February 5, 2008 TPTF 168 Hour Test Follow up discussion

2 2 TPTF1/21/2008 Agenda Discussion points at the last TPTF –Control of the grid during 168 hour test –Settlements –Credit & CRRs

3 3 TPTF1/21/2008 Discussion points during the last TPTF  Should Nodal control the grid during the 168 hour test?  ERCOT requested Nodal control throughout; Will Support 48 Hours  How will settlements be done during the 168 hour test?  Always through Zonal protocols, when Nodal Controls Dispatch and Frequency then Zonal protocols + PRR 748  How can we ensure that metering data is as realistic as possible?  See the proposed data feeds on slide 6  How will credit information be updated?  See proposed Credit process on slide 7  Should a CRR auction be conducted before the 168 hour test?  A mock CRR auction will conducted in August as part of the 168 hour test

4 4 TPTF1/21/2008 Sep 8, 2008 ERCOT prefers the grid to remain under Nodal control on Day 2 & Day 3 of the 168 hour test Real Time Market Timeline Operating Day 1 Operating Day 2 Operating Day 3 Operatin g Day 4 Operatin g Day 5 Operating Day 6 Operating Day 7 Operating Day 8 DAM Timeline DAM for Day 1 DAM for Day 2 DAM for Day 3DAM for Day 4DAM for Day 5 DAM for Day 6 DAM for Day 7 DAM for Day 8 DAM for Day 9 Operations (Zonal) Follow all Zonal Instructions Follow all Zonal Instructions, except: Regulation Balancing Energy Base points& UDBPs will be provided by Nodal Follow all Zonal Instructions, except: Regulation Balancing Energy Base points & UDBPs will be provided by Nodal Follow all Zonal Instructions S&B Zonal (Binding) Zonal Zonal + PRR 748 Zonal + PRR 748 Zonal S&B Nodal (Test) DAM RT DAM RT DAM RT DAM RT DAM RT DAM RT Sep 1, 2008Sep 9, Hour test complete EDS 4 Complete  Day 2 & 3 under Nodal dispatch should reduce the number of false-starts  If we execute 72 hours without a Sev 1 or 2 defect and then encounter one after that we will NOT repeat the Nodal Dispatch and LFC during the 168 hour test  A final Nodal control test between completing the 168 hour test and Go-live is expected  All financial transfer will result from Zonal settlements & Billing (green boxes) Sep 2, 2008Sep 3, 2008Sep 4, 2008Sep 5, 2008Sep 6, 2008Sep 7, 2008

5 5 TPTF1/21/2008 Settlements under Nodal control will follow PRR 748 During the test period, ERCOT will settle transactions based on the Zonal Protocols using MCPEs calculated in the Zonal Market. Units deployed by the Zonal Market for OOME and Local Balancing Energy will have their instructed output levels replaced with weighted average SCED Base Point instructions. QSEs will not be subject to Uninstructed Resource Charges (URC) for the hour before the test period, during the test period and the hour following the test period. Verbal Dispatch Instructions (VDI) records will be sent to the ERCOT Settlement group for the hours the QSE participated in LFC Regulation testing. If the test is discontinued and Resources are returned to Zonal control, then URC will apply following the first full hour of resumed zonal operations.

6 6 TPTF1/21/2008 Nodal Meter Data for 168 Hour Test Just prior to the test, data from LodeStar Production will be put into Nodal (retail data and 867 load) During the 168 hour test Production EPS data will be fed into Nodal LodeStar All other data used for Nodal Settlements will flow from the other nodal systems

7 7 TPTF1/21/2008 Credit & CRRs CRR Auction will be conducted two weeks prior to the 168 hour test and results will be used in the DAM during the 168 hour test CRR Bilateral trades will be allowed throughout the period of the 168 hour test Initial Estimated Liability (IEL) would be calculated using the Daily Estimated Load and Daily Estimated Generation Collateral Information available with the ERCOT’s credit group will be used for Credit calculations Counter Party’s creditworthiness and credit exposure will be computed on a daily basis throughout the duration of the test IEL calculations CRR Nomination and Allocation CRR Auction Bilateral Trades allowed 168 Hour Test ERCOT posts ACL Jul 25, 08 Aug 8, 08Aug 15, 08Aug 22, 08Aug 29, 08Aug 01, 08 AugustJulySeptember CP updates CRR ACL

8 8 TPTF1/21/2008 Questions?

9 9 TPTF1/21/2008 ERCOT Nodal Transition Plan Hour Test and Trial Real Time Settlement (1)ERCOT shall develop real time dispatch market readiness criteria that will include a systems stability test. The systems stability test generally will require the real time systems performing SCADA, Network Security Analysis, Transmission Constraint Management, SCED, RUC and LFC to operate without significant error for at least 168 continuous hours. On detection of any significant error of the operations systems (non-settlement), ERCOT and the Vendor will correct the problem and re-start the 168-Hour Test. (2) ERCOT shall provide QSEs with test settlement statements for each Operating Day of the 168 Hour Test as defined in the detailed test plan. The test settlement statements for each Operating Day will use calculated dispatches and LMPs from SCED and actual meter data simulating actual settlement statements for real-time operations. QSEs shall review the test settlement statements for errors and provide feedback to ERCOT for resolution. ERCOT will work with Market Participants to resolve any settlements issues identified during the 168- Hour Test prior to beginning Real-Time Operations.