1. 02/22/061 Review of Balancing Energy Neutrality Adjustment (BENA) 02-22-06 WMS Meeting ERCOT Settlement and Billing

2. 02/22/062 BENA iq = -1 * (Σ(RI i + LI i + URC i + MISD i + MISR i ) + TCRPAY BEi + ΣCSC BEiq ) * LRS iq BENA:Balancing Energy Neutrality Adjustment RI:Resource Imbalance LI:Load Imbalance URC:Uninstructed Resource Charge MISD:Mismatched Payments for Energy Delivered to ERCOT MISR:Mismatched Charges for Energy Received from ERCOT TCRPAY:Payment to TCR Account Holders CSC:Balancing Energy CSC costs LRS:Load Ratio Share

3. 02/22/063 BENA Components ERCOTERCOT Resource Imbalance (RI) Load Imbalance (LI) Uninstructed Resource Charge (URC) Balancing Energy CSC Charge (CSCQSEBE ) Balancing Energy Neutrality Adjustment (BENA) $ $ $ $ $ Mismatch Received from ERCOT (MSR) $ Mismatch Delivered to ERCOT (MSD) $ TCR Account Holders (CSCCREDITBE) $

4. 02/22/064 2005 –BENA Amounts ERCOTERCOT Resource Imbalance ($801 M) Load Imbalance $275 M Uninstructed Resource Charge $7M Balancing Energy CSC Charge $79 M Balancing Energy Neutrality ($166 M) Mismatch Received from ERCOT $751 M Mismatch Delivered to ERCOT ($25 M) TCR Account Holders ($119 M)

5. 02/22/065

6. 6

7. 7 Schedules with “ERCOT as a Resource” do not affect BENA Amount [case 1] QSE A R O ERCOT 120MW (North) 120MW QSE A (North) QSE B is instructed to provide BE and it generates 120 MW above its Resource Schedule MCPE =$40 QSE A is considered as purchasing 120MW from ERCOT, so QSE A is charged 120MW at MCPE MSR iqA = 120/4 * 40 = $1,200 Settlement System QSE B is paid in RI for the 120 MW of generation above its Resource Schedule. QSE B is paid 120MW at MCPE RI iqB = (100-220)/4 * 40 = -$1,200 NET Effect to BENA = $0

8. 02/22/068 Schedules with “ERCOT as a Resource” do not affect BENA Amount [case 2] QSE A R O ERCOT 120MW (North) 120MW QSE A (North) QSE B that had a “relaxed balanced schedule” ---- generates as he said and is paid in Load Imbalance MCPE =$40 QSE A is considered as purchasing 120MW from ERCOT, so QSE A is charged 120MW at MCPE MSR iqA = 120/4 * 40 = $1,200 Settlement System QSE B is paid in LI for the 120 MW he scheduled as load but did not have. QSE B is paid 120MW at MCPE LI iqB = -1*(120/4 -0) * 40 = -$1,200 NET Effect to BENA = $0

9. 02/22/069 RMR Energy injected into Grid alters Balancing Energy Requirements and affects BENA 1.RMR generation alters Balancing Energy Requirements. 2.For example, due to the injection of energy from the RMR units into the grid----ERCOT may be required to balance down non-RMR resources [ resulting in more $ to ERCOT] or ERCOT would be able to avoid balancing up non RMR units [resulting in less $ paid to QSE’s]. 3.On the monthly RMR report --- ERCOT provides an estimate of the value of the RMR Generation using the MCPE of the corresponding zone of the RMR resource and the RMR schedule. Referred to as the “RMR BENA Credit”

10. 02/22/0610

11. 02/22/0611 CSC Impact Protocol Equation Simplified: ICSCiq (w-n) = (((SR_N06_5 + SRSI_N06_5) - (SL_N06 _5 + SLSI_N06_5)) * CSCSF_N06_WN)+ (((SR_S06_5 + SRSI_S06_5) - (SL_S06 _5 + SLSI_S06_5)) * CSCSF_S06_WN)+ (((SR_W06_5 + SRSI_W06_5) - (SL_W06 _5+SLSI_W06_5)) * CSCSF_W06_WN)+ (((SR_H06_5 + SRSI_H06_5) - (SL_H06 _5 + SLSI_H06_5)) * CSCSF_H06_WN)+ (((SR_E06_5 + SRSI_E06_5) - (SL_E06 _5 + SLSI_E06_5)) * CSCSF_E06_WN)

12. 02/22/0612 Which of the following affects the BENA amount seen on the statement? 1.A bunch of rich guys drive up the price for TCR’s during the annual and monthly TCR auctions. 2.Overselling of TCR’s. 3.Underselling of TCR’s. 4.One or more QSE’s submitting schedules showing ERCOT as a resource. 5.One or more QSE’s scheduling in a “relaxed” manner. 6.The submittal of mismatched schedules between QSE’s. (different MW amounts, counter party forgets to send) 7.RMR energy being injected into the grid. 8.Lack of interest in the TCR auctions [ie low prices].

13. 02/22/0613 Questions

14. 02/22/0614 The ones in RED below affect the BENA amount seen on the statement 1.A bunch of rich guys drive up the price for TCR’s during the annual and monthly TCR auctions. 2.Overselling of TCR’s. 3.Underselling of TCR’s 4.One or more QSE’s submitting schedules showing ERCOT as a resource. 5.One or more QSE’s scheduling in a “relaxed” manner. 6.The submittal of mismatched schedules between QSE’s. (different MW amounts, counter party forgets to send) 7.RMR energy being injected into the grid. 8.Lack of interest in the TCR auctions [ie low prices].