TAC Meeting Update

TAC 9-2 Meeting Agenda and Related Discussion Items ERCOT Board Update including Subcommittee Restructure Nodal Advisory Task Force Report*Day Ahead Market (DAM) Available Credit Limit (ACL) (Possible Vote) Texas Nodal Implementation ERCOT Program Update Network Operations Model Update Nodal Testing Market Cut-Over Overview Market Readiness Market Reform Market Design Report TAC Committee Structure Review Subcommittee Updates Protocol Revisions Subcommittee Updates

Subcommittee Restructure Report TAC Chair asked each Subcommittee Chair to explain to TAC an update of how their Subcommittee would change (based on discussion at the TAC Subcommittee Workshop) as well as provide added benefits. It was noted that changes might be needed to By-laws and TAC operating procedures as well as other documentation.

Subcommittee Restructure Highlights COPs Subcommittee Transition to a Single Working Group Primarily Settlement Focused Combination of all Working Groups COP Market Guide – Transition to a User Guide COPs will elect leadership in January (as usual) Last COPs meeting currently discussed as February 2011 Final COPs meeting – will draft first Settlement Working Group Agenda

Subcommittee Restructure Highlights – cont. Other Subcommittees – Major Changes being discussed -Many Working groups To be combined -Changes to Voting Procedures being proposed -Current Voting Segments/Structure to stay in place

NATF Update from Sept. 2 nd NATF Meeting Motion for ERCOT to reduce ACL for the DAM on non-business days as it does today, except: ERCOT should reduce exposure from three part offers by the product of DAM clearing price times cleared qty for each cleared transaction No longer increase exposure for three part offers based on the difference between historic DAM and RTM prices Reduce exposure from each cleared energy only offer by the product of DAM clearing price, cleared qty, and e2. e2 is set by ERCOT for each counterparty, and only counterparties with favorable pre-DAM treatment qualify this reduction.“ Conditioned on the market participants being able to test a DAM weekend prior to go-live with these changes.”

PRRs – Approved! PRR850, Weather Responsiveness Determination for Interval Data Recorders - URGENT Nodal Protocol Revision Requests NPRR220, Nodal Requirement of Declaring an EEA for Reserves More than 500 MW NPRR231, Treatment of RMR Units in the Day-Ahead Market (formerly “Remove RMR Units from the Day-Ahead Market”) NPRR232, Clarification of Block Load Transfer Registration and Deployment NPRR238, Resolution of Alignment Item A47, A59, A104, A105, A114, A115, A130, A188, and A189 - Provides Clarification and Updates to Network Operations Model Processes for Resource Entities NPRR240, Proxy Energy Offer Curveo NPRR241, Aggregate Incremental Liability (AIL) Calculation and Credit Reports Publish Corrections NPRR243, Load Resource Disqualification, Unannounced Testing, and Complianceo NPRR247, Retail Market Testing Updates Due to the Merger of the TX SET and TTPT Working Groups NPRR248, Removal of Loads from Pre-1999 NOIE Load Zone NPRR249, Resolution of Alignment Item A155 and A159 – Removal of Text Reason Requirement (formerly “Removal of Text Reason Requirement” NPRR250, Suspension of Annual Profile ID Validation With Advanced Meter Deployment NPRR251, Synchronization of PRR845, Definition for IDR Meters and Optional Removal of IDR Meters at a Premise Where an Advanced Meter Can be Provisioned NPRR252, Synchronization of PRR758, Clarification of Language Related to Generation Netting for ERCOT Polled Settlement Meters NPRR254, Updates to Protocol Sections 14 and 18Revision Requests Tabled at TAC (Vote): PRR846, Deadlines for Initiating Alternative Dispute Resolution (Vote) NPRR213, Deadlines for Initiating Alternative Dispute Resolution (Vote) NPRR209, Data Posting Changes to Comply with P.U.C. Subst. R

ROS Reliability and Operations Subcommittee Report Revisions to TAC , Telemetry Standards SCR759, ac Line Segment Name Length Increase in Information Model Manager NOGRR039, Synchronization of Section 1 with Nodal Protocols

COPs – Two Voting Items – Approved! Commercial Operations Subcommittee Report LPGRRR038, Revisions for Texas Nodal Market Implementation and Synchronization with PRR821, Update of Section 21, Process for Protocol Revision (Vote) LPGRRR039, Revisions for Texas Nodal Market Implementation Part Two (Vote)

RMS – Two Voting Items – Approved! Retail Market Subcommittee Report RMGRR086, Submission of Distributed Generation Data for Advanced Meters RMGRR088, Updates to the IDR Meter Installation and Removal Processes

General Updates Board: All NPRRS presented to the Board were approved ERCOT Operations, Planning, and IT Report 2011 Ancillary Services Methodology 2011 Project Priority List (PPL) Renewable Technology Working Group Report* Texas Renewables Integration Plan Wholesale Market Subcommittee Report* 11

NATF NATF: Don Blackburn provided the update DAM Technical Workshops – Meetings each Tuesday and Thursday at 10AM Sept. 17 th – double meeting. If plugged into the calls might want to attend the meeting in Taylor –Lots of things from a NATF perspective that need to be addressed. –Looking at 168 hour test (1 week) –Documentation –Will have a focused look at those tests ERCOT Business practice Manuals Reliability and Wholesale Market Commercial Practices Current operating plan practices by QSEs Network Operations Modeling expectations for TSPs, REs and QSEs Comment period – deadline for comments for these two documents is Tuesday, September 7 th Future agenda items: all important DAM Credit issues ACL Calculation for non-business days ERCOT system changes priot to go-live separate presentation from the meeting held on Sept. 2

DAM Credit update DAM was run over non-business days for the first time with credit constraints of there weekend of Aug 14 through 16 A significant amount of credit was consumed resulting in some CPs being constrained in the Monday DAM CWG and MCWG joint meetings – 4 meetings to resolve Current practice – every transaction in the DAM reduced your credit limit in the DAM – no allowance for “offsets” See presentation for details… Proposed motion Move that ERCOT reduce ACL for the DAM on non-business days as it does today with 4 exceptions: (see presentation) Comments…consider holiday weekends such as Thanksgiving Ten significant holidays throughout the year ERCOT CIO – Cleary noted that he has to look at benefit to market and staffing impacts Motion was modified to include that ACL will be “determined” on the weekend. SCR will be needed to implement.

Cleary Update Cleary provided an update – Turned it over to Ken Ragsdale Focused on “quality of solution” instead of the “technical defects that ERCOT is aware of. Making sure the right solutions are in place Project status update – all on schedule Updates to the Board will be look forward to components involved, 168 hour test, other key components Getting into cutover procedures – cut over timeline Market trials running over 31 weeks

Ken Ragsdale update 168 hour test Document has been approved – ERCOT is internally prepared to go forward with the 168 hour test and are planning out the details This will be a full rehearsal Dam RUC Real-time 48 hour period for LFC test This test will be consecutive for 7 days Generate and post settlement statements and invoices and applicable reports and extracts Ercot needs good reasonable offers and bids put into the system no rogue testing going on need bilateral trades and other business behavior like that Set of Market Trials test There is a handbook for the breakdown of activities in the 168 hour test which was approved by TAC Summary will be provided to TAC and Board – Sept 17 th meeting with NATF end of the 168 hour test

Ken Ragsdale presentation continued Full system market and reliability test New issue for CRR came to view recently Nodal program communication – paragraph from Zonal protocols related to certification – making sure all requirements have been met Been looking at system, process and people readiness Key issuyes- load distribution factors looking at different methodology Go live decision will be made on October 7 th TAC chair comment - Need to look at things from a trajectory standpoint before the decision on October 7th

Ken Ragsdale continued - Settlements, Billing and Data Aggregation Running settlements since mid April Some defects noted If software cannot perform accurately then there is a manual workaround Readiness is being examined Credit - CLM – some defects will be resolved with fixes implemented on Labor Day weekend MIS - Reports showing up on MIS are meeting expectations

Steve Reddy’s update Descriptions of issues – see ppt for complete update CRR always a hot topic… Security around CRRS being received is that is taking around 3 hours which is not good since ERCOT is only allowed 3.5 hours for running and approving. Must speed that up! Other critical processes are being evaluated to verify acceptable timing

Thank You For TAC Meeting Materials related to this update please access 19