1 Market Trials Update NATF June 1, 2010

2 Agenda Operational Scenarios for June 168-Hour Test (preliminary discussion) MOTE Discussion 2-Hour LFC Test June / July Activities SCED Update Update on COP Expectations Discussion (2-7 days out from the Operating Day) Combined Cycle Limitation for Market Trials

Market Trials 2010 Roadmap 3

4 Operational Scenarios

DAM/RUC/SASM Scenarios –As described in the DAM/RUC/SASM market trials handbook (located at during June we will be exercising operational scenarios on Tuesdays and Thursdays in market trialshttp://nodal.ercot.com/readiness/markettrials/dam/index.html Two scenarios were added after the handbook was published (suggestions for additional scenarios were solicited from market participants) June 17 scenarios were moved to different dates RTM / LFC Scenarios –The Real Time operational scenarios will occur during the remaining LFC tests –The scenarios to be conducted in June’s 8 hour LFC are detailed in the 8-Hour LFC Test Approach document posted at:

DAM/RUC/SASM Operational Scenarios 6

DAM/RUC/SASM Operational Scenarios 7

RTM / LFC Operational Scenarios Issue EMBP Flags This operational scenario is a system-wide exercise to confirm that QSEs with Resources are capable of receiving EMBP –SCED failure will be simulated to the extent that the ERCOT Operator will enter an EMBP incremental MW value (based on the Generation to be Dispatched as required over the next five-minute interval) –Qualified Scheduling Entities (QSEs) will be sent these Base Points via telemetry, along with the system-wide EMBP status flag. ERCOT initially proposes implementing the Emergency Base Point scenario for at least minutes, –Duration of the scenario may be shortened or extended as deemed appropriate by the ERCOT –ERCOT may reach out to one or more Market Participants while the scenario is being exercised to confirm that the system-wide EMBP flag and incremental MW value are being received correctly 8

RTM / LFC Operational Scenarios Issue RRS Deployments Confirming that QSEs with Resources (Generation and Controllable Load) are capable of receiving and responding to RRS deployments. –Nodal Non-Spinning Reserve Service (NSRS) is out of scope for this scenario. –The testing of deployments for NSRS may be included as an operational scenario during the 48-Hour LFC Test in July SCED will continue to dispatch Base Points based upon the required Generation to be Dispatched and Energy Offer Curves (EOCs) ERCOT will inform QSEs via hotline call regarding the start time for conducting this operational scenario –QSEs will respond to the deployment instruction by updating their telemetered Ancillary Service (AS) Schedules for RRS to reflect the specified deployment amounts –QSEs will need to provide these updates back to ERCOT within one minute per Nodal Protocols Section 8 –Approximately 15 to 20 minutes following the RRS deployment instruction, ERCOT will recall RRS, and QSEs will respond by updating their telemetered AS Schedules for RRS to reflect the recall MW –As with the initial deployment, QSEs should provide the updates back to ERCOT within one minute 9

10 Preliminary 168 Hour Test Discussion

Preliminary Discussion Regarding the 168-Hour Test ERCOT continues over the next 3 weeks to discuss details regarding this tests Today’s discussion will be centered on the Market’s questions, concerns and comments ERCOT will publish the 168-Hour Test Handbook by June 30, 2010 ERCOT will review the handbook at a high level at the first NATF in July The 168-Hour Test Workshop will take place in tandem with MRS 5 on July 28, 2010 Details:

12 Market Operations Test Environment

13 MOTE Update Clarification on testing during Cutover –During Market Trials, the Nodal Production environment is dedicated to the market and assisting them with readiness for go-live –As ERCOT and the market transition from Market Trials to Cutover on October 1, ERCOT will need to have the flexibility to perform final preparations on the environment to ensure complete readiness for go-live –ERCOT is not committing to any Market facing activities or Nodal production environment availability for systems that are pre-go-live during cutover –This does not mean: ERCOT will completely shut down the environment That we won’t or will perform and market facing activities (e.g. additional LFC tests, DAM runs, etc). –ERCOT will keep telemetry up and running and expects the same of the market –Key take away: Flexibility Market Operations Test Environment (MOTE) –As previously stated, ERCOT will support the MOTE environment during business hours from its targeted release date on 6/30/2010 through and beyond Go-Live –Mote will provide the following functionality to the Market Testing of connectivity and authentication / authorization Web Service and MMS User Interfaces to MMS MMS validation of all submitted transactions Ability to query submitted transactions CRR User Interface –The environment will not: Run any of the Market Engines (DAM, SCED, RUC, CRR) Host any orchestrated tests Provide integration with any system beyond MMS (e.g. outage scheduler, registration, etc)

Hour LFC Test Update

Hour LFC Test Update Test ActivitiesApprox Timeline Market WebEx start8:00 AM ERCOT - MP pre-test troubleshooting period8:00 AM - 11:15 AM Test start11:15 AM Zonal-Nodal cutover11:15 AM - 11:55 AM System frequency controlled by nodal systems11:55 AM - 12:25 PM Nodal-Zonal cutover12:25 PM - 1:00 PM Test end1:00 PM Market WebEx end1:15 PM

Hour LFC Test Update 2-Hour LFC Test Update (continued) Constraints (activated in both Nodal and Zonal)Start Time Garrott - Midtown OC3Loss of Greens Bayou - Gable and Hardy - Crocket 138KV overloads Midtown - Garrott 138KV - 102% of 317 MVA rating. 10:45 AM Bellaire Autotransformer OC3Loss of Bellaire 345/138KV autotransformer 2 overloads Bellaire 345/138KV autotransformer % of 600 MVA rating. 11:45 AM

Hour LFC Test Update 2-Hour LFC Test Update (continued) Common ICCP Issues Identified/Solved During the Test  On/Off status incorrect for LBST/RBST points  Resource Status Codes (RSTs) coming in as SUSPECT  OFF RST being sent for units that were online and generating MW  RST of ON instead of ONREG being sent for units with REG Responsibilities  RST of ONREG being sent for units in hours where they had no REG Responsibility  Non-zero LSLs being sent for WGRs  HSLs for WGRS being set to capacity rather than un-curtailed MW output  MPs updating REG Responsibilities slowly  RegUp & RegDown Responsibilities switched for one another  AS Responsibilities not lining up between Nodal and Zonal (i.e., wrong AS Type or wrong MW value)

90 Day Outlook : June Market Activities Functional Area Real-Time Market Congestion Revenue Rights Day-Ahead Market Reliability Unit Commitment Outage Scheduler COMS/Settlements Network Modeling Nodal Reports Credit Full Integration Targeted Activities for June 2010 Operational scenarios executed 8hr LFC closed loop test executed ERCOT executes July Monthly CRR Auction DAM / DRUC Continues 5x / weekly SASM executed as needed ERCOT executes limited HRUC Protocol timelines on a best effort basis JanFebMarAprMayJuneJulyAug

90 Day Outlook : July Market Activities Functional Area Real-Time Market Congestion Revenue Rights Day-Ahead Market Reliability Unit Commitment Outage Scheduler COMS/Settlements Network Modeling Nodal Reports Credit Full Integration Targeted Activities for July 2010 Exercise ‘Normal State’ processes and procedures, including weekends 48hr LFC closed loop test executed DAM / DRUC executes 7x / weekly for two weeks ERCOT executes HRUC 7x24 during 7 day weeks Protocol timelines during 7 day weeks ERCOT executes August Monthly CRR Auction SASM executed as needed JanFebMarAprMayJuneJulyAug