1. Report to TAC February 2009

2. In Brief Chair and Vice-Chair for 2009 Chair and Vice-Chair for 2009 Working Group Reports Working Group Reports QMWG QMWG VCWG VCWG Staff reports Staff reports EPS Meters with Loss Compensation EPS Meters with Loss Compensation Local Congestion Management with WGRs Local Congestion Management with WGRs SCR 754 – issues SCR 754 – issues PRR 766 PRR 766 Non-Implemented Approved Zonal PRRs Non-Implemented Approved Zonal PRRs EILS: Cost Comparison EILS: Cost Comparison Other WMS action Other WMS action

3. Working Group Reports QMWG Affirm David Detelich, CPS Energy as Chairman Affirm David Detelich, CPS Energy as Chairman WGRPP Forecast Accuracy Analysis WGRPP Forecast Accuracy Analysis ERCOT will start presenting to ROS ERCOT will start presenting to ROS

4. Working Group Reports QMWG Optimal Procurement of A/S Optimal Procurement of A/S WMS believes the procurement of NSRS as described in the 2009 ERCOT Methodologies for Determining Ancillary Service Requirements has improved using the Net Load concept and current tools available. WMS endorses changing from on-peak/off- peak periods to the 4 hour blocks for NSRS sizing. WMS further agrees alternatives that ERCOT is developing will further optimize the procurement of NSRS. WMS believes the procurement of NSRS as described in the 2009 ERCOT Methodologies for Determining Ancillary Service Requirements has improved using the Net Load concept and current tools available. WMS endorses changing from on-peak/off- peak periods to the 4 hour blocks for NSRS sizing. WMS further agrees alternatives that ERCOT is developing will further optimize the procurement of NSRS.

5. Working Group Reports QMWG 4 hour blocks for NSRS sizing This analysis results in less total capacity purchased. This analysis results in less total capacity purchased. ERCOT to continue analysis and propose in future AS methodology ERCOT to continue analysis and propose in future AS methodology

6. Working Group Reports VCWG Affirm Heddie Lookadoo, NRG and Ino Gonzales, ERCOT as Co-Chairs Affirm Heddie Lookadoo, NRG and Ino Gonzales, ERCOT as Co-Chairs Affirm Russell Lovelace, Shell Energy as Vice- Chair Affirm Russell Lovelace, Shell Energy as Vice- Chair Nodal Fuel Adder Nodal Fuel Adder

7. Working Group Reports VCWG Nodal Fuel Adder Nodal Fuel Adder FIP issues in the RUC FIP issues in the RUC FIP only recovers a fuel index price. Does not recover other costs of fuel; such as intra-day premiums, transport, swing, imbalance. FIP only recovers a fuel index price. Does not recover other costs of fuel; such as intra-day premiums, transport, swing, imbalance. RUC committed units will typically purchase at Spot Gas Prices after the market closes RUC committed units will typically purchase at Spot Gas Prices after the market closes Language in the nodal protocols would result in an under- recovery of costs for RUC deployed units in a vast majority of instances. Language in the nodal protocols would result in an under- recovery of costs for RUC deployed units in a vast majority of instances.

8. Working Group Reports VCWG Nodal Fuel Adder Nodal Fuel Adder Recommendations herein only suggests modifying FIP in two sections of the nodal protocols: Recommendations herein only suggests modifying FIP in two sections of the nodal protocols: Section 5.6.1.1 - Verifiable Startup Costs* Section 5.6.1.1 - Verifiable Startup Costs* Section 5.6.1.2 - Verifiable Minimum-Energy Costs* Section 5.6.1.2 - Verifiable Minimum-Energy Costs* FIP + 10% will better align cost recovery to actual gas prices. FIP + 10% will better align cost recovery to actual gas prices. FIP + 10% was chosen because FIP + 10% was chosen because it is similar to wording in current zonal protocols: Section “6.8.1.11(3)(b) - For gas fired Resources, such documentation will not be required if the requested incremental fuel cost is less than one hundred ten percent (110%) of the Fuel Index Price it is similar to wording in current zonal protocols: Section “6.8.1.11(3)(b) - For gas fired Resources, such documentation will not be required if the requested incremental fuel cost is less than one hundred ten percent (110%) of the Fuel Index Price similar to other markets costs similar to other markets costs

9. Working Group Reports VCWG Nodal Fuel Adder Nodal Fuel Adder VCWG Options: VCWG Options: Option 1 : FIP * 1.X Option 1 : FIP * 1.X Option 2: FIP * 1.X with a Deadband 1.Y - 1.X Option 2: FIP * 1.X with a Deadband 1.Y - 1.X WMS endorse Option 1 and set X at 10%, and direct VCWG to address Settlement issues associated with Option 2 and return to WMS with more robust recommendation. WMS endorse Option 1 and set X at 10%, and direct VCWG to address Settlement issues associated with Option 2 and return to WMS with more robust recommendation.

10. Other WMS activity NPRR 147 – DAM Short Pay Changes NPRR 147 – DAM Short Pay Changes Remanded to new MCWG for review and recommendation Remanded to new MCWG for review and recommendation NPRR 167 – referred back to WMS NPRR 167 – referred back to WMS Allows QSE or Resource to submit VC Allows QSE or Resource to submit VC Local Congestion Management with WGR Local Congestion Management with WGR SPS and WGR tripping under N-1 SPS and WGR tripping under N-1 Requires WGR to monitor element that trips the SPS – concerns that element is not always radial Requires WGR to monitor element that trips the SPS – concerns that element is not always radial To be discussed at CMWG To be discussed at CMWG Endorsed SCR 754 WGRPP Forecasts Posted on Zonal TML Endorsed SCR 754 WGRPP Forecasts Posted on Zonal TML Delayed 6 months (ERCOT) Delayed 6 months (ERCOT) Non-Implemented Approved Zonal PRRs Non-Implemented Approved Zonal PRRs ERCOT updated list for WMS priority vote ERCOT updated list for WMS priority vote PRR 601 referred to CMWG and ERCOT to review impacts of 7/7 versus 7/8 PRR 601 referred to CMWG and ERCOT to review impacts of 7/7 versus 7/8

11. EILS: Cost Comparison with AS October 2008 – January 2009 Contract Period October 2008 – January 2009 Contract Period Service BH 1 BH 2 BH 3 NBH EILS10.8311.2811.399.61 RRS*16.2014.6525.5119.02 NSRS*1.672.613.081.79 Up-Reg*11.8010.4626.8614.08 * Average MCPCs through Jan. 15, 2009

12. EILS: further from 1000MW Business Hours 1 (HE 0900 through 1300, Monday thru Friday except ERCOT Holidays; 420 hours): MW procured: 163.6 MW procured: 163.6 Number of EILS Resources: 38 (includes 24 aggregations) Number of EILS Resources: 38 (includes 24 aggregations) Projected cost: $762,783.00 Projected cost: $762,783.00 Average cost per MW per Hour: $11.10 Average cost per MW per Hour: $11.10 Business Hours 2 (HE 1400 through 1600, Monday thru Friday except ERCOT Holidays; 252 hours) MW procured: 168.2 MW procured: 168.2 Number of EILS Resources: 38 (includes 24 aggregations) Number of EILS Resources: 38 (includes 24 aggregations) Projected cost: $489,872.88 Projected cost: $489,872.88 Average cost per MW per Hour: $11.56 Average cost per MW per Hour: $11.56 Business Hours 3 (Hours Ending 1700 through 2000, Monday thru Friday except ERCOT Holidays; 336 hours) MW procured: 163.4 MW procured: 163.4 Number of EILS Resources: 36 (includes 22 aggregations) Number of EILS Resources: 36 (includes 22 aggregations) Projected cost: $638,010.24 Projected cost: $638,010.24 Average cost per MW per Hour: $11.62 Average cost per MW per Hour: $11.62 Non-Business Hours (all other hours; 1,873 hours): MW procured: 139.4 MW procured: 139.4 Number of EILS Resources: 33 (includes 21 aggregations) Number of EILS Resources: 33 (includes 21 aggregations) Projected cost: $2,647,075.31 Projected cost: $2,647,075.31 Average cost per MW per Hour: $10.14 Average cost per MW per Hour: $10.14 Total projected cost of EILS for this Contract Period is $4,537,741.43. Total projected cost of EILS for this Contract Period is $4,537,741.43.