1. 1 Timeline for Activities in Breach CWG/MCWG ERCOT Public September 25 2013

2. 2 Timeline for Activities in Breach In addition to the settlement period for the Real-Time Market, collateral is also held against the period of time over which a default and mass transition might be executed. Under Protocols Section 16.11.4.1, M1 is the forward risk multiplier for DALE (day-ahead exposure) and RTLE (real-time exposure) Currently set at 20 days. Under Protocols Section 16.11.4.1, M1 is the forward risk multiplier for DALE (day-ahead exposure) and RTLE (real-time exposure) Currently set at 20 days.

3. 3 Timeline for Activities in Breach

4. 4 ERCOT Public Collateral Cure Period ISOCollateral Call Breach Notice Credit Default Possible Suspension ERCOT2 Days 4 Days NYISO2 Days 4 Days ISO-NE1 Day0 PJM2 Days0 MISO2 Days1 Day3 Days SPPSpecific Date 2 Days CaliforniaPolicy based upon number of late collateral instances in a rolling12 month period. Market Participants may be restricted, suspended or terminated after the 5 th instance in a rolling 12 month period Timeline for Activities in Breach

5. 5 ERCOT Public Payment Cure Period ISOTermsBreach Notice Default Possible Suspension ERCOT2 Days 4 Days NYISO2 Days1 Day3 Days ISONE2 Days1 Day3 Days PJM2 Days0 MISO2 Days1 Day3 Days SPPSpecific Date 2 Days CaliforniaPolicy based upon number of late payment instances in a rolling 12 month period. Market Participants may be restricted, suspended or terminated after the 7 th instance in a rolling 12 month period. Failure to cure within 30 days leads to a complete termination Timeline for Activities in Breach ERCOT Public

6. 6 Timeline for Activities in Breach Financial impact Based on September 18 th data, reducing M1 by two days (to reflect elimination of the cure period) reduced TPE by $13 million or 2.3%. EAL is reduced by $32 million or 22.2%, but most of the reduction is offset by minimum collateral requirements. Based on September 18 th data, reducing M1 by two days (to reflect elimination of the cure period) reduced TPE by $13 million or 2.3%. EAL is reduced by $32 million or 22.2%, but most of the reduction is offset by minimum collateral requirements.

7. 7 Timeline for Activities in Breach Other considerations Due to system constraints at both ERCOT and TDSPs, there is a risk that a large mass transition might take considerably longer than estimated. ERCOT is currently running system tests to better gauge the potential number of transitions that can be processed. Elimination of the two-day cure period would require re- execution of the SFA by all Market Participants, potentially a lengthy process. Due to system constraints at both ERCOT and TDSPs, there is a risk that a large mass transition might take considerably longer than estimated. ERCOT is currently running system tests to better gauge the potential number of transitions that can be processed. Elimination of the two-day cure period would require re- execution of the SFA by all Market Participants, potentially a lengthy process.

8. 8 Questions ERCOT Public Timeline for Activities in Breach