Default Uplift Max MWh Activity Total Matthew Tozer Manager, Settlements and Billing WMS 1/8/2014

2 The table below shows the total MMA and the break down per market activity type These numbers are based on latest settlements for the month of November 2013 as of December 31, 2013 Counterparty Max Activity & Counts for November 2013 CP = Counter-Party MMA = Maximum MWh Activity MMATOT = Maximum MWh Activity Total The sum of all Counter-Party’s Maximum MWh Activity.

3 Default Uplift Allocation - Overview Refer to Protocol Section , Default Uplift Invoices Allocation Methodology Use True-Up data from the month PRIOR to the default month For each Counterparty determine its “maximum MWh activity ratio share” (MMARS) Allocate the default to each counterparty according to its MMARS The maximum MWh activity ratio share is determined using the most recent DAM and CRR Auction data, and RTM True-Up data for the month prior to the default Further allocate the default to QSEs or CRRAHs under the counterparty according to their pro-rata share of the MWhs that contributed to the MMARS (necessary because ERCOT only settles with QSEs / CRRAHs)

4 (2) Each Counter-Party’s share of the uplift is calculated using True-Up Settlement data for each Operating Day in the month prior to the month in which the default occurred, and is calculated as follows: DURSCP cp = TSPA * MMARS cp Where: MMARS cp = MMA cp / MMATOT MMA cp = Max { ∑ mp (URTMG mp + URTDCIMP mp ),  RTM Metered Generation and DC Tie Imports ∑ mp URTAML mp,  RTM Adjusted Metered Load ∑ mp URTQQES mp,  RTM QSE to QSE Energy Sales ∑ mp URTQQEP mp,  RTM QSE to QSE Energy Purchases ∑ mp UDAES mp,  DAM Energy Sales (TPO and Energy-Only) ∑ mp UDAEP mp,  DAM Energy Purchases ∑ mp (URTOBL mp +URTOBLLO mp ),  RTM PTP Obligations ∑ mp (UDAOPT mp + UDAOBL mp + UOPTS mp + UOBLS mp ),  CRR Auction Sales & CRR Ownership in DAM ∑ mp (UOPTP mp + UOBLP mp )}  CRR Auction Purchases MMATOT = ∑ cp (MMA cp ) Where: URTMG mp = ∑ p, r, i (RTMG mp, p, r, i ), excluding RTMG for RMR Resources and RTMG in Reliability Unit Commitment (RUC)-Committed Intervals for RUC-committed Resources URTDCIMP mp = ∑ p, i (RTDCIMP mp, p, i ) / 4 URTAML mp = ∑ p, i (RTAML mp, p, i ) URTQQES mp = ∑ p, i (RTQQES mp, p, i ) / 4 URTQQEP mp = ∑ p, i (RTQQEP mp, p, i ) / 4 UDAES mp = ∑ p, h (DAES mp, p, h ) UDAEP mp = ∑ p, h (DAEP mp, p, h ) Default Uplift Allocation – Formula ( (2)) URTOBL mp = ∑ (j, k), h (RTOBL mp, (j, k), h ) URTOBLLO mp = ∑ (j, k), h (RTOBLLO mp, (j, k), h ) UDAOPT mp = ∑ (j, k), h (DAOPT mp, (j, k), h ) UDAOBL mp = ∑ (j, k), h (DAOBL mp, (j, k), h ) UOPTS mp = ∑ (j, k), h (OPTS mp, (j, k), h ) UOBLS mp = ∑ (j, k), h (OBLS mp, (j, k), h ) UOPTP mp = ∑ (j, k), h (OPTP mp, j, h ) UOBLP mp = ∑ (j, k), h (OBLP mp, (j, k), h ) Default Uplift Allocation – Formula ( (2))