1. Discussion of Reliability Must-Run (RMR) Protocol Provisions ERCOT Technical Advisory Committee November 6, 2002

2. Discussion Purpose Recent RMR contracts have raised questions –Amount of MW under RMR –Total cost of RMR contracts (~$350 MM annualized cost) –RMR costs are uplifted to all loads TAC should review RMR Protocols –Determine if current contracts are within the Protocols –Determine if RMR contracts fit the intent of RMR –Determine if Protocol Revisions are needed –Determine what TAC’s role is in reviewing RMR plans and contracts in the future

3. Issues Raised For TAC Review From Initial RMR Contracts Data inputs to Standby Price The heat rate benefit of a combined cycle plant that includes an RMR gas turbine Analysis comparing RMR payments to transmission upgrades to resolve the local constraint Estimated contract value, including energy deployments RMR energy management and pricing How are RMR units handled in the Day-Ahead balanced schedule process? Minimum take provisions ERCOT’s plan for 2003 –If report not done until 12/15/02 and existing RMR contracts expire 12/31/02, when will ERCOT negotiate new contracts? –What is TAC’s role in evaluating ERCOT’s plan?