1 ERCOT Load Profile Transition Option 1 – 4 Analysis August 21, 2006

2 Analysis Methodology New profiles were simulated using the latest LRS results (reflecting 2006 AV Profile ID assignments) and were compared to current profiles for 2005 Data Aggregation process was approximated using a SAS program in conjunction with usage records pulled for 2006 Annual Validation –Usage and profile data were structured to facilitate making multiple data aggregation runs over the April 1 – October 31 time period –Code was written to approximate both Initial and Final settlements for all transition options being considered for all 6 Profile Types –May 1 transition date was assumed in all cases –Profiles were adjusted as needed to properly reflect the way a specific transition option would be implemented –New profiles were considered to be loaded and available for settlement as needed back to January 1 of the transition year; old profiles were considered to be loaded and available through December 31 of the transition year –Code was benchmarked against production settlement runs to confirm that reasonably accurate approximations were incorporated

3 Description of Option 1- Direct Cutover –Start posting and using new profiles beginning on the transition date with no adjustments –Continue the settlement process with no changes to the current settlement system following all current rules for data aggregation

4 Option 1 – Direct Cutover Residential Group Initial and Final Residential load aggregated using old profiles Old Old + New % Difference

5 Option 1 – Direct Cutover Residential Group Initial and Final Old Old + New % Difference Residential load aggregated using old profiles Option 1 Residential load aggregation with a May 1 transition date

6 Option 1 – Direct Cutover Residential Group Initial and Final Residential load would be overstated for both initial and final settlement by as much as 20% for about the first month after the transition date Residential load would be understated by about 5% for about 2 weeks prior to the transition date for final settlement Old Old + New % Difference

7 Option 1 – Direct Cutover Business Group Initial and Final Old Old + New % Difference Business load aggregated using old profiles

8 Option 1 – Direct Cutover Business Group Initial and Final Old Old + New % Difference Business load aggregated using old profiles Option 1 Business load aggregation with a May 1 transition date

9 Option 1 – Direct Cutover Business Group Initial and Final Business load would be significantly understated by as much as 50% for initial settlements for about the first month after the transition date Business load would be significantly overstated by as much as 40% for final settlements for about the first month prior to the transition date and as much as 30% for the first month after the transition date Old Old + New % Difference

10 Option 1 – Direct Cutover Profile Total Initial and Final Old Old + New % Difference Total profiled load would be understated by as much as about 20% for initial for about the first month after the transition date Total profiled load would be overstated by about 15% for final settlements for about the first month prior to the transition date and understated by about 15% following the transition date

11 RES Base RES Option 1 Ratio Diff Option 1 – Direct Cutover Profiled Load Ratio Share Initial and Final Substantial distortion in the Residential percentage of load occurs during the transition period both at initial and final settlement Note : Business percentage of load = (100 – residential percentage of load)

12 Pros and Cons Option 1 – Direct Cutover –Pro: No system changes required either at ERCOT or in shadow settlement systems –Con: Significant contribution to UFE –During the transition period UFE allocation will reduce the miss-statement of Business load, but will increase the miss- statement of Residential load for all settlements –IDR ESIIDs will be allocated UFE caused by the transition even though they are not involved in the profile changes Significant differences will occur between initial and final settlement … scheduling that’s right for one will be wrong for the other QSEs/CRs with large proportions of Business load will be affected most dramatically

13 Description of Option 4a-c – Graduated Option –Transition from old to new profiles over a selected number of days –Transition profile = p × old profile + (1 – p) × new profile, Where p = percent of days through transition period

14 Option 4a – Graduated Option 50 Day Transition Residential Group Initial and Final Residential load would be overstated for both initial settlement by as much as 10% for about the first two months after the transition date Transition impact would be almost completely eliminated for Residential load at final settlement Old Transition Profile % Difference

15 Option 4a – Graduated Option 50 Day Transition Business Group Initial and Final Old Transition Profile % Difference Business load would be understated for initial settlement by as much as 30% for about the first three months after the transition date Transition impact would be largely eliminated for Business load at final settlement

16 Option 4a – Graduated Option 50 Day Transition Profile Total Group Initial and Final Old Transition Profile % Difference Total profiled load would be understated for both initial settlement by as much as 10% for about the first three months after the transition date Transition impact would be almost completely eliminated for total profiled load at final settlement

17 Option 4a – Graduated Option Profiled Load Ratio Share Initial and Final RES Base RES Option 4a Ratio Diff Substantial distortion in the Residential percentage of load occurs during the transition period at initial settlement only Note : Business percentage of load = (100 – residential percentage of load)

18 Pros and Cons Option 4a – Graduated Option 50 Day Transition –Pro: No system changes required either at ERCOT or in shadow settlement systems Eliminates the large load swing at the transition date present in Option 1 –Con: ERCOT will have to calculate old, new and transition forecast and backcast profiles for the entire transition period Somewhat significant contribution to UFE at initial settlement over a three- month time period Somewhat significant differences will occur between initial and final settlements for business load QSEs/CRs with large proportions of Business load will be affected most dramatically QSEs/CRs will have to adjust their forecasts/schedules to implement the old-to-new transition if they generate their own forecasts CR product offerings will be more difficult to price Transition impacts will extend into the summer months

19 Option 4b – Graduated Option 100 Day Transition Residential Group Initial and Final Old Transition Profile % Difference Transition impact would be almost completely eliminated for Residential load at both initial final settlement

20 Option 4b – Graduated Option 100 Day Transition Business Group Initial and Final Old Transition Profile % Difference Business load would be understated for initial settlement by as much as 20% for about the first four months after the transition date Transition impact would be largely eliminated for Business load at final settlement

21 Option 4b – Graduated Option 100 Day Transition Profile Total Group Initial and Final Old Transition Profile % Difference Transition impact would be almost completely eliminated for Total profiled load at both initial final settlement

22 Option 4b – Graduated Option 100 Day Transition Profiled Load Ratio Share Initial and Final RES Base RES Option 4b Ratio Diff Some distortion in the Residential percentage of load occurs during the transition period at initial settlement only Note : Business percentage of load = (100 – residential percentage of load)

23 Pros and Cons Option 4b – Graduated Option 100 Day Transition –Pro: No system changes required either at ERCOT or in shadow settlement systems Eliminates the large load swing at the transition date present in Option 1 –Con: ERCOT will have to calculate old, new and transition forecast and backcast profiles for the entire transition period Somewhat significant differences will occur between initial and final settlements for business load QSEs/CRs with large proportions of Business load will be affected most dramatically QSEs/CRs will have to adjust their forecasts/schedules to implement the old-to-new transition if they generate their own forecasts CR product offerings will be more difficult to price

24 Option 4c – Graduated Option 150 Day Transition Residential Group Initial and Final Old Transition Profile % Difference Transition impact would be almost completely eliminated for Residential load at both initial final settlement

25 Option 4c – Graduated Option 150 Day Transition Business Group Initial and Final Old Transition Profile % Difference Business load would be understated for initial settlement by as much as 10% for about the first six months after the transition date Transition impact would be largely eliminated for Business load at final settlement

26 Option 4c – Graduated Option 150 Day Transition Profile Total Group Initial and Final Old Transition Profile % Difference Transition impact would be almost completely eliminated for Total profiled load at both initial final settlement

27 Option 4c – Graduated Option 150 Day Transition Profiled Load Ratio Share Initial and Final RES Base RES Option 4c Ratio Diff Small distortion in the Residential percentage of load occurs during the transition period at initial settlement only Note : Business percentage of load = (100 – residential percentage of load)

28 Pros and Cons Option 4c – Graduated Option 150 Day Transition –Pro: No system changes required either at ERCOT or in shadow settlement systems Eliminates the large load swing at the transition date present in Option 1 –Con: ERCOT will have to calculate old, new and transition forecast and backcast profiles for the entire transition period Somewhat significant differences will occur between initial and final settlements for business load QSEs/CRs with large proportions of Business load will be affected most dramatically QSEs/CRs will have to adjust their forecasts/schedules to implement the old-to-new transition if they generate their own forecasts CR product offerings will be more difficult to price

29 Description of Option 2 – Consumption Start Date Cutover ESIIDs having an actual meter reading (meter read spans trade day) available for settlement that starts before the transition date is settled with old profiles ESIIDs having an actual meter reading (meter read spans trade day) available for settlement that starts on or after the transition date is settled with new profiles ESIIDs settled with historical meter reads will be settled with old profiles if they will have an actual meter read spanning the trade day that starts before the transition date ESIIDs settled with historical meter reads will be settled with new profiles if they will have an actual meter read spanning the trade day that starts on or after the transition date

30 Option 2 – Consumption Start Date Cutover Residential Group Initial and Final Old New Profile % Difference Transition impact would be almost completely eliminated for Residential load at both initial final settlement

31 Option 2 – Consumption Start Date Cutover Business Group Initial and Final Old New Profile % Difference Transition impact would be almost completely eliminated for Business load at both initial final settlement

32 Option 2 – Consumption Start Date Cutover Profile Total Initial and Final Old New Profile % Difference Transition impact would be almost completely eliminated for Total profiled load at both initial final settlement

33 Option 2 – Consumption Start Date Cutover Profiled Load Ratio Share Initial and Final RES Base RES Option 2 Ratio Diff No distortion in the Residential percentage of load occurs during the transition period Note : Business percentage of load = (100 – residential percentage of load)

34 Pros and Cons Option 2 – Consumption Start Date Cutover –Pro: Eliminates the large load swing at the transition date present in Option 1 Virtually eliminates the profile transition impact for all trade days and settlements –Con: ERCOT will have to calculate and post both old and new forecast and backcast profiles for a significant length of time ERCOT and shadow system changes will be required to properly select the appropriate old or new profile to use For a given trade day following the transition date some ESIIDs will be settled with old profiles and the others would be settled with new profiles … the mix would change continuously over the transition period

35 Description of Option 3 – Trade Day Cutover ESIIDs are settled with old profiles for all Trade days occurring before the transition date ESIIDs are settled with new profiles for all Trade days occurring on or after the transition date

36 Option 3 – Trade Day Cutover Residential Group Initial and Final Old New Profile % Difference Transition impact would be almost completely eliminated for Residential load at both initial final settlement

37 Option 3 – Trade Day Cutover Business Group Initial and Final Old New Profile % Difference Transition impact would be almost completely eliminated for Business load at both initial final settlement

38 Option 3 – Trade Day Cutover Profile Total Initial and Final Old New Profile % Difference Transition impact would be almost completely eliminated for Total profiledl load at both initial final settlement

39 Option 3 – Trade Day Cutover Profiled Load Ratio Share Initial and Final RES Base RES Option 3 Ratio Diff No distortion in the Residential percentage of load occurs during the transition period Note : Business percentage of load = (100 – residential percentage of load)

40 Pros and Cons Option 3 – Trade Day Cutover –Pro: Eliminates the large load swing at the transition date present in Option 1 Virtually eliminates the profile transition impact for all trade days and settlements –Con: ERCOT will have to calculate and post both old and new forecast and backcast profiles for a significant length of time ERCOT and shadow system changes will be required to properly select the appropriate old or new profile to use

41 Questions?

42 Review of Initial and Final Settlement Impacts for all Options By Profile Group and Type Appendix

43 Option 1- Direct Cutover Review of Initial and Final Settlement Impacts By Profile Group and Type

44 Option 1 – Reshiwr Initial and Final Old Old + New % Difference

45 Option 1 – Reslowr Initial and Final Old Old + New % Difference

46 Option 1 – Bushilf Initial and Final Old Old + New % Difference

47 Option 1 – Buslolf Initial and Final Old Old + New % Difference

48 Option 1 – Busmedlf Initial and Final Old Old + New % Difference

49 Option 1 – Busnodem Initial and Final Old Old + New % Difference

50 Option 4a – Graduated Option 50 Day Transition Review of Initial and Final Settlement Impacts By Profile Group and Type

51 Option 4a – 50 Day Transition Reshiwr Old Transition Profile % Difference

52 Option 4a – 50 Day Transition Reslowr Old Transition Profile % Difference

53 Option 4a – 50 Day Transition Bushilf Old Transition Profile % Difference

54 Option 4a – 50 Day Transition Buslolf Old Transition Profile % Difference

55 Option 4a – 50 Day Transition Busmedlf Old Transition Profile % Difference

56 Option 4a – 50 Day Transition Busnodem Old Transition Profile % Difference

57 Option 4b – Graduated Option 100 Day Transition Review of Initial and Final Settlement Impacts By Profile Group and Type

58 Option 4b – 100 Day Transition Reshiwr Old Transition Profile % Difference

59 Option 4b – 100 Day Transition Reslowr Old Transition Profile % Difference

60 Option 4b – 100 Day Transition Bushilf Old Transition Profile % Difference

61 Option 4b – 100 Day Transition Buslolf Old Transition Profile % Difference

62 Option 4b – 100 Day Transition Busmedlf Old Transition Profile % Difference

63 Option 4b – 100 Day Transition Busnodem Old Transition Profile % Difference

64 Option 4c – Graduated Option 150 Day Transition Review of Initial and Final Settlement Impacts By Profile Group and Type

65 Option 4c – 150 Day Transition Reshiwr Transition profile = p × old profile + (1 – p) × new profile, Where p = percent through transition period Old Transition Profile % Difference

66 Option 4c – 150 Day Transition Reslowr Old Transition Profile % Difference

67 Option 4c – 150 Day Transition Bushilf Old Transition Profile % Difference

68 Option 4c – 150 Day Transition Buslolf Old Transition Profile % Difference

69 Option 4c – 150 Day Transition Busmedlf Old Transition Profile % Difference

70 Option 4c – 150 Day Transition Busnodem Old Transition Profile % Difference

71 Option 2 – Consumption Start Date Cutover Review of Initial and Final Settlement Impacts By Profile Group and Type

72 Option 2 – Reshiwr Old New Profile % Difference

73 Option 2 – Reslowr Old New Profile % Difference

74 Option 2 – Bushilf Old New Profile % Difference

75 Option 2 – Buslolf Old New Profile % Difference

76 Option 2 – Busmedlf Old New Profile % Difference

77 Option 2 – Busnodem Old New Profile % Difference

78 Option 3 – Trade Day Cutover Review of Initial and Final Settlement Impacts By Profile Group and Type

79 Option 3 – Reshiwr Old New Profile % Difference

80 Option 3 – Reslowr Old New Profile % Difference

81 Option 3 – Bushilf Old New Profile % Difference

82 Option 3 – Buslolf Old New Profile % Difference

83 Option 3 – Busmedlf Old New Profile % Difference

84 Option 3 – Busnodem Old New Profile % Difference