1 Market Trials Real Time Market / LFC Weekly Update February 26, 2010

2 Antitrust Admonition 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 the 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. If you have not received a copy of these Guidelines, copies are available at the Client Relations desk. Please remember your ongoing obligation to comply with all applicable laws, including the antitrust laws. DISCLAIMER All presentations and materials submitted by Market Participants or any other Entity to ERCOT staff for this meeting are received and posted with the acknowledgement that the information will be considered public in accordance with the ERCOT Websites Content Management Operating Procedure.

3 Agenda Antitrust Admonition Environment Report –Planned / unplanned outages –Known Issues Standing Reports and Updates –FAQ and Support Metrics –General reminders / updates –Readiness outreach update –Qualification update Phase 3 RTM / LFC Update Special Topic: LFC Individual Generator Testing Kick-Off Question and Answers / General Discussion ERCOT asks that Market Participants log into the WebEx session using their company name and then their name. This will allow ERCOT to take roll-call offline

QSE Qualification Call Overview: Market Trials 2010 Roadmap 4

5 Day-to-day operations summary: Planned / Unplanned Outages of EDS Planned Outages –03/03/10 2:30 P.M – 3:30 P.M Interruption in OS service availability to support scheduled CIM data load. –03/05/10 – 03/07/10 Maintenance activities are planned during the period in preparation for Market Trials phase 4. Will affect availability of : –MMS/MMS UI –MIS –Outage Scheduler/OS UI –CRR –All External Web Services Note that 3/5 is typically a supported day; due to the size of this release, we will be taking the environment offline starting Thursday at 6pm Unplanned Outages –02/22/10 – 02/22/10 12:30 P.M – P.M BidSet queries were timing out on Market Manager & EWS systems as a result of an underlying database related issues. –02/24/10 – 02/24/10 8:00 A.M – 9.30 A.M EWS Get LMP/Get Report services were timing out during the stated period. Cause was attributed to a memory issue and was addressed immediately. –02/24/10 – 02/24/10 11:30 A.M – P.M Latency reported in loading Market Manager and OSRUI applications.

6 Environment Report: Known Issues No new known issues to report this week

7 Standing Reports and Updates: Support Calls / FAQs Most questions are responded to within a 24 hour time frame Note that these do not include follow-up questions FAQs : No new for the week

8 Standing Reports and Updates: General reminders / updates Network Model Update –Next two loads are targeted for 3/3/2010 and 3/17/2010 –Note that during these updates, it will be necessary to bring down the outage scheduler for approximately ½ hour (market notice sent 2/25/2010) FIP/FOP –FIP / FOP will now be updated automatically with actual daily price values –This is as of 2/27/2010 –QSEs will now be responsible for obtaining these prices independently

Standing Reports and Updates: Outreach Program Overview Confirmed Scheduled Site Visits XTEND Energy (March 3 rd ) Brazos (March 10 th ) Shell (March 11 th ) Formosa (March 16 th ) Westar (March 18 th ) Market Call 26 February 2010

Standing Reports and Updates: Outreach Program Overview Market Participant “Menu” Topics: All materials are available on the Nodal Readiness Center. ( Nodal Program Update (mandatory) – (75 min) Readiness Center and Readiness Scorecard – (45 min) Day-Ahead Market Implementation – (60 min) Congestion Revenue Rights (CRR) Auction Implementation – (60 min) Reliability Unit Commitment Implementation – (60 min) Telemetry & Load Frequency Control (LFC) – (30 min) Real Time Market Processes & Systems – (60 min) Nodal Settlement and Billing Processes – (60 min) Reports and Data Extracts – (30 min) Credit Monitoring and Management – (45 minutes) Market Call 26 February 2010

11 Standing Reports and Updates: Qualification Update QSEs with Resources and Load and Load Only –86 TOTAL –82 QUALIFIED representing 99.9% of the generation –4 QSEs with Resource remain to be qualified –Note that the total numbers are in flux as QSEs enter and leave the market QSE without Resources –189 TOTAL –173 QUALIFIED –16 QSEs without Resources remain to be qualified

10/17/ Real Time Market / LFC Update

SCED Week 4 SCED is behaving as expected given offer curves and telemetry in place COP submissions steady at 86% (89% last week) TPO submissions steady at 85% (87% last week) Week ending 2/17 had 20 QSEs with 100% weekly TPO/COP submissions Week ending 2/24 had 19 QSEs with 100% weekly TPO/COP submissions The new Market Submissions dashboard is available on the Readiness Center at

Real Time Market / LFC Update 14 SCED Week 4 $2250 LMP’s during just one morning peak for ~2 hours (Thursday 2/25)

Real Time Market / LFC Update 15 SCED Week 4 LMP tracking against Load well Can only happen when there are no transmission constraints and telemetry is consistent enough with Energy Offer Curves

16 Real Time Market / LFC Update ERCOT is giving the green light to start 6 Month LMP Posting as scheduled on 3/1/2010 The following criteria were agreed on with the Market in 2007 as defining “reasonable” which also serves as the entry criteria for 6 Month LMP –LMP is Greater than or equal to offer price at maximum limit (HDL) for a Resource which is dispatched at maximum limit (HDL) –LMP is less than or equal to offer price at minimum limit (LDL) for a Resource which is dispatched at minimum limit (LDL) –LMP is equal to offered price at dispatched MW point for a Resource which is dispatched within minimum limit (LDL) and maximum limit (HDL) (provided the offer price is not mitigated) –Shadow Price is zero for a transmission constraint which is not binding –Shadow Price is non-zero for a transmission constraint which is binding –Base Points are between HDL and LDL ERCOT has reviewed a representative sample of SCED solutions since Feb 11, 2010 and has found no error associated with the above criteria During 6 Month LMP, ERCOT will be reviewing more closely offer curve submissions and telemetry quality Additionally, we will report on the performance of SCED solutions and # failed solves each week on this call

10/17/ Nodal Telemetry Outreach (NTO) Update and State Estimator Convergence

18 Nodal Telemetry Outreach Update QSE Telemetry 1 point required for State Estimator still missing (~99% complete for nodal telemetry) 8 points required for SCED execution still missing (~99% complete for nodal telemetry) Load Resource Telemetry 20 additional points being requested to cover newly modeled Load Resources TSP Telemetry 345 Circuit Breaker and Load points unresolved (~94% complete for nodal telemetry) 987 Disconnect points unresolved—these points represent new requests in the nodal telemetry outreach effort (90% complete for nodal telemetry) The TSP Telemetry Dashboard will refresh on the Readiness Center Feb 26,

19 Nodal Telemetry Outreach Update State Estimator Daily Convergence Statistics (these percentages are graphed in the next slide) MonthDay% Convergence (Including Solved w/ Mismatch) FEB FEB FEB FEB FEB FEB FEB FEB FEB FEB

20 Nodal Telemetry Outreach Update

21 Market Trials Individual QSE LFC Tests Kick Off Meeting February 26, 2010

Individual QSE LFC Tests Agenda Overview Components of QSE LFC Testing Phase 3 and 4 Timelines QSE Participation Scheduling a Test LFC Testing Calendar Confirmation s Preparing for your Test Artifacts to be reviewed LFC Test Forms to be filled out and submitted Submission Items: Details and Deadlines What to expect on the day of your test Test Results Slide 22

Overview Components of QSE LFC Testing The purpose of the tests is to confirm that QSEs intending to provide Regulation Service and Responsive Reserve Service (RRS) in the nodal market can exchange SCADA data with LFC/RLC components of ERCOT’s Nodal EMS system. Tests consist of: Updated Desired Base Point (UDBP) and Regulation Test Constant Frequency Operation Test Responsive Reserve Service Schedule Test Slide 23

Overview Components of LFC Testing (continued) UDBP and Regulation Test For this test, QSEs with Resources that will be following a SCED Base Point in Nodal will receive and respond to Base Points, UDBPs, and Regulation deployments from the ERCOT Nodal EMS system QSEs will not be expected to bring off-line Resources online for the purpose of this test QSEs will not be required to test every Resource designated as capable of following a Base Point and/or providing Regulation in Nodal When under test, a QSE’s Resources will be asked to respond to LFC Regulation dispatch instructions based upon a current Zonal Ancillary Service obligation for the test period QSEs under test will not be subject to Uninstructed Resource Charges and will receive a Schedule Control Error exception This test will last approximately one hour Slide 24

Overview Components of LFC Testing (continued) Constant Frequency Operation Test For this test, QSEs intending to provide Regulation Service in the Nodal Market will operate in Constant Frequency control mode on their nodal systems. The duration of this test will be approximately fifteen minutes. Slide 25

Overview Components of LFC Testing (continued) Responsive Reserve Service Schedule Test For this test, QSEs intending to provide RRS in the Nodal Market will receive RRS deployment signals from ERCOT QSEs will respond by updating the corresponding Responsive Reserve Ancillary Service Schedules to ERCOT via ICCP to reflect the deployment amount within one minute The duration of this test will be approximately fifteen minutes. This is a communication test only, so no energy will be deployed during the test Slide 26

Overview Phase 3 and 4 Timelines ERCOT and Market Participants will engage to conduct Individual QSE LFC tests March 1 – April 16, 2010 One to two test windows will be scheduled daily, Monday through Thursday, as practicable. A Test may also be scheduled on Friday as agreed upon by ERCOT and the QSE under test. ERCOT will attempt to schedule tests during times when they will have the least chance of interrupting the normal operation of the system. Testing may not be available during periods when ERCOT is conducting production database loads or during periods such as morning ramp and afternoon peak-load times. Re-tests will be scheduled as necessary and conducted April 19 – April 30, Slide 27

Overview Phase 3 and 4 Timelines (continued) Slide 28 MT PhaseMonthActivity Description Phase 3.0Feb 26, 2010  LFC Kickoff Call  Complete scheduling individual QSE LFC tests Mar 01, 2010 Begin conducting individual QSE tests in support of LFC (to be completed by April 16) Mar 05, 2010Friday Market Call Mar 12, 2010Friday Market Call Mar 19, 2010Friday Market Call Mar 26, 2010Friday Market Call Phase 4.0Apr 02, 2010Friday Market Call Apr 09, 2010Friday Market Call Apr 16, 2010  Friday Market Call  Complete conducting individual QSE LFC tests Apr 19, 2010Begin conducting individual QSE re-tests Apr 23, 2010Friday Market Call Apr 30, 2010  Friday Market Call  Complete conducting individual QSE LFC re-tests

Overview QSE Participation Market Participants who will be asked to participate in an Individual QSE LFC Test include: any QSEs with Resources that did not participate in the EDS 3 Release 6.2 testing during 2008 all QSEs with Resources that intend to provide Regulation and/or Responsive in the nodal market as many QSEs as needed to ensure participation representing at least 80% of system-wide generation Proposal for an Attestation of Readiness For any QSEs that participated in LFC testing in 2008 and are opting not to participate in individual QSE LFC testing in 2010, ERCOT is proposing an attestation certifying that: The QSE is opting not to participate in 2010 testing The QSE's nodal systems and its Resources have been sufficiently tested and are ready to participate in Market Trials Phase 5 full-system LFC testing Slide 29

Next on the Agenda Agenda Overview Components of QSE LFC Testing Phase 3 and 4 Timelines QSE Participation Scheduling a Test LFC Testing Calendar Confirmation s Preparing for your Test Artifacts to be reviewed LFC Test Forms to be filled out and submitted Submission Items: Details and Deadlines What to expect on the day of your test Test Results Slide 30

Scheduling a Test LFC Testing Calendar ERCOT has been populating the LFC Calendar since late January To date, 33 QSEs have been contacted, 20 have been scheduled, and two have tested To schedule, update, or inquire about your test window, contact ERCOT will post a tracking Dashboard in March (including LFC Calendar dates): Communicates the completion status of QSEs To be refreshed on the Readiness Center weekly Becomes available in March 2010 at Slide 31

Scheduling a Test Confirmation s Once your test has been scheduled, ERCOT will follow up with a confirmation to communicate: The date and time of your test window The location of LFC testing documents on the Nodal Readiness Center The timelines for submitting your testing documents The conference bridge information for your test window (in some cases, this information is being provided in a follow-up ) Slide 32

Next on the Agenda Agenda Overview Components of QSE LFC Testing Phase 3 and 4 Timelines QSE Participation Scheduling a Test LFC Testing Calendar Confirmation s Preparing for your Test Artifacts to be reviewed LFC Test Forms to be filled out and submitted Submission Items: Details and Deadlines What to expect on the day of your test Test Results Slide 33

Preparing for Your Test Artifacts to be Reviewed Once your test is scheduled and confirmed, you may prepare for your test by reviewing and filling out the LFC test documents posted on the Readiness Center at Slide 34

Preparing for Your Test Artifacts to be Reviewed / LFC Test Forms to be Filled Out (continued) LFC test documents posted on the Readiness Center include: Real-Time Market Testing Market Participant Handbook v2.0 (.doc) This document provides details around the Individual QSE LFC Tests (review) Market Trials LFC Individual QSE Test Documents: 02/18/2010 (.zip): Appendix-Example 5-Min BP Schedule.docx (review) market_trials_lfc_ind_qse_test_procedure_v2.doc (review) market_trials_lfc_ind_qse_vdi_example.pdf (review) market_trials_lfc_ind_qse_flatfile_template.xls (fill out) market_trials_lfc_ind_qse_test_form.xls (fill out) Slide 35 Provides ERCOT with details about the Resources that will be online and participating in your test window Provides ERCOT with the 5- minute Resource-specific Base Points to be used during your test window

Preparing for Your Test Slide 36 QSE Short Name Station NameUnit Name Interval Start Time (MM/DD/YYYY HH:MM) Interval End Time (MM/DD/YYYY HH:MM) Base Point QSE1OUTBACKUNIT203/01/ :0003/01/ :0520 QSE1OUTBACKUNIT303/01/ :0003/01/ :0520 QSE1KANGAROOUNIT103/01/ :0003/01/ :05100 QSE1KANGAROOUNIT203/01/ :0003/01/ :05100 QSE1OUTBACKUNIT203/01/ :0503/01/ :1020 QSE1OUTBACKUNIT303/01/ :0503/01/ :1025 QSE1KANGAROOUNIT103/01/ :0503/01/ :10100 QSE1KANGAROOUNIT203/01/ :0503/01/ :10110 QSE1OUTBACKUNIT203/01/ :1003/01/ :1520 QSE1OUTBACKUNIT303/01/ :1003/01/ :1530 QSE1KANGAROOUNIT103/01/ :1003/01/ :15100 QSE1KANGAROOUNIT203/01/ :1003/01/ :15115 LFC Test Forms to be Filled Out (continued) The Base Point Schedule is used by the ERCOT RLC during the test in place of the nodal SCED Base Points so that nodal test signals are aligned with zonal The Base Point Schedule will need to have enough base points to cover the entire test window. The start and end times will need to follow the format MM/DD/YYYY HH:MM

Preparing for Your Test Submission Items: Details and Deadlines Complete the two test forms: market_trials_lfc_ind_qse_flatfile_template.xls market_trials_lfc_ind_qse_test_form.xls Submit the two test forms at least two days ahead of your test window to the distribution included in your confirmation The flatfile template containing the 5-Minute Base Point Schedule may be updated and resubmitted up to 30 minutes before your test window begins Slide 37

Next on the Agenda Agenda Overview Components of QSE LFC Testing Phase 3 and 4 Timelines QSE Participation Scheduling a Test LFC Testing Calendar Confirmation s Preparing for your Test Artifacts to be reviewed LFC Test Forms to be filled out and submitted Submission Items: Details and Deadlines What to expect on the day of your test Test Results Slide 38

What to expect on the day of your test What to expect on the day of your test: ERCOT will perform preliminary checks an hour ahead of your test window— this is the best time for you to communicate any last minute issues or changes to your test files You will dial into the conference bridge for the test a few minutes before your test window begins—the dial-in information will be provided in your confirmation Your test will be conducted according to the Market Trials Individual QSE LFC Test Procedure (see the Market Trials LFC Individual QSE Test Documents (.zip) at Slide 39

Test Results Test Results: Following each test, ERCOT will analyze the test results and the test performance and will report the results to the QSE within five Business days. All QSE Performance during the tests will be measured against qualification criteria described in Nodal Protocol Section 8, Performance Monitoring Slide 40

41 Q&A Q&A / Open Forum

42 Appendix

43 URLS and ADDRESS FOR SUPPORT URLs for access the Nodal Production systems –MIS: –Market Manager: Click the ‘Applications’ tab in the upper menu. Link is in the ERCOT Applications portlethttps://mis.ercot.com/pps/tibco/mis/ –CRR: Click the ‘Markets’ Link in the upper menu. Click CRR in the Market sub menuhttps://mis.ercot.com/pps/tibco/mis/ –EWS: Reminder: Market Trials address change: ERCOT asks that MPs use the address for questions from this point –This will begin the phasing out of and –A centralized address will no longer require MPs to “guess” which address to use for their questions –We have implemented a more effective method of routing and responding to s using this address –The old eds s can continue to be used until 2009 hold over efforts are completed (such as telemetry outreach)

44 Market Trials Handbooks –ERCOT will release the following Handbooks In December Real Time Market / LFC covering Phase Outage Scheduler covering Phase CRR covering release Phase Settlements / COMs covering Phase Day Ahead Market (note that this contains only reference data to the 2.1 qualification as there is no Phase 3.0 scope) –The Phase 4.0 release of the Market Trials Handbooks will occur in early February. –The Phase 5.0 release of the Market Trials Handbooks will occur in March

45 Verifiable Cost Submission (originally presented on 4/17) WMS Approved Verifiable Cost Submission Timelines: Simple Cycle Greater than 90MW June 30, 2009 Simple Cycle Less than or Equal to 90MW July 31, 2009 Gas Steam Non-Reheat Boiler Aug 31, 2009 Gas Steam Reheat BoilerSep 30, 2009 Gas Steam Super Critical BoilerOct 31, 2009 Combined Cycle Less than or Equal to 90MW Nov 30, 2009 Combined Cycle Greater than 90MW Dec 31, 2009 Coal, Lignite Jan 31, 2010 Nuclear, Hydro and Renewable Feb 28, 2010 Reciprocating Engines Feb 28, 2010