1 Market Trials DAM/RUC/SASM Weekly Update April 9, 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 DAM summary for 4/6 and 4/8 QSE Activities for Next Week FAQ General Reminders/Updates Environment Report –Planned outages –Known Issues Nodal Scorecard Update Special Topics –Phase 2 validation –Day-Ahead Self-Commitment –Bid/Offer submission efficiencies Question and Answers / General Discussion Appendix –DAM Kickoff slides –Pre- and Post-DAM reports 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.

Market Trials 2010 Roadmap 4

5 Submission Overview for Apr 6 Submission overview Overall, 150 QSEs participated for Op Day 4/7

6 Submission Overview for Apr 6 Submission overview

7 Submission Overview for Apr 6 Submission overview Energy Bids from QSEs – 80% of Load was requested.

8 Submission Overview for Apr 6 Submission overview AS Offers were requested for the first time –25 QSEs submitted –We had an AS insufficiency for RRS and Non-Spin MCPCs: RRS ranged from $55-$63.18 Non-Spin ranged from $50-$54.32 –We reduced AS requirement in DAM by the insufficient amount for those two types (DAM Operators followed the procedure for an AS insufficiency, except did not perform the step of waiting 30 minutes for additional AS Offers to be submitted – this will be done during operational scenarios in June) –No AS insufficiency for Regulation (however prices were high for RegUp due to the Non-Spin and RRS insufficiency – the same capacity is offered amongst the online reserves) MCPCs: RegDn ranged from $4.02-$7.44 RegUp ranged from $50-$58.18

9 Submission Overview for Apr 6 Submission overview AS Self-Arrangement from QSEs –50% of AS Obligation was requested, ~45% received –41 QSEs sent in AS Self-Arrangement Three-Part Offers – approx 80% of QSEs submitted prior to the DAM Energy Only Offers – 75 QSEs submitted EOOs PTP Obligation Bids – 48 QSEs submitted PTPs, averaging ~2,600 MW per hour

10 Submission Overview for Apr 8 Submission overview Overall, 153 QSEs participated for Op Day 4/9

11 Submission Overview for Apr 8 Submission overview

12 Submission Overview for Apr 8 Submission overview Energy Bids from QSEs – 120% of Load was requested.

13 Submission Overview for Apr 8 Submission overview AS Offers were requested – 25 QSEs submitted –We had an AS insufficiency for Non-Spin for hour 17 We reduced AS requirement in DAM by the insufficient amount (DAM Operators followed the procedure for an AS insufficiency, except did not perform the step of waiting 30 minutes for additional AS Offers to be submitted – this will be done during operational scenarios in June) AS Self-Arrangement from QSEs –50% of AS Obligation was requested, ~45% received –36 QSEs sent in AS Self-Arrangement Three-Part Offers – approx 83% of QSEs submitted prior to the DAM Energy Only Offers – 73 QSEs submitted EOOs PTP Obligation Bids – 55 QSEs submitted PTPs, averaging ~2,600 MW per hour

14 Next Week’s Activities DAM executing on 4/13 and 4/15 (Op Days are 4/14 and 4/16) Changes from this week’s activities: –Network constraints will be in the solution –No PTP Obligation Bids or CRR Offers can be submitted (or will be canceled prior to DAM run) –Virtual Bids/Offers guardrails relaxed to 10 transactions totaling 100 MW/QSE/hr Remember that Tuesday’s Load Bid MW target is 80% of forecasted load, and Thursday’s is 120%. DRUC executing on 4/15 after DAM at 1430 –COP updates required after DAM and DRUC complete Week 3 Note: Dates are DAM execution days 4/13/2010 & 4/15/2010 Objective Network Constrained Solution/Initial DRUC Network Constraints Included Self-Arranged AS Requested 50% Load Bid MW Requested 80% Tue/120% Thurs forecasted load Virtual Bids / Offers Up to 10 transactions totaling 100 MW/QSE/hr PTP Obligations None NOIE CRR Offers None COP Updates After DAM and DRUC starting 4/15 DRUC DRUC w/ Thursday DAM HRUC None SASM None

15 Next Week’s Activities DAM executing on 4/13 and 4/15 (Op Days are 4/14 and 4/16) (cont’d): If you have AS-qualified Resources, please remember to submit AS Offers to avoid AS insufficiency –Also note that you must have a COP in the system in order to be awarded AS Offers (applies to Load Resources as well). If no COP, the AS Offer will be ignored by the clearing engine

16 FAQ Q: Why does my QSE not show up as participating on the DAM participation dashboard? I submitted my TPO prior to DAM deadline. A: TPOs, COPs and Output Schedules do not count toward DAM participation, they count toward Real-Time participation. In order to have participated in the DAM, you need to submit a DAM-specific transaction – DAM Energy Bids, DAM Energy Only Offers, AS Self-Arrangement, AS Offer, or PTP Obligation Bid. DAM Participation Dashboard posted at Q: Why are my Energy Bid awards giving a negative MW quantity? A: Due to the negative sign convention for load, the Energy Bid awards contain a negative MW quantity. FYI regarding large csv report files on the MIS: Large reports, such as the DAM LMPs, won’t load completely in older version of Excel (pre-2007) due to row size limits. MPs report that Access can open the files, however.

17 FAQ Q: Why is there no product tool to select peak, nonpeak, and all hours for DAM Energy Bids/Offers, similar to the Trades page? A: Due to the ability to submit 10 price/quantity pairs if you choose a curve, the product tool was not able to be added to this page. However, you can use the copy/paste functionality to easily get the same result. This is discussed on pages 9-10 of the Market Manager User Guide located at Basically, for a 7-22, enter data in the 0700 hour. Click the 0700 column header of the column. It will highlight. Hold down the shift key, then click the 2200 column header. All the intervening columns will fill in. Q: How do you properly reflect transition costs between combined cycle configurations? A: The difference in the startup costs that you submit for different configurations is the transition cost. An example: Transition Cost(A->B) = Startup Cost B(Warmth state B) – Startup Cost A(Warmth state B). Note that the startup cost for both configuration A and B depend on the warmth status(cold/intermediate/hot) of B.

18 FAQ Q: Does DAM check the COP resource status? A: DAM uses the COP in two ways. 1) The HSL/LSL contained in the next day’s COP is used to determine max/min TPO award quantities. 2) The resource status for the rest of the current day’s COP is used to determine the initial condition (online/offline status) for the start of the next day. DAM does not look at your COP resource status for the next operating day. If your unit is planned to be OUT for the next day, do not submit a TPO into the DAM for any hours for which the unit planned to be OUT Q: Why wasn’t my jointly-owned unit (JOU) awarded in the DAM? A: There are many possible reasons in a particular scenario but want to note one important point: all owners of a JOU must enter TPOs into the DAM in order for any of them to be awarded.

19 General Reminders/Updates ERCOT will discontinue the temporary DAM morning WebEx starting Tuesday –Please contact for Network Model Update –Next scheduled loads are 4/14 and 5/3 An updated settlement points and MP short name list will posted on 4/14 at Phase 5 Handbook for DAM/RUC/SASM was posted on 3/31 – For NOIEs –ERCOT must have your CRRAH to QSE relationship on file in order to accept CRR Offers from your QSE. Please contact your Account Manager for details if you do not yet have this relationship set up.

General Reminders/Updates Trade confirmation testing ERCOT will maintain a list of QSEs that desire to test trade confirmation/bilateral process with other QSEs during market trials sent to Nodal Project Managers yesterday afternoon, with a.xls attachment. Please fill out the spreadsheet, or send the following information, to with the subject line ‘Trade Confirmation Testing Contacts’ by Friday, April 16, –QSE short name –Contact name for trade confirmation –Phone number – address Once we have received this contact information, we will compile and distribute it to all QSEs participating so that the trading contacts can work together to complete their testing. Note that this information will only be shared with other trading contacts who have volunteered their own information. 20

21 Support Metrics * This week, 30 out of 321 questions were responded to outside of the 24 hour time frame. Market Participant Inbound Questions Last WeekThis Week

22 Day-to-day operations summary: Planned / Unplanned Outages Planned Outages 04/23/10 – 04/25/10 –ERCOT will be performing the initial release for Phase 5 on 4/23 –Due to the size and complexity of the release, it will be necessary to take systems down periodically throughout the weekend –ERCOT will be running a series of tests that Sunday which may result in notifications and / or data in the Nodal Production systems that are associated with that test. Unplanned Outages 03/27/10 09:00 A.M. – 4/7/2010 8:00 P.M –Market Manager UI experiencing intermittent periods of unavailability and / or degradation in performance –Update: configuration changes have been released into the NPROD environment which appear to have resolved stability issues. Note: ERCOT will be performing site failover testing on 04/10. A brief delay in EWS service availability may occur during this time period.

Environment Report-Known Issues Full DAM/RUC/SASM known issues list will post every Friday night at New DAM/RUC/SASM known issues Bid/Offer IDs containing non-alphanumeric characters cause an issue with DAM post- processing. A validation rule will be added to restrict the Bid/Offer IDs to alphanumeric characters. In the interim, please do not submit special characters as part of your Bid/Offer IDs Total cleared Bids and total cleared Offers should be equal. However, when DAM is AS insufficient, the clearing engine can over-procure offers by a small amount (1-3 MW). Occasionally TPOs submitted at a submission cap are improperly rejected. Submitting at $0.01 less than the cap is successful. Market Manager - When buyer and seller both = submitting QSE, the details screen should show a column for each hour for the user to enter P or S. Buyer and seller are initially set to submitting QSE upon page load, so these columns should appear. Currently, the columns only show if the user selects a different QSE and then selects their own QSE again. Market Manager - When updating Resource Parameters, the value entered for Cold Start Time is discarded and the value for Intermediate Start Time is submitted in its place. 23

Environment Report-Known Issues New DAM/RUC/SASM known issues The trade confirmation notification that follows the cancellation of a confirmed trade is currently returning a verb of ‘created’. This will be changed to ‘canceled’. TPO submissions in the adjustment period are rejected due to being DAM-committed even if the awarded amount was 0 MW. As a workaround, use the reason code field (enter OUT, FUEL, or DSCM) in order to be able to successfully submit your TPOs in the adjustment period. Get “SystemLoad” web service is incorrectly reporting the results as an hourly interval data. The corresponding CDR report is being sent as 15-minute interval data. When DAM MCPC report availability notification is sent as an Alert, the corresponding message has the header “Noun” value incorrectly set to the name of the report instead of the keyword “Alert”. Closed DAM/RUC/SASM known issues CLOSED - Awards are no longer displaying incorrectly and incompletely on the Market Manager for Energy Only Offers and Energy Bids. 24

Environment Report-Known Issues MIS/reports issues CLOSED – NP4-192-CD, DAM Total Energy Purchased, and NP4-193-CD, DAM Total Energy Sold, were delayed but will begin posting next week. CLOSED - Settlement Points and Settlement Points to Electrical Buses Mapping reports did not post on 4/1 25

Nodal Scorecard  3 DAM runs so far (4/1, 4/6, 4/8)  MPs measured on 50% participation (submission of DAM-specific transactions)  QSEs with Resources – 54/80 >= 50% participation  QSEs without Resources – 96/192 >= 50% participation  Generation – 87% participating (based on GRS from 4Q 2009)  Load – 76% participating (based on LRS from 4Q 2009)  AMBER/RED scores go live on 4/21, MPs with < 50% participation will be contacted starting 4/12 MP16 DAM Participation Metric Results 26

Special Topics Phase 2 Validation reports and process Phase 2 validation re-evaluates all submitted transactions at 7 am in the day-ahead with updated information, such as AS Obligation, CRR ownership, credit limits, etc. If there is a validation error, ERCOT will cancel the transaction We send a notification that a Phase 2 report is available for a particular transactions type, and notification containing the cancellation for the transaction. You can query for the Phase 2 report via web service or on the Reports page of the Market Manager in order to view the reason for the cancellation. Correct and resubmit prior to 10 am. Note that submissions are locked out during the Phase 2 process, which is currently taking about 15 minutes to complete. 27

Special Topics Day-Ahead Self Commitment DAM clearing engine treats your TPO differently if you submit Startup and Minimum Energy (SU/ME) costs as $0 vs. NULL If you submit with SU/ME as $0, DAM engine treats this as a normal offer where the QSE is not requesting SU/ME to be covered. HSL/LSL constraints will be respected. Also, if you are selected for an online Ancillary Service, you will also be awarded at least LSL on your offer curve. If you submit with SU/ME as NULL, DAM engine is signaled to ignore the HSL/LSL constraints for the resource. In this scenario, the offer curve submitted will start at 0 MW and go to the max MW quantity desired – again, DAM will ignore LSL/HSL constraints. If the offer curve submitted doesn’t start at 0 MW, it will be extended to 0 MW by DAM. If the resource is selected for Ancillary Services, no requirement to also award TPO at LSL (since no LSL constraint honored in this case). 28

Special Topics Day-Ahead Self Commitment The purpose of the NULL: It allows a QSE to use part of a Resource to serve its own load, and then offer in the rest to the DAM and enable the offer to be co- optimized with its AS Offer. Example: A Resource has 100 MW LSL and 400 MW HSL, and the QSE has already committed 300 MW of the Resource through some other mechanism. The QSE wishes to offer the remaining 100 MW, which would otherwise be ignored due to the 100 MW LSL. Then going into real-time, so QSEs will need to update their TPO to cover the full capacity of the resource, from LSL to HSL, rather than from 0 MW. To do that if the resource is awarded in the DAM, the QSE must provide a reason code, which is DSCM. This functionality came about due to TPTF subgroup on the issue. It has not yet been added to the protocols but will during our protocol traceability/cleanup effort. 29

Special Topics Bid/Offer efficiencies ERCOT has identified efficiencies in Bid/Offers submission with regard to the format of submission This applies to all transaction that use a Bid ID or an Offer ID (Energy Only Offers, Energy Only Bids, PTP Obligation Bids, and CRR Offers) Preference is for QSEs to submit the same Bid/Offer ID for each hour in the submission, versus submitting a different Bid/Offer ID for every hour. The market system treats the submission the exact same way, regardless of which format is used Using the preferred format will optimize DAM system performance For xml examples detailing this issue, please view a document that will be posted along with this presentation on the calendar page at This was discussed at NATF 4/6, we send an to the nodal technical contacts that we have on file for all QSEs, and we will add it to the External Interfaces Specification 30

31 Q&A Q&A / Open Forum

Appendix –DAM Kickoff slides –Pre- and post-DAM reports 32

33 Objectives Objectives of Phase 4.0 DAM/RUC Market Trials: Execute DAM, RUC, and SASM in the Market Trials environment twice a week Generate awards, notifications, and reports

34 Entry Criteria ERCOT Entry Criteria for Phase 4.0: ERCOT has completed required integration testing for Phase 4.0 functionality ERCOT has published all known, market-relevant defects to Market Participants via the Readiness Center Market Participant Entry Criteria for Phase 4.0: QSEs have met the system requirements (digital certificate with ‘MMS Trader’ role assigned, etc.) QSEs have completed the qualification testing and have confirmed their ability to use Web Services or the Market Manager to submit transactions necessary to support Day-Ahead Market Trials

Summary of QSE Activities QSEs with Resources: Maintain SCED offers and ensure Start-Up and Minimum Generation Offers are available prior to the Day Ahead 10:00 a.m. (Central) deadline Submit AS Offers Update COP after DAM, DRUC, HRUC starting 4/13 QSEs with Load: Self-Arrange requested amount of AS Obligations Bid a portion of their Load in the DAM (see example on next slide). In general, this should take the form of an Energy Bid but during the last week of April, can also be in the form of a PTP Obligation Bid. –Tuesday- 80% of QSE’s forecasted Load –Thursday- 120% of QSE’s forecasted Load 35

Summary of QSE Activities QSEs with Load (cont’d): Example for load bids All QSEs: May submit a limited amount of DAM Energy Only Offers and DAM Energy Bids that do not represent actual Resources or Loads (virtual bids and offers) – limit is up to a MW quantity total contained within a certain number of transactions per hour. PTP Obligation Bids will be limited as well Details with dates on next slide 36

37 Schedule/Key Dates Week 1Week 2Week 3Week 4Week 5 Note: Dates are DAM execution days4/1/2010 4/6/2010 & 4/8/2010 4/13/2010 & 4/15/2010 4/20/2010 & 4/22/2010 4/27/2010 & 4/29/2010 Objective Connectivity / Execution AS co- optimization Network constrained + Initial DRUC DAM + DRUC DAM + DRUC + HRUC + SASM Network ConstraintsNone Included Self-Arranged AS Requested100%50% Actual Load Bid MW Requested 80/120% forecasted load 80/120% forecasted load 80/120% forecasted load 80/120% forecasted load Virtual Bids / Offers Up to 5 transactions totaling 50 MW/QSE/hr Up to 10 transactions totaling 100 MW/QSE/hr Up to 10 transactions/ QSE/hr PTP Obligations Up to 5 bids totaling 50 MW/QSE/hr None Up to 5 bids totaling 50 MW/QSE/hr Up to 5 bids totaling 50 MW/QSE/hr (unless the bid represents QSE's load) NOIE CRR Offers Allocated CRRs only None Allocated CRRs only COP UpdatesNot needed After DAM and DRUC After DAM, DRUC and HRUC DRUCNone DRUC Thursday DRUC after each DAM HRUCNone Limited SASMNone Yes

38 Activities Market Participant Activities: Submit, update, and cancel DAM submission items, while keeping within the guardrails. –Three-Part Supply Offers (including Minimum Energy Offer and Startup Costs) –COP –AS Offer –AS Self-Arrangement –Energy-Only Offers –Energy Bids –PTP Obligation Bids –CRR Offer (for NOIEs only) Report any issues to the Market Trials Team at Download and review pre-DAM and post-DAM report postings Download and review RUC postings, as applicable Download and review SASM posting, as applicable Update COP (after DAM, RUC) Submit self-selected credit limit to ERCOT, if desired, as often as weekly

39 Activities ERCOT Activities: Execute DAM (including Phase 2 Validation), DRUC, HRUC and SASM periodically Generate Awards, Day-Ahead LMPs/SPPs, and other reports Communicate DAM/RUC/SASM reports and outputs to the market via Market Information System (MIS) postings Verify QSE submission activities Work with Market Participants to resolve issues Update Counterparty credit limits with self-selected credit limits submitted by MPs

Other Note: All transactions will be supported. Trade submission and confirmation (Energy, Capacity and AS Trades) may be exercised at this time. DAM notifications will be active. Phase 2 Validation process will be active and supported. QSE transactions that do not follow the guidelines are subject to cancellation at ERCOT’s discretion. ERCOT may run DAM on non-supported days. No QSE participation is requested, and ERCOT staff will not be available to answer questions regarding the outputs of these non-supported processes. CRR information from the market trials auction conducted in March for the month of April will be integrated into the market system. CRR Offers (by NOIEs) must contain CRR IDs from this auction in order to be valid. 40

41 Exit Criteria ERCOT Exit Criteria ERCOT completes DAM execution with Market Participant data, as planned ERCOT completes RUC execution with Market Participant data, as planned ERCOT completes SASM execution with Market Participant data, as planned Market Participant Exit Criteria Each QSE participates in at least 50% of the available scheduled DAM executions by successfully submitting the relevant transactions as tracked on the DAM participation dashboard

42 Dashboard

MP16 Day-Ahead Market Participation  Requires at least 50% participation in Market Trials Day Ahead Market runs (includes all sub-QSEs)  Metric is reported up to the 168 Hour Test  80% of Load and 80% of Generation participation required to meet the metric  Light up date of 4/1 for GREEN/WHITE and 4/21 for AMBER/RED  Participation equals any DAM-specific transactions (bids, offers, or AS self- arrangements) Nodal Scorecard Reminder 43

Supplemental Materials Slide 44 Reference and DescriptionLocationVersion External Interfaces Specification Explanation of Market Submission Items dex.html 0.26 Market Manager User Guidehttp://nodal.ercot.com/readiness/markettrials/connectivity/in dex.html 0.06 MMS Requirementshttp://nodal.ercot.com/docs/pd/mms/index.html#reqVarious Market Connectivity Handbookhttp://nodal.ercot.com/readiness/markettrials/connectivity/in dex.html 0.97 DAM/RUC Known Issues Listhttp://nodal.ercot.com/readiness/markettrials/dam/index.ht ml N/A Web Services XSDshttp://nodal.ercot.com/readiness/sandbox/index.html Sample Reports, Extracts, and DDLs DAM ERCOT Operating Procedures ml 2.0 DRUC/WRUC ERCOT Operating Procedures ml

45 Report Postings Posted by 6 am: Ancillary Services (AS) Plan Load Ratio Shares (these will be static based on Zonal production data as of October 16, 2009) * AS Obligations * Wind Generation Resource Power Potential (WGRPP) forecast * and Aggregated WGRPP forecast List of all Settlement Points and the mapping to Electrical Buses Load forecasts for ERCOT system, Weather Zones and Load Zones Load forecast distribution factors Distribution Loss Factors and forecasted Transmission Loss Factors Weather assumptions * Denotes MIS Certified reports

46 Report Postings Posted after each DAM: Awards (AS Offers, Energy Offers, DAM Energy-Only Offers, DAM Energy Bids, CRR Offers, and PTP Obligation Bids) * DAM Clearing Price for Ancillary Services (MCPC) Day-Ahead hourly Settlement Point Prices (SPPs) Day-Ahead hourly Locational Marginal Prices (LMPs) Shadow Prices Quantity of AS Offers Aggregated AS Offer Curve Total quantity of energy (in MWh) bought and sold in DAM See DAM Handbook for a list of all DAM/RUC/SASM reports available starting in Phase See MIS Handbook for a comprehensive list of reports available * Denotes MIS Certified reports