1. 1 WMS Report TO TAC March 2007

2. 2 In Brief Three Working Group Reports Three Working Group Reports Three Task Force Reports Three Task Force Reports EILS Discussion EILS Discussion Two staff reports Two staff reports

3. 3 Working Groups & Task Forces Working Groups are standing and self directed Working Groups are standing and self directed Task Forces are ad hoc and take their assignments from the subcommittee Task Forces are ad hoc and take their assignments from the subcommittee Neither has a voting structure and may not speak for stakeholders Neither has a voting structure and may not speak for stakeholders Minority positions are brought to the subcommittee Minority positions are brought to the subcommittee Have Antitrust responsibilities Have Antitrust responsibilities

4. 4 Working Group & Taskforce Leadership QMWG – Gary Miller & Ron Wheeler QMWG – Gary Miller & Ron Wheeler CMWG – Jerry Ward & Marguerite Wagner CMWG – Jerry Ward & Marguerite Wagner DSWG – MaryAnne Brelinsky &Nelson Nease DSWG – MaryAnne Brelinsky &Nelson Nease MWG – Dotty Disanto & Mark Rollins MWG – Dotty Disanto & Mark Rollins GATF – Malcom Smith & Henry Durrwachter GATF – Malcom Smith & Henry Durrwachter RTTF – Mark Bruce RTTF – Mark Bruce

5. 5 Working Group Reports QSEWG, CMWG & DSWG QSE managers did not meet but the chairman is working with ERCOT staff to get more integrated with nodal project QSE managers did not meet but the chairman is working with ERCOT staff to get more integrated with nodal project Competitive Constraint determination draft NPRR is out Competitive Constraint determination draft NPRR is out Updates on PUC Demand Side Project Updates on PUC Demand Side Project Drafting a PRR on Laar Testing Drafting a PRR on Laar Testing

6. 6 Task Force Reports GATF Addressing point by point the inputs to the ERCOT Reserve calculation Addressing point by point the inputs to the ERCOT Reserve calculation Will develop a revised methodology for the calculation Will develop a revised methodology for the calculation Will recommend changes in the format of the ERCOT CDR summary page Will recommend changes in the format of the ERCOT CDR summary page

7. 7 Task Force Reports RTTF Met twice and has developed a matrix defining the universe of options regarding how to address differences between early movers and late comers to a CREZ. Met twice and has developed a matrix defining the universe of options regarding how to address differences between early movers and late comers to a CREZ.

8. 8 Discussion Item NonSpin vs RPRS RPRS market impacts RPRS market impacts Dispatchablity of non-spin units Dispatchablity of non-spin units General trade offs General trade offs No action taken No action taken

9. 9 EILS Charge to WMS from PRS The benefit. The benefit. The cost based on the EILS PRRs. The cost based on the EILS PRRs. Changes in Market since April 17, 2006 Changes in Market since April 17, 2006

10. 10 Benefit of EILS Benefit of EILS Larry Gurley moved that the benefit be defined by the calculation as described in slide number 4 of the presentation, with the enumerated assumptions. Clayton Greer seconded the motion. The motion carried on a roll call vote, with five opposed and four abstaining. Larry Gurley moved that the benefit be defined by the calculation as described in slide number 4 of the presentation, with the enumerated assumptions. Clayton Greer seconded the motion. The motion carried on a roll call vote, with five opposed and four abstaining.

11. 11 Calculation The value provided by EILS is the avoided cost of the outage prevented: The value provided by EILS is the avoided cost of the outage prevented: Value = Risk of outage * cost of outage = (1 event/15 yr) * ($6000/MWh * 1000MW * 4 hr) = $1.6M/yr

12. 12 EILS Benefit EILS is to be used as the last step before firm load shed EILS is to be used as the last step before firm load shed Firm load shed historically has occurred at a rate of 1 event every 15 years Firm load shed historically has occurred at a rate of 1 event every 15 years Assume that the firm load shed prevented would be 1000MW (the maximum size of the EILS program) Assume that the firm load shed prevented would be 1000MW (the maximum size of the EILS program) Assume that the value of lost load is $6,000/MWh (slightly under the DOE value calculated for the Northeast blackout) Assume that the value of lost load is $6,000/MWh (slightly under the DOE value calculated for the Northeast blackout) Assume that an event lasts approximate 4 hours Assume that an event lasts approximate 4 hours Assume that EILS can be used in ALL firm load shed events Assume that EILS can be used in ALL firm load shed events Assume that the performance of EILS is quick enough to prevent ERCOT from requiring firm load shed as well Assume that the performance of EILS is quick enough to prevent ERCOT from requiring firm load shed as well

13. 13 Additional Benefit May help avoid the ERCOT SHEDS FIRM LOAD headline** May help avoid the ERCOT SHEDS FIRM LOAD headline** This is a real objective of the program. How do we put a value on it? ** ROS does not seem to think it will help. [ROS motion] ROS does not believe that EILS program as it has been defined in PRR705 is an effective reliability tool, and suggests that other tools that are more effective, or revisions to PRR705 that would make it effective, can be developed with further study as has been tasked for ROS to do. Discussed But not included In WMS motions

14. 14 Costs of EILS Larry Gurley moved that the cost of the EILS PRR be defined at $100,000 (or less) for cost of implementation, with a $20 million annual cap ($17 million for the first year), with many unquantifiable costs associated with market inefficiencies. Clayton Greer seconded the motion. The motion carried on voice vote, with four opposed and one abstention (Investor Owned Utility segment.) Costs of EILS Larry Gurley moved that the cost of the EILS PRR be defined at $100,000 (or less) for cost of implementation, with a $20 million annual cap ($17 million for the first year), with many unquantifiable costs associated with market inefficiencies. Clayton Greer seconded the motion. The motion carried on voice vote, with four opposed and one abstention (Investor Owned Utility segment.)

15. 15 Cost of the EILS PRRs To ERCOT 702: Assuming complexities removed, potentially $50K- $100K; otherwise, will require capital project for settlement changes. 702: Assuming complexities removed, potentially $50K- $100K; otherwise, will require capital project for settlement changes. 703: Assuming complexities removed, potentially $50K- $100K; otherwise, will require capital project for operational changes. 703: Assuming complexities removed, potentially $50K- $100K; otherwise, will require capital project for operational changes. 704: Assuming complexities removed, potentially $50K- $100K; otherwise, will require capital project for settlement changes. 704: Assuming complexities removed, potentially $50K- $100K; otherwise, will require capital project for settlement changes. 705: $50K-$100K under O&M budgets of affected departments. 705: $50K-$100K under O&M budgets of affected departments.

16. 16 Cost of the EILS PRRs To Consumers Comments filed on PRR 702 include a discussion of a $43.8 M Cap Comments filed on PRR 702 include a discussion of a $43.8 M Cap PRR 705 has a $20M Cap PRR 705 has a $20M Cap

17. 17 Changes in the Market Since the April 17, 2006 Event Larry Gurley moved to accept the changes listed on slide number 8 of the presentation, and to add more effective use of the RPRS tool, including load participation, enhanced non-spin procurement procedures, passage of PRR 701, and elimination of MCSM and the shame cap. Clayton Greer seconded the motion. The motion carried on voice vote with one abstention (Municipal segment.) Changes in the Market Since the April 17, 2006 Event Larry Gurley moved to accept the changes listed on slide number 8 of the presentation, and to add more effective use of the RPRS tool, including load participation, enhanced non-spin procurement procedures, passage of PRR 701, and elimination of MCSM and the shame cap. Clayton Greer seconded the motion. The motion carried on voice vote with one abstention (Municipal segment.)

18. 18 Changes in Market since April 17, 2006 Forecasting Model refinements Forecasting Model refinements Terminating Modified Competitive Solution Method and Shame Cap Terminating Modified Competitive Solution Method and Shame Cap Terminating CSC congestion constraint on BES MCPE Terminating CSC congestion constraint on BES MCPE Revised EECP and Alert process and procedures Revised EECP and Alert process and procedures Raised offer cap Raised offer cap More effective use of RPRS tool More effective use of RPRS tool Load participation Load participation Enhanced Non-Spin procurement procedures Enhanced Non-Spin procurement procedures Passed PRR 701, stranded capacity Passed PRR 701, stranded capacity

19. 19 EILS WMS understands that there is more to do to be responsive to PUC requests for solutions. WMS understands that there is more to do to be responsive to PUC requests for solutions. WMS is open to suggestions from TAC regarding how to proceed with developing long term solutions. WMS is open to suggestions from TAC regarding how to proceed with developing long term solutions.