1. PRR 692 APPEAL PRESENTED BY: Constellation NewEnergy DATE: November 2, 2006

2. 2 PRR 692 Attempts to Isolate and Directly Assign RPRS Charges Associated with Under-Scheduling to Those That Under- Schedule Direct Assignment is at Marginal Cost Withholding is Addressed Through Compensation of Over- Schedulers and Minimum 10 HR bid. – 10 HR Min. Bid makes it less economic for “in the money” resources to schedule in attempts to Induce an RPRS Market – Over-Scheduled QSEs Available in RPRS Procurement Resource Plans and in Real Time are Compensated Portfolio commitment and bidding make it difficult to: – Compensate Over-scheduled QSEs, and – Enforce 10HR Minimum Energy Bid

3. 3 New Data, No Difference Only 2% of RPRS Step 2 Procurements. Can Even “Arguably” be Attributable to Under-Scheduling Insufficient Capacity Related to Under-Scheduling has occurred in less than <.2% of Hours Since RPRS became effective Significant Reductions of Step 2 Procurements in Sept. Material Step 1 Procurements (Local Congestion), Which, Under PRR 676 Would all be Discriminatorily Assigned to Under-Scheduled QSEs

4. 4 Some of the Negative Market Effects of Past Flawed Structure Source: ERCOT Balancing Energy Reports

5. 5 Typical Real Time Activity

6. 6 Real Time Activity Since September 2