1. Texas Nodal © 2005 - 2006 Electric Reliability Council of Texas, Inc. All rights reserved. 1 Day-Ahead Market Ancillary Services Business Requirements Settlements and Billing July 27, 2006

2. Texas Nodal © 2005 - 2006 Electric Reliability Council of Texas, Inc. All rights reserved. 2 Agenda Review of Charge types Charge Type Calculation Map Highlights of Business Requirements

3. Texas Nodal © 2005 - 2006 Electric Reliability Council of Texas, Inc. All rights reserved. 3 Charge Types Regulation Up Service Payment Regulation Down Service Payment Responsive Reserve Service Payment Non-Spinning Reserve Service Payment Regulation Up Service Charge Regulation Down Service Charge Responsive Reserve Service Charge Non-Spinning Reserve Service Charge

4. Texas Nodal © 2005 - 2006 Electric Reliability Council of Texas, Inc. All rights reserved. 4 Overall Data and Calculation Flow

5. Texas Nodal © 2005 - 2006 Electric Reliability Council of Texas, Inc. All rights reserved. 5 Ancillary Service Payments Highlights Requirement IDFR1 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR 4.6.4.1.1 Traceability to Sub-Process MapsWill be completed August 31, 2006 Description PCRUAMT_ _ =(-1) * MCPCRU_ * PCRU_ _ Requirement IDFR2 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR 4.6.4.1.1 Traceability to Sub-Process MapsWill be completed August 31, 2006 Description PCRU_ _ = PCRUR_ _ _

6. Texas Nodal © 2005 - 2006 Electric Reliability Council of Texas, Inc. All rights reserved. 6 Requirement IDFR51 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR 4.6.4.2.2 Traceability to Sub-Process MapsWill be completed August 31, 2006 Description DARUAMT_ =DARUPR * DARUQ_ Ancillary Service Charge Highlights Part I Requirement IDFR52 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR 4.6.4.2.2 Traceability to Sub-Process MapsWill be completed August 31, 2006 Description DARUPR =(-1) * PCRUAMTTOT_ / DARUQTOT

7. Texas Nodal © 2005 - 2006 Electric Reliability Council of Texas, Inc. All rights reserved. 7 Requirement IDFR53 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR 4.6.4.2.2 Traceability to Sub-Process MapsWill be completed August 31, 2006 Description PCRUAMTTOT_ =PCRUAMT_ _ Ancillary Service Charge Highlights Part II Requirement IDFR54 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR 4.6.4.2.2 Traceability to Sub-Process MapsWill be completed August 31, 2006 Description DARUQTOT = DARUO_

8. Texas Nodal © 2005 - 2006 Electric Reliability Council of Texas, Inc. All rights reserved. 8 Ancillary Service Charge Highlights Part III Requirement IDFR55 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR 4.6.4.2.2 Traceability to Sub-Process MapsWill be completed August 31, 2006 Description DARUQ_ =DARUONET_ – RUSQ_ _ Requirement IDFR56 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR 4.6.4.2.2 Traceability to Sub-Process MapsWill be completed August 31, 2006 Description DARUONET_ = DARUO_ + DARUCS_ – DARUCP_ Note: ERCOT Settlement System will not verify or ensure that a QSEs Self-Supplied Schedule is equal or less than the QSEs Ancillary Service Obligation.

9. Texas Nodal © 2005 - 2006 Electric Reliability Council of Texas, Inc. All rights reserved. 9 Summary Regulation Up, Regulation Down, Responsive Reserve and Non-Spin Ancillary Services will all follow the same calculation processes. MMS will ensure that a QSE does not Self-Supply more than their Ancillary Service Obligation. ERCOT is implementing Protocol calculations based upon using an interval-based business rule system.