Kenan Ogelman 2012 TAC Chair Tab 7: TAC Report Board of Directors Meeting ERCOT Public November 13,

2 Tab 7 ERCOT Public Summary of TAC Update Revision Requests Recommended for Approval by TAC – Unopposed (Vote): NPRR425, Creation of a WGR Group for GREDP and Base Point Deviation Evaluation and Mixing Turbine Types Within a WGR NPRR460, WGR Ramp Rate Limitations NPRR465, Transmission Planning Analysis to Minimize the Need for RMR Units NPRR466, Asset Depreciation Schedule for Capital Contributions NPRR467, Balancing Account Resettlement due to DAM Resettlement NPRR471, Removal of Language Related to NPRR241 NPRR485, Clarification for Fuel Adder Provisions - Urgent Impact Assessment for Parking Deck NPRR153, Generation Resource Fixed Quantity Block PGRR018, Clarify the Prerequisites for Adding a New Generation Resource to the Planning Models and Capacity Demand and Reserves Report NOGRR093, Synchronization with NPRR365 Protocol Annual Review Requirement of Credit Variables (X and Y; A and M) (Vote) Guide Revisions Approved by TAC Future Agenda Items

Revision Requests Recommended for Approval by TAC (Unopposed) Tab 7 3 ERCOT Public

4 NPRR425, Creation of a WGR Group for GREDP and Base Point Deviation Evaluation and Mixing Turbine Types Within a WGR Purpose (ERCOT) This NPRR provides that WGRs meeting registration requirements will be evaluated for GREDP and Base Point Deviation as groups of WGRs rather than individual WGRs; and permits multiple wind turbine models or sizes to be combined in a single WGR if certain criteria are met. TAC VoteOn 10/4/12, TAC unanimously voted to recommend approval of NPRR425 as recommended by PRS in the 7/19/12 PRS Report and as amended by the 9/26/12 ERCOT comments and 9/27/12 Wind Coalition comments. ERCOT OpinionERCOT supports the approval of NPRR425 as it provides ERCOT with sufficient operational and modeling data without burdening Market Participants with WGRs as turbines are replaced or added over time. Effective Date/PriorityUpon System Implementation – Priority 2013; Rank 770 ERCOT Impact$250k - $350k; impacts to Registration Systems, NMMS, S&B, MMS, EMS, EIS, CDR, ISM; ERCOT business functions will be updated; provides improved visibility to evaluate Reactive Capability and quantify Dynamic Response of WGRs. Business Case HighlightsMaintains current WGR definition for reactive modeling purposes while addressing Dispatch issues for Resource Entities representing WGRs; provides accurate uplift of the payments to QSEs representing Load; provides transparency of Base Point Deviation and GREDP calculations for WGRs that can only be controlled as a WGR Group. Tab 7 ERCOT Public

5 NPRR460, WGR Ramp Rate Limitations Purpose (E. ON) This NPRR increases the WGR ramp rate limitation from 10% per minute of nameplate rating to a five minute average of 20% per minute of nameplate rating with no individual minute exceeding 25%. TAC VoteOn 9/7/12, TAC unanimously voted to recommend approval of NPRR460 as recommended by PRS in the 8/23/12 PRS Report. ERCOT OpinionERCOT supports approval of NPRR460 as it allows WGRs greater flexibility in ramping to the desired output quicker. ERCOT will monitor the change for any potential impacts to regulation. Effective Date/PriorityDecember 1, 2012 ERCOT ImpactNo budget or system impacts. ERCOT business functions will be updated. Business Case Highlights Provides for a more efficient dispatch of Resources; additional ramping capability for SCED to use when resolving congestion as well as responding to net Load changes; reduces sequential WGR dispatches; WGRs would not be forced to generate at a price that is below their Energy Offer Curve; Generator O&M costs will be reduced; Resources will have more stable price signals that are more reflective of actual Resource capabilities; Improves SCED Dispatch results and reduced artificial, single-SCED-interval negative prices for all Resources. Tab 7 ERCOT Public

6 NPRR465, Transmission Planning Analysis to Minimize the Need for RMR Units Purpose (CenterPoint Energy) The NPRR modifies provisions that relate to Reliability Must-Run (RMR) analysis to require that transmission planning analysis is performed to ensure reliability while minimizing the need for RMR Units. TAC Vote On 10/4/12, TAC unanimously voted to recommend approval of NPRR465 as recommended by PRS in the 9/20/12 PRS Report. ERCOT Opinion ERCOT supports approval of NPRR465 as it would result in improved awareness and mitigation of transmission system impacts when Generation Resources intend to cease operation in a transmission-constrained area. Effective Date/Priority December 1, 2012 ERCOT Impact No budget or system impacts; Staffing impact of 0.5 FTE that can be absorbed by current ERCOT Staff; ERCOT business functions will be updated. Business Case Highlights Reduces the possibility of Load shed events in transmission- constrained regions by requiring that transmission planning analysis be performed and solutions be initiated if such analysis indicates a reliability concern. Tab 7 ERCOT Public

7 NPRR466, Asset Depreciation Schedule for Capital Contributions Purpose (RCWG) This NPRR creates an appropriate asset depreciation schedule to apply to the capital contribution repayment obligation for Resources contracted to provide capacity pursuant to Section , ERCOT Control Area Authority. TAC VoteOn 9/7/12, TAC unanimously voted to recommend approval of NPRR466 as recommended by PRS in the 7/19/12 PRS Report and as revised by TAC. ERCOT OpinionERCOT supports approval of NPRR466 as it establishes a methodology for an asset depreciation schedule that would apply to capital contribution repayment obligations for Resources contracted to provide capacity that subsequently decide to re-enter the market. Effective Date/PriorityDecember 1, 2012 ERCOT ImpactNo impacts to budget or systems. ERCOT business functions will be updated. Business Case Highlights The asset depreciation schedule will allow Resources who have received capital contributions from ERCOT to repay ERCOT a fair market value for the contributions received. Tab 7 ERCOT Public

8 NPRR467, Balancing Account Resettlement Due to DAM Resettlement Purpose (CSWG) This NPRR provides a resettlement of the CRR Balancing Account (CRRBA) due to any changes in a DAM resettlement that impacts the CRRBA amount. TAC VoteOn 9/7/12, TAC unanimously voted to recommend approval of NPRR467 as recommended by PRS in the 8/23/12 PRS Report and as amended by TAC. ERCOT OpinionERCOT supports approval of NPRR467 as it provides for the accurate allocation of CRR account balances through resettlement due to changes in the CRR Balancing Account amounts. Effective Date/PriorityDecember 1, 2012; Automated solution will be implemented upon system implementation – Priority 2014; Rank 910 ERCOT Impact$80k - $90k (for automated solution); impacts to S&B and EIS (for automated solution); ERCOT business functions will be updated. Business Case Highlights Provides accurate Settlement of the CRRBA due to changes in the account from the resettlement of the DAM; Market Participants will receive the accurate allocation of any CRR account balances through resettlement due to changes in the CRRBA amounts. Tab 7 ERCOT Public

9 NPRR471, Removal of Language Related to NPRR241 Purpose (ERCOT) This NPRR removes the grey box language associated with NPRR241, Aggregate Incremental Liability (AIL) Calculation and Credit Reports Publish Corrections. TAC VoteOn 10/4/12, TAC unanimously voted to recommend approval of NPRR471 as recommended by PRS in the 9/20/12 PRS Report. ERCOT OpinionERCOT supports approval of NPRR471. Effective Date/PriorityDecember 1, 2012 ERCOT ImpactNo impacts. Business Case Highlights Eliminates a $100k - $120k project from the Project Priority List, which will allow limited resources to be used on other efforts; Market Participants will not have to revise current systems or processes to utilize a new report format. Tab 7 ERCOT Public

10 NPRR485, Clarification for Fuel Adder Provisions - Urgent Purpose (Luminant) This NPRR will provide for consistent application of the fuel adder that is meant to compensate Resources for the actual cost of transporting and purchasing fuel on the spot market across Mitigated Offer Caps and RUC instructions, as well as allow for Resource-specific verifiable costs to be submitted and verified by ERCOT. The Verifiable Cost Manual was recently updated to provide for consistent application of the value of X across Mitigated Offer Caps and RUC instructions, where the value of X is meant to compensate Resources for the actual cost of transporting and purchasing fuel purchased on the spot market. The fuel adder ($/MMBtu) cost may be submitted for each Resource and verified by ERCOT. The current default value of $0.50/MMBtu will continue to be used by ERCOT when no specific fuel adder has been provided for a Resource. TAC VoteOn 11/1/12, TAC unanimously recommended approval of NPRR485 as recommended by 10/18/12 PRS Report with a priority 2014 and rank 920. ERCOT Opinion ERCOT supports approval of NPRR485 acknowledging that the changes proposed are intended to align the Protocols and the Verifiable Cost Manual, while leaving the more detailed description and calculations in the manual. Additionally, ERCOT supports these changes because they could provide the ERCOT systems with a more accurate reflection of Resource costs for start-up and minimum energy. Effective Date/PriorityDecember 1, 2012; Priority 2014 and Rank 920 for automated solution. ERCOT Impact$15k - $30k (PPL Funding); $120k - $130k (ongoing O&M); impacts to S&B; ERCOT business functions will be updated; ongoing operational impact of 0.6 FTE in the S&B department which cannot be absorbed & will require an additional FTE. Business Case HighlightsAlign Protocols with the Verifiable Cost Manual. Tab 7 ERCOT Public

11 Impact Assessment for Parking Deck NPRR153, Generation Resource Fixed Quantity Block Purpose (TPTF) This NPRR revises existing Ancillary Service Offer criteria to provide for offers of Non-Spinning Reserve service in fixed quantity and time blocks from Off- Line Generation Resources similar to that for Load Resources. TAC VoteOn 10/4/12, TAC unanimously voted to recommend approval of the impact assessment for NPRR153 as recommended by PRS in the 9/20/12 PRS Report – Impact Assessment. ERCOT OpinionERCOT supports Market Participants’ desire for the option to offer Non-Spin service in fixed quantity and time blocks from Off-Line Generation Resources. Effective Date/PriorityUpon System Implementation – Priority 2013; Rank 790 ERCOT Impact$12k - $16k; impacts MMS. Business Case HighlightsMay result in lower offers for Non-Spin Ancillary Service from Off-Line Resources, as these Resources will be able to recover their fixed costs over a fixed quantity block size (if selected). This NPRR is expected to result in a more efficient market design and a more robust Non-Spin market. Tab 7 ERCOT Public

12 PGRR018, Clarify the Prerequisites for Adding a New Generation Resource to the Planning Models and Capacity Demand and Reserves Report Purpose (ERCOT) This PGRR clarifies that ERCOT will add proposed Generation Resources to the planning models and include these Resources in the calculation of the Planning Reserve Margin only after the Interconnecting Entity (IE) has first: (a) notified ERCOT that it has given the Transmission Service Provider (TSP) a financial commitment sufficient to fund the interconnection facilities and notice to proceed with the construction of the interconnection; (b) notified ERCOT that it has obtained all requisite air permits from the Texas Commission on Environmental Quality (TCEQ); and (c) demonstrated that it has obtained the rights to sufficient water to operate the facility. This PGRR also requires the IE to submit all data necessary for including the proposed Generation Resource in the planning models. TAC VoteOn 9/7/12, TAC voted to recommend approval of PGRR018 as recommended by ROS in the 7/12/12 ROS Report. There were two abstentions from the Independent Generator Market Segment. ERCOT OpinionERCOT supports approval of PGRR018. Effective Date/PriorityDecember 1, 2012 ERCOT ImpactNo impacts to budget or systems. Business processes will be updated. Business Case HighlightsMore accurate planning models, which should lead to a more reliable system. Tab 7 ERCOT Public

13 NOGRR093, Synchronization with NPRR365 Purpose (OWG) This NOGRR synchronizes the Nodal Operating Guides with NPRR365, Change in Resource Outage Approvals from Eight to 45 Days, which was approved by the ERCOT Board on 9/20/11 and revised the deadline for ERCOT approval of Resource Outages from an eight-day notice to a 45-day notice while aligning the new Resource Outage timelines to match those of Transmission Outages. TAC VoteOn 9/7/12, TAC unanimously voted to recommend approval of NOGRR093 as recommended by ROS in the 7/12/12 ROS Report. ERCOT OpinionERCOT supports approval of NOGRR093 as it synchronizes the Nodal Operating Guides with Protocols and clarifies a report. Effective Date/PriorityUpon System Implementation – Priority 2013; Rank 750 ERCOT Impact$20k - $25k; impacts to Enterprise Information Services. Business Case HighlightsSynchronized Nodal Operating Guides and clarification of reporting requirements. Tab 7 ERCOT Public

14 Tab 7 ERCOT Public Notice of Guide Revisions Approved by TAC RMGRR110, Enhancements to the Inadvertent Gain Process This RMRGRR enhances the current inadvertent gain process to provide for a more expeditious return of an Electric Service Identifier (ESI ID) that was gained in error to the losing Competitive Retailer. RMGRR112, Synchronization of NPRR454, Removal of Unfunded Project List Language, and Modification of Administrative RMGRR Definition This RMGRR aligns the RMG with NPRR454 approved by the ERCOT Board on July 17, 2012, which removed language regarding the Unfunded Project List; aligns the RMG with the Protocols by requiring ERCOT’s opinion in the TAC Report for any RMGRR requiring an ERCOT project for implementation; modifies the scope of the Administrative RMGRR definition to include revisions for the purpose of maintaining consistency between Section 3, Retail Market Guide Revision Process, and Protocol Section 21, Revision Request Process; and proposes administrative alignment changes. NOGRR100, Extending Manual Time Error Correction Threshold This NOGRR extends the manual time error correction threshold from +/- 3 seconds to +/- 30 seconds. Rejection of NOGRR095, Type 2 Special Protection System Submissions This NOGRR revises paragraph (13) of Section to state that non-Transmission Service Provider (TSP) equipment owners may submit Type 2 Special Protection System (SPS) proposals to ERCOT.

15 Protocol Annual Review Requirement of Credit Variables Paragraph (2) Protocol Section , Determination of the Counter-Party Future Credit Exposure, specifies: The parameters to determine ACPE (Auction Clearing Price Exposure) (X and Y) shall be posted on the MIS Public Area. The TAC shall review these values at least annually and may recommend to the ERCOT Board changes to these values. Protocol Section , Auction Process, specifies: The additional credit requirement for all awarded PTP Obligations, which is $A per MW per hour, plus the absolute value of the PTP Obligation bid price multiplied by M…The TAC shall review these values at least annually and may recommend, to the ERCOT Board, changes to these values that become effective at least 30 days prior to a monthly CRR Auction and 60 days prior to an annually CRR Auction. On October 4, 2012, TAC unanimously endorsed retaining the existing parameters (X and Y) and (A and M) with no revisions. Existing Parameters: X = $1.00; Y = $1.50; A = $0.75; and M = 0 Tab 7 ERCOT Public

16 Future TAC Items to the Board NPRR475, EPS Metering Exception for ERS Generation NPRR476, Market Submitted Energy Offer Curves Disclosures NPRR478, Extension of DAM QSE Offer and Bid Submission Deadline Due to ERCOT Systems Delays NPRR479, Daily Net Outage MW NPRR480, Removal of Language for Relaxing Transmission Constraints NPRR481, Report of Hourly Actual System Load by Weather Zone NPRR482, Removal of Duplicative Statement of Opportunity Requirements Tab 7 ERCOT Public