSRT RTCRRSAMT ($) 11CO DACRRSAMTTOT: Day-Ahead CRR Shortfall Amount Total CRRCRRSRT = CRR Credit Ratio Share Real-Time

Texas Nodal 64 Texas Nodal CRR Settlements - Acronyms - July 31, 2007

Texas Nodal 65 CRR Settlements - Acronyms CConstraint Identifier ACRR Annual / Monthly Auctions CHCRR Account Holder COCRR Owner CRRBACRCRR Balancing Account Credit CRRNZREVCRR Non-Zonal Revenue CRRRAMTMonthly Refund to Short-Paid CRR Owners CRRZREVCRR Zonal Revenue per 2003 ERCOT Congestion Management Zone DACONGRENTDay-Ahead Congestion Rent DACRRSAMTDay-Ahead Shortfall Charges to CRR Owners DAFGRDay-Ahead FGR (MW) DAFGRAMTDay-Ahead FGR Amount DAFGRDADay-Ahead FGR Derated Amount DAFGRHVDay-Ahead FGR Hedge Value DAFGRHVPRDay-Ahead FGR Hedge Value Price DAFGRPRDay-Ahead FGR Price DAFGRTPDay-Ahead FGR Target Payment DAMDay-Ahead Market

Texas Nodal 66 CRR Settlements - Acronyms DAOBLDay-Ahead Obligation (MW) DAOBLAMTDay-Ahead Obligation Amount DAOBLDADay-Ahead Obligation Derated Amount DAOBLHVDay-Ahead Obligation Hedge Value DAOBLHVPRDay-Ahead Obligation Hedge Value Price DAOBLRDay-Ahead Obligation with Refund (MW) DAOBLRAMTDay-Ahead Obligation with Refund Amount DAOBLRDADay-Ahead Obligation with Refund Derated Amount DAOBLRHVDay-Ahead Obligation with Refund Hedge Value DAOBLRTPDay-Ahead Obligation with Refund Target Payment DAOBLTPDay-Ahead Obligation Target Payment DAOPTDay-Ahead Option (MW) DAOPTAMTDay-Ahead Option Amount DAOPTDADay-Ahead Option Derated Amount DAOPTHVDay-Ahead Option Hedge Value DAOPTHVPRDay-Ahead Option Hedge Value Price DAOPTPRDay-Ahead Option Price DAOPTRDay-Ahead Option with Refund (MW)

Texas Nodal 67 CRR Settlements - Acronyms DAOPTRAMTDay-Ahead Option with Refund Amount DAOPTRDADay-Ahead Option with Refund Derated Amount DAOPTRHVDay-Ahead Option with Refund Hedge Value DAOPTRTPDay-Ahead Option with Refund Target Payment DAOPTTPDay-Ahead Option Target Payment DASFMCWGRSDay-Ahead Shift Factor of McCamey WGRs DASPDay-Ahead Shadow Price DAWALBEPDay-Ahead Weighted Average Load Bus Energy Price DAWASFDay-Ahead Weighted Average Shift Factor DAWASFLBDay-Ahead Weighted Average Shift Factor of Load Buses DRFDeration Factor EDirectional Network Element FFlowgate FGRFlowgate Right FGRDRPRFGR Deration Price FIPFuel Index Price INFImpact Normalization Factor LACMRNZAMTLoad-Allocated CRR Monthly Revenue Non-Zonal Amount LACMRZAMTLoad-Allocated CRR Monthly Revenue Zonal Amount per Zone LACRRAMTCRR Balancing Account Closure

Texas Nodal 68 CRR Settlements - Acronyms MAXRESHRMaximum Resource Price Heat Rate MAXRESPRMaximum Resource Price for sink Settlement Point MAXRESRPRMaximum Resource Price for Resources located at the sink Settlement Point MCFRIMcCamey Flowgate Right MINRESHRMinimum Resource Price Heat Rate MINRESPRMinimum Resource Price for source Settlement Point MINRESRPRMinimum Resource Price for Resources located at the source Settlement Point NDRTFGRAMTNo DAM FGR Amount NDRTOBLAMTNo DAM Real-Time Obligation Amount NDRTOBLRAMTNo DAM Real-Time Obligation with Refund Amount NDRTOPTAMTNo DAM Real-Time Option Amount NDRTOPTRAMTNo DAM Real-Time Option with Refund Amount OBLDRPRObligation Deration Price OBLRACTObligation with Refund Actual usage OPTPTP Options (MW) OPTDRPROption Deration Price OPTRPTP Options with Refund (MW) OPTRACTOption with Refund Actual usage PCRRPre-Assigned Congestion Revenue Right PCRRNZREVPCRR Non-Zonal Revenue PCRRZREVPCRR Zonal Revenue per 2003 ERCOT Congestion Management Zone

Texas Nodal 69 CRR Settlements - Acronyms PTPPoint-to-Point QQualified Scheduling Entity (QSE) RResource RMRCEFARMR Contract Estimated Fuel Adder RMRCHRHSLRMR Contract Heat Rate at HSL Level RMRCHRLSLRMR Contract Heat Rate at LSL Level RTCRRSAMTReal-Time Shortfall Charges to CRR Owners RTOBLReal-Time Obligation (MW) RTOBLAMTReal-Time Obligation Amount RTOBLPRReal-Time Obligation Price RTOBLRReal-Time Obligation with Refund RTOBLRAMTReal-Time Obligation with Refund Amount RTOPTReal-Time Option (MW) RTOPTAMTReal-Time Option Amount RTOPTDAReal-Time Option Derated Amount RTOPTHVReal-Time Option Hedge Value RTOPTHVPRReal-Time Option Hedge Value Price RTOPTPRReal-Time Option Price RTOPTRReal-Time Option with Refund (MW) RTOPTRAMTReal-Time Option with Refund Amount

Texas Nodal 70 CRR Settlements - Acronyms RTSPReal-Time Shadow Price RTSPPReal-Time Settlement Point Price SCEDSecurity-Constrained Economic Dispatch SKSPSink Settlement Point SRSPSource Settlement Point ZZone

Texas Nodal 71 Questions