Nodal Market Workshop for Retail Electric Providers October 6 th 2010 Austin, Texas

L EGAL D ISCLAIMERS AND A DMONITIONS 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 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.Guidelines for Members Slide 2

A GENDA I NTRODUCTION : M ARCIE Z LOTNIK, COO & CHAIRMAN, STARTEX POWER 9:30 A. M. N ODAL M ARKET P ROGRAM U PDATE ERCOT 9:45 A. M. P ANEL 1: THE BIG PICTURE INTERACTIONS BETWEEN ERCOT AND MARKET PARTICIPANTS 10:15 A. M. LUNCH 11:15 A. M. P ANEL 2: WHOLESALE MARKET CHANGES I NTERACTIONS BETWEEN MARKET PARTICIPANTS 12:00 P. M. BREAK 1:30 P. M. P ANEL 3: RETAIL MARKET CHANGES I NTERACTIONS BETWEEN REP ’ S AND RETAIL CONSUMERS 1:45 P. M.

O PENING R EMARKS PLEASE WELCOME : M ARCIE Z LOTNIK COO & CHAIR, S TAR T EX P OWER ERCOT BOARD MEMBER

M ODERATOR R AJ CHUDGAR SUNGARD CONSULTING SERVICES PLEASE WELCOME :

P ANEL 1: THE BIG PICTURE INTERACTIONS BETWEEN ERCOT AND MARKET PARTICIPANTS

T HE B IG P ICTURE Slide 7

ERCOT AND M ARKET P ARTICIPANTS Slide 8 PANEL 1: THE BIG PICTURE I NTERACTIONS BETWEEN ERCOT AND M ARKET P ARTICIPANTS

CRR Account Holder QSE Maintains Available Credit Limit (ACL) with ERCOT ERCOT AND M ARKET P ARTICIPANTS PANEL 1: THE BIG PICTURE I NTERACTIONS BETWEEN ERCOT AND M ARKET P ARTICIPANTS M ANAGING C REDIT CRR Auctions Day-Ahead Market Real-Time

PANEL 1: THE BIG PICTURE INTERACTIONS BETWEEN ERCOT & MARKET PARTICIPANTS TOPICS MARKET RELATIONSHIPS TRANSITION TO NODAL MARKET CREDIT ISSUES ZONAL - NODAL CHANGES P ANEL -1 Slide 10

P ANEL -1 P ANEL MEMBERS : GDF SUEZ E NERGY R ESOURCES NA LUMINANT E NERGY C OMPANY ERCOT ANDREW ELLIOT SHERRY LOONEYCHERYL YAGER DIRECT E NERGY READ COMSOCK TRIEAGLE E NERGY MARTY DOWNEY

O VERVIEW T OWARD A NEW M ARKET M ODEL Slide Days and counting !!! Nodal Market December 1 st, 2010 Slide 12

O VERVIEW Who are the Players? QSELSE Resource CRR Account Holder Qualified Scheduling Entities Load Serving Entities ( REP, NOIE ) Resource Entities Slide 13 TSP Transmission Service Providers Distribution Service Providers DSP CRR Account Holders Counter Party

O VERVIEW Zonal Market Nodal Market Slide 14 Improved price signals Improved dispatch efficiencies Direct assignment of local congestion Hubs Load Zones Resource Nodes

O VERVIEW Slide 15

P ANEL 1 DISCUSSION SPEAK INTO A MICROPHONE INTRODUCE YOURSELF KEEP QUESTIONS BRIEF & CONCISE 16

P ANEL 2: WHOLESALE MARKET CHANGES INTERACTIONS BETWEEN MARKET PARTICIPANTS RE

P ANEL 2: WHOLESALE MARKET CHANGES Slide 18 PANEL 2: WHOLESALE MARKET CHANGES I NTERACTIONS BETWEEN M ARKET P ARTICIPANTS

PANEL 2: WHOLESALE MARKET CHANGES INTERACTIONS BETWEEN MARKET PARTICIPANTS TOPICS BILATERAL T RADES (E NERGY, A NCILLARY S ERVICES, C APACITY ) HEDGING I NSTRUMENTS CRR, DAM PTP OBLIGATIONS QSE - REP RELATIONSHIP NODAL MARKET SETTLEMENT ( DAM, RUC, REAL - TIME ) P ANEL - 2 Slide 19 RE

P ANEL - 2 P ANEL MEMBERS : POWER & GAS CONSULTING STRATUS ENERGY ERCOTMP2ENERGY JIM REYNOLDS KIM CASEYSTEVE REEDY BRANDON SCHWERTNER SHELL E NERGY N ORTH A MERICA TRAVIS RADTKE

Overview - Serving Load Energy Capacity Ancillary Services What are the wholesale market costs for serving load? Slide 21

Overview - Serving Load Energy and Capacity Bilateral Trade Day-Ahead Market Real-Time Purchase Energy & Capacity Energy & Capacity Energy & Capacity Energy & Capacity Energy Slide 22

Overview - Reliability Unit Commitment (RUC) Capacity Short Charge Capacity Obligations Capacity Supply Capacity Shortfall Slide 23 QSEs with Capacity Shortfall are assessed Capacity Short Charges Load Bilateral Sales DAM Sales Resources Bilateral Purchases DAM Purchases

Energy Supply Generation DAM Purchase Bilateral Purchases Energy Supply Generation DAM Purchase Bilateral Purchases Energy Obligations Load DAM Sales Bilateral Sales Energy Obligations Load DAM Sales Bilateral Sales Overview - Real-Time Operations Slide 24 Resource Nodes Load Zones Hubs

P ANEL 2 DISCUSSION SPEAK INTO A MICROPHONE INTRODUCE YOURSELF KEEP QUESTIONS BRIEF & CONCISE 25

P ANEL 3: RETAIL MARKET CHANGES INTERACTIONS BETWEEN REP S AND RETAIL CUSTOMERS

P ANEL 3: RETAIL MARKET CHANGES Slide 27 PANEL 3: RETAIL MARKET CHANGES I NTERACTIONS BETWEEN R ETAIL E LECTRIC P ROVIDERS AND C USTOMERS

PANEL 3: RETAIL MARKET CHANGES REP ’ S AND RETAIL CONSUMERS TOPICS N ODAL MARKET CHARGES C ONTRACTS P RODUCT AND SERVICE OFFERINGS C ONSUMER PROTECTION O VERVIEW Slide 28

Introduction P ANEL 3 MEMBERS : STARTEX P OWER PUBLIC U TILITIES C OMMISSION OF T EXAS TEXAS OFFICE OF P UBLIC U TILITY C OUNSEL FOX, SMOLEN, AND A SSOCIATES STEVE MADDEN SHAWNEE CLAIBORNE-PINTO DANNY BIVENS PAUL SMOLEN PRIORITY P OWER M ANAGEMENT JOHN BICK

P ANEL 3 DISCUSSION SPEAK INTO A MICROPHONE INTRODUCE YOURSELF KEEP QUESTIONS BRIEF & CONCISE 30

THANK YOU FOR YOUR PARTICIPATION