1 COMS/Settlements/Credit Weekly Update July 2, 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 Anti-trust Admonition Standing Reports and Updates –Operating Day Settlement Reports –Week in Review/General Reminders –Next Week’s Activities Environment Report –Known Issues Credit 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

4 DAM Settlement Overview for June 24 Statement and Invoice Overview 171 Statements/Invoices posted to QSEs 53 Statements/Invoices posted to CRRAHs 0 QSEs received Statements/Invoices for $0 (Not due to earlier closed issue) CRR Overview CRRs were derated CRR Owners were fully funded (i.e. there were no Short Fall Charges) General Reminders/Updates Submit any questions/issues about statements, invoices, extracts or calculations to

5 DAM Settlement Overview for June 25 Statement and Invoice Overview 171 Statements/Invoices posted to QSEs 54 Statements/Invoices posted to CRRAHs 0 QSEs received Statements/Invoices for CRR Overview CRRs were not derated CRR Owners were fully funded (i.e. there were no Short Fall Charges) General Reminders/Updates Submit any questions/issues about statements, invoices, extracts or calculations to

6 DAM Settlement Overview for June 26 Statement and Invoice Overview 169 Statements/Invoices posted to QSEs 42 Statements/Invoices posted to CRRAHs 0 QSEs received Statements/Invoices for CRR Overview CRRs were derated CRR Owners were fully funded (i.e. there were no Short Fall Charges) General Reminders/Updates Submit any questions/issues about statements, invoices, extracts or calculations to

7 DAM Settlement Overview for June 29 Statement and Invoice Overview 179 Statements/Invoices posted to QSEs 54 Statements/Invoices posted to CRRAHs 0 QSEs received Statements/Invoices for CRR Overview CRRs were not derated CRR Owners were fully funded (i.e. there were no Short Fall Charges) General Reminders/Updates Submit any questions/issues about statements, invoices, extracts or calculations to

8 RTM Settlement Overview for June 16 Statement Overview 188 Statements posted to QSEs 2 Statements posted to CRRAHs 4 QSEs received Statements for $0 (This is not due to the closed issue. There were drivers for calculations, but the outputs were zero) General Reminders Submit any questions/issues about statements, invoices, extracts or calculations to

9 RTM Settlement Overview for June 17 Statement Overview 196 Statements posted to QSEs 2 Statements posted to CRRAHs 5 QSEs received Statements for $0 Charge Type Overview Emergency Energy Payments and Charges were calculated General Reminders Submit any questions/issues about statements, invoices, extracts or calculations to

10 RTM Settlement Overview for June 18 Statement Overview 192 Statements posted to QSEs 1 Statements posted to CRRAHs 4 CRRAHs and QSEs received Statements for $0 General Reminders Submit any questions/issues about statements, invoices, extracts or calculations to

11 RTM Settlement Overview for June 19 Statement Overview 189 Statements posted to QSEs 2 Statements posted to CRRAHs 2 CRRAHs and QSEs received Statements for $0 Charge Type Overview RMR Unexcused Misconduct Charges were calculated General Reminders Submit any questions/issues about statements, invoices, extracts or calculations to

12 RTM Settlement Overview for June 22 Statement Overview 188 Statements posted to QSEs 1 Statements posted to CRRAHs 2 CRRAHs and QSEs received Statements for $0 Charge Type Overview Block Load Transfer Payments were calculated General Reminders Submit any questions/issues about statements, invoices, extracts or calculations to

Charge Type Tracker Below are the Day Ahead Market charge types that have been executed at least once during Market Trials (18 of 19 executed) –Day Ahead Short Fall scenario was hit on Op Day

Charge Type Tracker 14 Below are the Real-Time Market charge types that have been executed at least once during Market Trials (34 of 45 executed) ** We are currently planning to have all charge types executed by the end of July**

Update to Settlement Charge Type Tracker 15 Planned Settlement dates for charge types not yet executed in Market Trials **Any updates to these dates will be communicated at the Friday Settlements Market Trials Call

Week in Review RTM Invoice (Posted 6-24) –No Unsupported Operating Dates included –Initials Included 6/11, 6/15, 6/16, 6/17 –Finals Included 6/1, 6/2, 6/3, 6/4, 6/5 –True-Ups Included 5/5, 5/7 Miscellaneous Invoice (Posted on 6-29) –81 Invoices Created (Uplift to Load with payment to one Gen QSE) CARD Final for May Auction (Posted on 6-29) Incorrect DAM Market Totals for 6-18 –Day Ahead Energy Purchases and Day Ahead Congestion Rent were transposed –Correct Totals on Next Slide DAM Resettlement for Operating Day 6-26 (to Post on 7-2) 16

Corrected DAM Totals for

18 Next Week’s Activities Operating Days for next week that will be settled –7-6 No-DAM Settlement –7-7 SASM only if needed –7-8 SASM only if needed –7-9 SASM only if needed –7-10 SASM only if needed RTM Re-Settlement for Operating Date 6-22 Miscellaneous Invoice to post on Thursday, 7-8 –Invoices will get generated for all QSEs

19 Support Metrics * This week, 24 out of 147 questions were responded to outside of the 24 hour time frame. Market Participant Inbound Questions Last WeekThis Week

Environment Report-Known Issues COMS New Known Issues EOCPRCAP (Energy Offer Curve Price Cap) does not calculate when HSL=MW quantity and there are multiple quantities equal HSL. This only affects Real Time Ahead AIEC calculation under this very distinct data scenario Multiple Extract issues (Next Slides) Missing TWTG data for whole intervals (Due to missing SCADA, working on S&B integration logic to catch these instances) COMS Closed Issues AIEC is calculating incorrectly when “Vertical Offer Curves” are submitted. Issue is seen when there are different offer prices for the same MW quantity on the curve DAEOCPRCAP (Day Ahead Energy Offer Curve Price Cap) does not calculate when HSL=MW quantity and there are multiple quantities equal HSL. This only affects Day Ahead AIEC calculation under this very distinct data scenario Reminder: ERCOT will post known issues every Friday to the readiness center at:

Settlement Extracts Issues Blank Postings due to corrupt files –PRDE Affected dates of 06/26/2010 and 06/27/2010 –RTM Affected Operating Days: –RTM Initial 6/15/2010 –RTM Final 6/4/2010 –RTM Final 6/5/2010 –RTM True Up 5/7/2010 All files reposted by 7/2/2010 –DAM Affected Operating Days: –DAM 6/22/2010 –DAM 6/23/2010 Files reposted 7/1/2010

Settlement Extracts Issues DAM Resettlement for 06/16/2010 Operating Day Affected posting date 06/23/2010 File was posted 07/01/2010 This file was not posted due to an internal miscommunication Late Postings –Settlements Inputs Extract (SID) Affected posting days: –6/24/ /26/2010 –6/29/2010 Current as of 6/30/2010 –RTM CODE Affected posting days: –6/24/ /26/2010 –6/29/2010 Current as of 6/30/2010 –Late postings are due to an issue with long running jobs. Development team is currently working on an extract tuning fix to resolve the issue and this fix is scheduled to be implemented this weekend.

23 Credit and Treasury Weekly Update July 2, 2010

Week in Review Posted Credit Reports –ACL and TPE Summary Reports were posted around 8:30 am –Remaining Credit Reports were posted around 9:30 am –Aggregate Incremental Liability (AIL) report was posted on June 25 th. However, due to a weekend migration, CMM experienced a significant delay in data population of this report (added to the Known Issues list). As a result, this report was not posted this week. A fix has been identified for this performance issue and is expected to be in place in the next few weeks We expect that data will “catch up” over this weekend We will begin posting the AIL report on Tuesday, July 6 with whatever data is available Sent ACLs each business day 24

Week in Review Credit exposures –Credit exposures should reflect market participant activity There remain a few exceptions, which are listed on the Known Issues list –Extrapolation of high historical activity forward continue to impact exposure calculations for CPs with ongoing activity in Real Time –ERCOT did not override ACLs or adjust credit limits –Last week, ERCOT requested CPs to seek a “refund” of e-collateral to adjust it down consistent with exposure and begin managing in a more normal way Have not received many requests for “refund” ERCOT will make one last adjustment to reduce credit limits to 30% above TPE for entities that have not given instructions in the past week –Still see a significant amount of CP activity in the RT market 25

Volume by Counter-Party by Day 26

Next Week ERCOT –Will post Aggregate Incremental Liability (AIL) report again on Tuesday, July 6 th and will be posting this with the other Credit Reports from now on Occasionally, some operating day’s real time estimates are missing due to delayed jobs. If this happens, the corresponding forward day’s estimates would also be missing (known issue). –Since ERCOT has not received many requests for “refund”, early next week, ERCOT will make one last adjustment to reduce credit limits to 30% above TPE for entities that have not given instructions in the past week Reminders –ERCOT will send collateral calls if exposure exceeds collateral –If ERCOT sends a collateral call, the CP will likely not be able to bid in the DAM until additional e-collateral is received 27

Next week Counter-Parties –Since ERCOT will no longer override ACLs and will make one final adjustment to bring credit limits to 30% over TPE, CPs should review Credit Reports, consider a) their exposure and b) upcoming DAM activity and send e-collateral as needed 28

Next Week - Schedule of activity Meeting Title (optional) Date

Other topics Tentative timeline for First Priority Security Interest document –July 1, 2010 – ERCOT circulated initial draft to CPs. –July 19, 2010 – Comments back from CPs. –August 2, 2010 – ERCOT circulates second draft to CPs. –August 17, 2010 – ERCOT reviews document with F&A. –September 21, 2010 – Final review and possible approval by F&A and ERCOT Board. NPRR 206 and “e” factors –NPRR 206 with 1/0/1 - last week – “e” factors – planned - August 1 –Training on NPRR 206 and “e” factors - August 30

New Known Issues Display issue on reports: If a First Priority Security Interest is given and the CCE & FCE is a credit amount; the TPE is incorrectly displaying a 0. –Underlying TPE and ACL calculations are correct Display issue on AIL Detail Report: The sign convention on the AIL Details Report for the ‘Completed and Settled’ days and the ‘Completed and Not Settled’ days is inconsistent. –Underlying exposure calculations are correct DAM Resettlement Invoice is included in the DALE. –Root cause has been identified and fix is in process –This invoice will roll out of the EAL calculation on Friday (July 2). Real time estimates for Aggregate Incremental Liability (AIL) have been delayed by up to five days –A fix has been identified for this performance issue and is expected to be in place in the next few weeks 31

Closed Known Issues –Note: Known Issues can be reviewed at :