Role of Account Management at ERCOT PRR 672 Collaborative Analysis Presentation to RMS November 8, 2006 DRAFT ONLY

2 Background of PRR672 PRR written as a result of changes from Terms and Conditions. PRR requested timing changes for ERCOT processing of transactions –TCTF noted in original PRR: –A group needs to review CR and TDSP transaction timing requirements related to Terms and Conditions project to be addressed in a separate PRR. Group shared that ERCOT timing was first priority. TDSPs and CRs are reviewing timing changes. –Due to the mandatory nature of the rulemaking, TCTF would also ask that ERCOT consider and present other options that may be less expensive to implement in the event that the changes proposed in this PRR would be cost prohibitive or would not allow implementation by the dates required by the rulemaking.

DRAFT ONLY 3 Background of PRR672 PRR puts ERCOT transaction timings into four categories based on their priority in the marketplace: –Level 1 Transactions: Including transaction pairs (inbound and outbound) relating to 814_16 priority move-ins and 814_20 creates (adds), which should be processed within 1 Retail Business Hour (any hour within a Retail Business Day as defined in Section 2 of Protocols). –Level 2 Transactions: Including transaction pairs relating to standard move-ins, move-outs, Off cycle Drops to AREP and Off cycle switches, which should be processed within 2 Retail Business Hours. –Level 3 Transactions: Including transaction pairs relating to historical usage transactions, and 814_20 changes, which should be processed within 4 Retail Business Hours. –Level 4 Transactions: Including pairs relating to On-cycle Switches, On- cycle Drops, 814_26 Ad Hoc Usage Request, Establishing/Deleting CSA within 1 Retail Business Day.

DRAFT ONLY 4 PRS recommendation 7/20/06 On 07/20/06, PRS voted to recommend approval of PRR672 as submitted by the Retail Market Subcommittee (RMS). Revised language will be grey-boxed until system implementation. ERCOT will be directed to implement priority move-ins within two (2) Retail Business Hours with the TX SET 3.0 implementation. Remaining grey-boxed language will be implemented with future system functionality. ERCOT and Market Participants will have a collaborative analysis of Retail Business Processes (RBP) associated with PRR672 transaction timing changes. Results of the analysis will be presented to RMS no later than the November 2006 RMS meeting. Rank and priority: –Two (2) Retail Business Hours processing and sorting of priority move-in to be included with TX SET 3.0. –All other changes for PRR672 will be included in Project 60008_01 (priority 1.1; rank 10) The motion passed with one (1) abstention from the Municipal segment. All Market Segments were present for the vote.

DRAFT ONLY 5 TAC recommendation to BOD 8/3/06 On 08/03/06, TAC voted to recommend approval of PRR672 with Phase 2 and Phase 3 language to be grey-boxed and assigned a high priority to Phase 1. Priorities for Phase 2 and Phase 3 will be considered after system and impact analyses have been completed and issues have been further vetted. TAC will present Phase 1 and its associated costs to the ERCOT Board for approval at this time. Phase 2 and Phase 3 costs will be further defined upon completion of analysis. The motion passed with two oppositions from the Consumer segment. All Market Segments were present for the vote.

DRAFT ONLY 6 BOD action 8/15/06 The Board voted unanimously to approve PRR672 as recommended by TAC.

DRAFT ONLY 7 Collaborative Analysis – Level 1 Recap Level 1 Transactions: Including transaction pairs (inbound and outbound) relating to 814_16 priority move-ins and 814_20 creates (adds), which should be processed within 1 Retail Business Hour (any hour within a Retail Business Day as defined in Section 2 of Protocols). Findings support timing changes for: –814_16 Priority Move-Ins Approach - Two (2) Retail Business Hours processing and sorting of priority move-in to be included with TX SET 3.0. Approach – additional system changes (going from 2hr to 1hr) to be managed in PR60008 – Market decision to re-rank Findings by ERCOT support alternative to changing transaction timing for: –814_20 Creates (adds) ERCOT recommends near term approach – changing transaction flow process for 814_20s (Two SIRs to be in Feb 2007 release) –Automate the 814_20s throttling capabilities within current processing pipe (all 814s) –Building a separate processing pipe for 814_20/814_21 processing ERCOT requests the market to review the production results from the near-term before adding system changes to PR60008 for the 814_20s

DRAFT ONLY 8 Findings from Analysis – Level 1 transactions Priority Move-Ins –TDSP needs to receive by 5pm or the order is considered received the next business day. –CRs may need to review their batch times –CRs may need to review their call center scripts to ensure that customer expectations are set appropriately

DRAFT ONLY 9 Collaborative Analysis – Level 2 recap Level 2 Transactions: Including transaction pairs relating to standard move-ins, move-outs, Off cycle Drops to AREP and Off cycle switches, which should be processed within 2 Retail Business Hours Findings support timing changes for: –Standard Move-ins –Move outs Approach – additional system changes (going to 2 hr) to be managed in PR60008 – Market decision to re-rank ERCOT does not believe that the analysis support the timing changes for the following: –Off-cycle Switches –Off-cycle Drop to AREP ERCOT plans to file another PRR to move these to Level 4 Market participants did not agree with the moving from Level 2 to Level 4

DRAFT ONLY 10 Findings from Analysis – Level 2 transactions Standard Move-Ins –Standard move ins need to be received 2 business days prior to the requested date. TDSP needs to receive by 5pm or the order is considered received the next business day. –CRs may need to review their batch times –CRs may need to review their call center scripts to ensure that customer expectations are set appropriately

DRAFT ONLY 11 Findings from Analysis – Level 2 transactions Move-outs –85% are submitted 2 or more days ahead –These are Move Outs, Move Out to CSA – does not include force off –Move Outs need to be received 2 business days prior to the requested date. TDSP needs to receive by 5pm or the order is considered received the next business day.

DRAFT ONLY 12 Findings from Analysis – Off Cycle Switches ERCOT does not believe the analysis supports the timing changes for the following: Off-cycle Switches Market behavior of sending >15 days from date requested – changing the timing does not change the result for the end use customer Protocol language for First Available Switch Date (FASD)

DRAFT ONLY 13 Excerpt from Protocol The FASD for a Switch Request where notification has not been waived is calculated as follows: FASD = EPD + 3BD (Mailing to notify Customer of the pending Switch Request) + 7CD (Customer Rescission Period) + 3BD (Processing time to allow for potential cancellation by Customer) In the event that Customer notification has been waived, the CR will indicate such a waiver in the 814_01 transaction. For additional information concerning which Customer class and /or events would qualify for a waiver of Customer notification, CRs should refer to the PUCT rules. The FASD is calculated as follows for a waiver of notification: FASD = EPD + 3BD (Processing time) Where: EPD = ERCOT Processed Date BD =Business Day (Does not include TDSP holidays.) CD =Calendar Day

DRAFT ONLY 14 Findings from Analysis – Off Cycle Drop to AREP ERCOT does not believe the analysis supports the timing changes for the following: Off-cycle Drop to AREP Market behavior of sending at least 8 days from date requested – changing the timing does not change the result for the end use customer Protocol language for First Available Switch Date (FASD)

DRAFT ONLY 15 Findings from Analysis – Off Cycle Drop to AREP ERCOT does not believe the analysis supports the timing changes for the following: Off-cycle Drop to AREP Protocol language for First Available Switch Date (FASD) – excerpt from The FASD for a Drop to AREP Request is calculated starting with the date that ERCOT processes the 814_10 sent by the CR. The FASD is calculated as follows: FASD = EPD + 6BD (Processing time) Where: EPD =ERCOT Processed Date BD =Business Day (Does not include TDSP holidays.)

DRAFT ONLY 16 Collaborative Analysis – Level 3 recap Level 3 Transactions: Including transaction pairs relating to historical usage transactions and 814_20 changes (i.e. maintains), which should be processed within 4 Retail Business Hours Findings by ERCOT support alternative to changing transaction timing for: –814_20 changes (i.e. maintains) ERCOT recommends near term approach – changing transaction flow process for 814_20s (Two SIRs to be in Feb 2007 release) –Automate the 814_20s throttling capabilities within current processing pipe (all 814s) –Building a separate processing pipe for 814_20/814_21 processing ERCOT requests the market to review the production results from the near- term before adding system changes to PR60008 for the 814_20s Findings indicate that ERCOT already meets the 4 hour turn for historical usage (867_02).

DRAFT ONLY 17 Collaborative Analysis – Level 4 recap Level 4 Transactions: Including pairs relating to On-cycle Switches, On-cycle Drops, 814_26 Ad Hoc Usage Request, Establishing/Deleting CSA within 1 Retail Business Day. –Does not change current protocol timing. –No analysis requested by Market. –ERCOT will recommend adding additional transactions to this category based upon the analysis shared with the market.

DRAFT ONLY 18 Collaborative Analysis Recommendations Recommendations: 1.TX SET 3.0 – priority Move ins w/in 2 hours – in progress 2.Ask ERCOT to move forward with near-term recommendations for 814_20 processing changes to be implemented prior to PR Automate the 814_20s throttling capabilities within current processing pipe (all 814s) Building a separate processing pipe for 814_20/814_21 processing 3.Re-rank and initiate project PR60008 (remainder of grey box) –Intent of PR60008 is to implement remainder of grey box changes to address timing of transactions –Intent of PR60008 also to include changes from a PRR that ERCOT will draft for prioritization of all transactions (as set by analysis from this group) and recommend moving off-cycle switches and drops to AREP to level 4 transactions (not everyone participating agreed) –Once re-ranked, ERCOT would provide IA and CBA for system changes (using information from collaborative analysis)

DRAFT ONLY 19 Collaborative Analysis Closure PRR 672 –Phase 1 – already underway for TX SET 3.0 –Phase 2 & 3 – Collaborative Analysis / Future system release (PR60008 – Terms & Conditions) This report back to RMS at Nov 06 Meeting RMS to report to TAC in Dec 06 TAC to report to BOD in Jan 07 –Near term – ERCOT to begin work on near term recommendations –Long term – Market make decision to reprioritize PR60008 for 2007 Project list Market may file PRR on CR / TDSP timing changes that are needed ERCOT will draft PRR for prioritization of all transactions (as set by analysis from this group) and recommend moving off-cycle switches and drops to AREP to level 4 transactions

DRAFT ONLY 20 Collaborative Analysis Closure 814_20 processing - Until near-term recommendations are implemented – ERCOT encourages TDSPs to continue to communicate to ERCOT any large volumes of 814_20s to be managed through current market processes (bundles and manual intervention by ERCOT and TDSPs). Long Term analysis continues at TX SET This concludes the Collaboration effort for PRR672. Thank you for your support.