1. SEWG R EPORT TO COPS Jim Galvin- Chair, Settlements and Extract Working Group

2. E XTRACT I SSUES ERCOT reported on the Extract and Report issues from the mid December and January http://www.ercot.com/services/sla/ Extract and Report Issues continue to be on the decline will continue to be monitored through Nodal implementation

3. N ODAL S ETTLEMENT A LGORITHMS Provided discussion on DAM settlement Algorithms Next slide will provide a sample of how we will document in the form of a users guide There will be some thoughts to how to incorporate the concept of a settlement guide and the Settlement Charge Matrix to avoid duplicative documentation Ideally, the Settlement Guide will provide more support and detail than the Matrix

4. N ODAL S ETTLEMENT A LGORITHMS - S AMPLE VariableUnitDescriptionInterval Frequen cy SourceShadow- able DAESAMT q, p $ Day-Ahead Energy Amount per QSE per Settlement Point  The payment to QSE q for the cleared energy offers at Settlement Point p for the hour. 1 / hourYes DASPP p $/M Wh Day-Ahead Settlement Point Price per Settlement Point  The DAM SPP at Settlement Point p for the hour. 1 / hour DAES q, p MW Day-Ahead Energy per QSE per Settlement Point  The total amount of energy represented by QSE q’s cleared Three-Part Supply Offers in the DAM and cleared DAM Energy-Only Offer Curves at Settlement Point p, excluding the offers submitted for RMR Units at the same Settlement Point, for the hour. 1 / hourYes DAESAMTQSE TOT q $ Day-Ahead Energy Amount QSE Total per QSE  The total of the payments to QSE q for its cleared energy offers at all Settlement Points for the hour. 1 / hourYes Calculate Day-Ahead Energy Sale Amount QSE Total per QSE by QSE for each Operating Hour of the Operating Day. Calculations Calculate Day-Ahead Energy Sale Amount by QSE and Settlement Point for each Operating Hour of the Operating Day. Description The Day-Ahead Energy Payment is made for all cleared offers (excluding offers submitted for the RMR Units) to sell energy in the DAM, whether through three part supply offers or DAM Energy-Only Offer Curves. The payment to each QSE for each settlement point is calculated on an hourly interval.

5. UFE C OST D ECEMBER 2009 Channel 1 Initial Settlement $19.6 M Channel 4 Final Settlement $7.4 M Spikes in UFE Cost and Percentages occurring on cold weather days Dec 2009 average temp 42.13, compared to 48.22 in 2008 and 47.25 30-year average Morning Off-peak tends to be higher than normal UFE percentages

6. J ANUARY 2010 C HANNEL 1 H IGHLIGHTS Total Cost estimated $21.9 M January 6-10 comprise estimated $15.3 M UFE prevalent on cold weather events, predominantly negative for later part of the month Average temperature for Jan 2010 43.45, compared to 46.78 in Jan 2009 and 46.63 30-year average Will the cost impact come back at Final Settlement

7. UFE U PCOMING D ISCUSSIONS Significant cold weather events in February with high prices as well Average temperature 42.00 compared to 55.71 in 2009 and 50.10 30-year average Cost and percentage statistics will be provided in April SEWG meeting SEWG and PWG will continue to discuss and analyze UFE as part of joint sessions in the SEWG meetings Discussions may continue on the allocation factors for UFE, however, it does not appear that consensus from one particular group (SEWG or PWG) will bring the issue to a PRR

8. EILS S ETTLEMENT - N EXT S TEPS SEWG recommends no preference on Miscellaneous Debit/Credit vs. Miscellaneous Invoice ERCOT would default to Miscellaneous Invoice and SEWG had no objections Will continue to evaluate potential long term solution Need to address how to handle the Transition Contract Period between Zonal and Nodal

9. Q UESTIONS

10. D EC 2009 C HANNEL 1 UFE %

11. D EC 2009 UFE C HANNEL 4

12. D ECEMBER C HAN 1 V C HAN 4

13. C HANNEL 1 TO C HANNEL 4 C OST COMPARISON