A Strawman for Discussion by Dottie Stockstill & Greg Ramon Special ERCOT Board Meeting June 24, 2003

PUCT July 24, 2003 Nodal Market Rule Making Board decision on stakeholder process design and selection of Project Oversight Team by July 15, 2003

Develop design options and alternatives by October 15, 2003 Board decision on stakeholder process design and selection of Project Oversight Team by July 15, 2003 PUCT July 24, 2003 Nodal Market Rule Making

Develop design options and alternatives by October 15, 2003 Board decision on stakeholder process design and selection of Project Oversight Team by July 15, 2003 Develop final design by December 2003 PUCT July 24, 2003 Nodal Market Rule Making

Develop design options and alternatives by October 15, 2003 Board decision on stakeholder process design and selection of Project Oversight Team by July 15, 2003 Develop final design by December 2003 Develop protocols, cost / benefit study by July 2004 PUCT July 24, 2003 Nodal Market Rule Making

March 1, 2006 Commercial Operations of Texas Nodal Market Develop design options and alternatives by October 15, 2003 Board decision on stakeholder process design and selection of Project Oversight Team by July 15, 2003 Develop final design by December 2003 Develop protocols, cost / benefit study by July 2004 Implement new market PUCT July 24, 2003 Nodal Market Rule Making

rd Q4th Q1st Q2nd Q3rd Q4th Q1st Q2nd Q3rd Q4th Q1st Q DETAILED DESIGN STAGE Assess Existing Systems Design DA Energy Market Define Operational Info Design Congestion Pricing Design Congestion Rights Define Zones Design Market Mitigation Design Optimization of AS Design Multi-Settlement Define Market Info to Post Develop Protocols IMPLEMENTATION STAGE Finalize Functional Spec Identify Requirements Develop Business Processes Develop & Test Software Internal & External Training System Integration Testing Internal & External Market Trials Production Cutover Texas Nodal In Service

1. Defining stakeholder process 2. Monitoring, adjusting and ensuring adherence to process 3. Approval of work and all associated PUCT filings Filings Decisions: final approval, disputes, clarifications, etc. Weekly / Monthly reporting Input / Feedback Weekly / Monthly reporting Input / Feedback ERCOT Board Design & Implementation Process PUCT TAC & Standing Committees Project Oversight Team  Leadership & facilitation of stakeholder process  Project management Stakeholders PUCT Recommendations }

Process Principles Independence of Leadership Clearly Defined Roles of Participants Decision Making Protocol Addressing Disagreements Building on Agreements Getting Started

Independence of Leadership Stakeholders with a vested interest in the existing market design or a change to a nodal design will not be perceived as independent Goal: the market design that delivers the most benefits to consumers while encouraging participation in the market by loads, transmission providers, suppliers, power marketers, scheduling entities and retailers

Defining Roles PUCT Commissioners and Staff ERCOT Board ERCOT Staff ERCOT Market Participants ERCOT TAC Process Oversight Team

Defining Roles - PUCT Commissioners –Primary Oversight –Decisions (final approval, disagreements, clarifications, give direction along the way) Staff – Participates in discussion, inputs ideas supporting objectives of the Rulemaking –Provide routine briefings to the Commissioners detailing progress and clearly defining disagreements needing Commission direction or decision –

Defining Roles - ERCOT Board Create (with advice from TAC), implement and monitor a clearly defined stakeholder process –Board Oversight Committee Filing of design developed through the stakeholder process, including documented alternate positions Recommendations on resolution of disagreements –PUCT final decision

Defining Roles - ERCOT Board Votes on recommended design(s) with options if not previously determined by PUCT action

Defining Roles - ERCOT Staff Recognized and needed expertise on reliability, operational & IT issues and impacts Will also contribute with other participants with development of market design concepts Candidate to coordinate the overall process Implementers of market design & protocols

Defining Roles - ERCOT TAC & Standing Committees Key advisory role with the Process Oversight Team & Board Important to maintain current design and PRR process - “keep the lights on” Coordinate interplay between existing and future market design

Defining Roles - ERCOT Market Participants Advisors on commercial aspects of various designs Key role in development of market principles and design concepts Participate in development of Protocol language Work collaboratively with ERCOT Staff, PUCT Staff and other Market Participants

Defining Roles - Project Oversight Team Leadership & facilitation of stakeholder process Document decisions reached in the stakeholder process (both agreements and disagreements, options, etc) Process managers must be independent and knowledgeable regarding the ERCOT market and market design principles Performs & coordinates the communications with ERCOT Board, TAC & Standing Committees and PUCT

Defining Roles - Project Oversight Team Uses Straw vote method to get sense of stakeholder views, build on agreements and pull together detailed proposals for review by everyone –Stakeholders –ERCOT Staff –PUCT MOD –TAC –Board

Defining Roles - Project Oversight Team Coordinate with PUCT Staff on reporting to Commissioners Task Forces/work groups will be chaired by ERCOT Staff or consultants

Disagreements Disagreements not resolved by the process are clearly documented and reported to TAC, the Board and the PUCT PUCT final decision on disagreements

Getting Started - Development of Principles & Concepts A key component of the stakeholder process The actual blueprint of the new “Texas Nodal” market will be based on this initial phase This phase will drill down on the PUCT Rule general concepts to set the stage for blueprints on the Texas nodal market design elements