1 RMS Update to TAC March 30, 2007

2 RMS Activity Summary 1.Change in Drop to AREP Process 2.Market Processes for Solar and Wind Generation 3.Market Preparation for SET MarkeTrak Ph II Update 5.Issues submitted by Market for Consideration 6.SCR745 Update 7.PMO/PPL Process Review

3 1. Drop to AREP Changes PUCT Project oRULEMAKING TO AMEND COMMISSION SUBSTANTIVE RULES CONSISTENT WITH §25.43, PROVIDER OF LAST RESORT (POLR) Project was approved on February 16, 2007 oEffective March 8, 2007, Competitive Retailers shall no longer send 814_10 Drop to AREP transactions to ERCOT. oIn response to the adopted rule: oTX SET will submit to RMS our recommended changes to Protocols Sections 15 and 19 concerning the 814_10 Drop to AREP transaction. oTexas Test Plan Team has eliminated the Drop to AREP Test Script from CR Market Certification testing effective with Flight 0407 oMarket Metrics Working Group will continue to provide quarterly reports of the number of 814_10 Drop to AREP transactions received by ERCOT. Re-evaluation of 814_10 Drop to AREP reporting will be conducted once the new Performance Measures rule is introduced.

4 2. Market Process for Solar & Wind Devices In an effort to conserve on their electrical usage by using environmentally safe devices, Retail customers are purchasing and installing wind and solar equipment on their residence and in some cases the premise may even be their place of business. With solar panels/cells these types of devices have shown to reduce the amount of usage that is recorded at the billing meter, as well as, based upon the amount of consumption may generate an output of electricity onto the utility’s distribution line.

5 New Technology Creates New Issues TX SET discussed some of the following issues at a high level and came to the conclusion that these issues are BIGGER than TX SET: –Currently TX SET 867_03 Monthly Usage does not support negative values in usage –A standard process to communicate net values and/or value of onsite generation is needed. Input from CR’s and ERCOT necessary. –The REP of Record may want to know exactly how much electricity was generated by the Retail Customer’s equipment to pass onto the customer any savings information. –Does the CR expect to be Settled on the electricity generated? If yes, what are the Settlement implications and how would the information be communicated? –What role will ERCOT play with these? Will they support “banking”? REC’s?

6 New Technology Creates New Issues –Do the current Protocols support Solar and Wind producing equipment? –Are there any gaps between market processes and Substantive Rules , , or with PURA (b)(3)? –Could this type of premise require a change or addition to the Load Profile Assignment because of the frequent fluctuation of usage? –PUCT Project 33874, Advanced Metering Infrastructure Rulemaking may require IDR’s at all locations resulting in negative interval values being communicated. –House Bills 1415 and 1958 may impact –Where should this issue belong because it may cross into both the Retail Market and Commercial Operations Subcommittees? –Are there Wholesale implications as well?

7 New Technology Creates New Issues These customers are more than likely to be residential or small commercial type premise where the customer is looking for cost savings to their bottom line while in that process of trying to benefit from tax incentives. Competitive Metering Working Group has been asked to review rules and protocols to identify any gaps. COMET will also be considerate of pending legislation. Encourage participation by COPS membership or creation of joint RMS and COPS Task Force to address issues.

8 3. Market Preparation for TX SET 3.0 All Market Participants have responded that there are no issues with their preparation and ability to transition on the June 22 nd weekend. ERCOT still in stabilization from RBP (TIBCO replacement of Seebeyond) in December and with February release. PUCT mandate of July 1 implementation poses tight timeline.

9 4. MarkeTrak Phase II Enhancements Market Metrics Working Group is: – further developing reporting requirements from MarkeTrak. –Drafting SCR defining enhancements for Ph II implementation MMWG is also in holding pattern awaiting direction from PUCT Staff on the Performance Measures Rulemaking

10 5. Issues Submitted by MP’s for RMS Consideration Data Extract Variance (DEV) where Load Scheduling Entity (LSE) Relationship Changes leaving usage without assignment and potential to be assigned as UFE. –ERCOT clarified role of TDSP when accepting CR request for change to assign a DUNS with liability Inadvertent Gain Manual Processes –A workshop will be held to look for opportunities to streamline process and determine if updates to RMG are necessary. –Workshop scheduled for April 5 –Potential exists that the Inadvertent Gain Task Force could be reformed.

11 6. SCR745 Update Testing Status as of 03/06/07 –Successfully tested 148 of 148 MP’s, 18 of 18 entities –No open issues Production Migration Status as of 03/06/07 –All MP’s have successfully migrated to new environment –Migrations completed 03/09/07 –Start of Metrics collection against new environment was delayed until 03/12/07 –Old NAESB URL will be disabled on 03/30/07

12 7. PMO/PPL Process Review Managing Project Funding Changes David Troxtel, Program Management Office Presentation to RMS on March 14, 2007

13 Managing Funding Changes Process for Managing Changes in Project Funding  Individual CARTs have authority to make project budget changes <$100k  They must still manage within their allocated CART budget  Project budget changes >=$100k go to the ERCOT Strategic Review Team (directors) for review and approval  CARTs bring forward proposals for reallocation of funds (including the CART which released the funds)  Project budget changes >=$500k go to the ERCOT Executive Committee (EC) for review and approval  SRT recommendation is provided  Project budget changes >=$1M go to the ERCOT Board of Directors for review and approval

14 Managing Funding Changes Texas SET 3.0 Funding Transfer  Texas SET 3.0 was estimated at $1.63M going into Execution  PPL budget was $3.75M  $2.1M variance was reported to SRT by RO CART  Reasons: Project consolidation, reduced external labor, hardware not needed  RO presented a proposal to use some of the funds within RO  CO presented a proposal to use the funds for facilities needs  Build out unfinished TCC2 space, reconfigure cubicles to increase cube count, construct 12,000 sq. ft. annex/warehouse  The SRT and Executive Committee decided the best course of action was to reallocate the funds to CO  No impact to planned RO market projects to be started in 2007; possible, but small, impact to delivery in 2007  These decisions occurred very quickly due to timing constraints relating to the February Board of Directors meeting  Reported to RMS on 2/14  Board reviewed proposal on 2/20 (see next slide)

15 Managing Funding Changes At February Board meeting a portion of the proposed CO facilities project was approved (PR _01)  Approved (used $600k of $2.1M reallocated funds)  Reconfigure TCC2 cubicles from 6 packs to 8 packs (+216 seats)  Build out unfinished TCC2 space (+136 seats)  Configure TCC2 space for Nodal market trials  Reconfigure conference rooms as vendor/team rooms  Parking lot expansion (+130 spaces)  Off-site storage (+5,000 sq ft leased space)  Not Approved  12,000 sq ft annex/warehouse  CO will bring forward a proposal for remaining needs at an upcoming Board meeting  Reallocated funds remain with CO until final decisions are made on facilities needs ($1.5M not yet committed to a project)  If additional effort is not approved, funds will be returned to SRT for reallocation consideration

16 Current RO PPL Status* – above the line TX SET 3.0 Budget Range has changed to reflect final estimated cost Overall RO Capability Line Funding has been lowered to $4.879M from $7M to reflect change in TX SET 3.0 Budget *The source for this presentation is the February 2007 PPL posted to ERCOT.com, dated 2/21/07

17 Current RO PPL Status – below the line 2007 Planned but not Funded

18 PMO/PPL Process Review Action Step: –RMS will be investigating what changes are necessary to ensure market input and approval of any PPL changes BEFORE the changes occur.

19 Questions ?