1. Technical Advisory Committee (TAC) update to RMS Kathy Scott January 3, 2013Technical Advisory Committee 1

2. Kenan Ogelman – Chair ◦ CPS Energy Randa Stephenson- Vice Chair ◦ Lone Star Transmission ◦ Note: Both positions were unopposed 2013 TAC Leadership Elections January 3, 2013Technical Advisory Committee2

3. TAC ERCOT Board Update Respond to Board Resettlement Question Related to NPRR461, Energy Storage Settlements Consistent With PUCT Project 39917, (Vote) ◦ Issue: After system implementation, resettle all Operating Days from BOD approval to system implementation according to the NPRR461 methodology. ERCOT highlighted the following items to be considered by TAC: ◦ Question of precedent – the consistent and standard practice is that when a manual solution is not an option, the language remains grey-boxed until system implementation ◦ Audit Risk – retroactive configuration of the generation site and the EPS metering points in the settlement system will require procedural actions which are inconsistent with standard practice and result in inconsistencies between the settlement system and upstream systems ◦ Price Availability – prices for the WSL bus would not be available on normal timelines. Data is expected to be available to calculate RTRMPRES for the known installation, but this could be an issue if there are other installations prior to implementation ◦ Increase project cost – due to the delay of Release 6, which included changes to Real-Time Energy Imbalance, a resettlement back to 1/1/13 would require NPRR461 logic to be developed and tested on an additional version of the code. This cost is not included in the current IA. ◦ Market Impact  TDSP – ERCOT will need the meter data for resettlement. Presumably this will require the TDSP to certify the meter earlier than the system implementation.  Per ERCOT meter data must be obtained from EPS meter and if the meter is installed prior to system implementation at ERCOT, ERCOT can still poll meter and store data until systems are available.  All QSEs with load – upon resettlement a QSE representing load could expect changes to load-based charge types. Presumably, these changes would be small.  All QSEs and CRRAHs – expect some resettlement after True-Up, however ERCOT preference would be to reflect changes on scheduled Finals and True-Ups to the extent possible. January 3, 2013Technical Advisory Committee3

4. TAC ERCOT Board Update (cont.) ◦ ERCOT Board Approved NPRR461 during the December 11, 2012 BOD meeting. The motion to approve included a request to see “Whether something can be done in terms of a true-up”  Xtreme Power worked closely with ERCOT to develop a feasible solution with minimal impact to other market participants as follows: ◦ Proposed Implementation Solution:  TAC’s normal course of action would be to avoid (a) implementing protocols on a retroactive basis and/or (b) making protocols effective before ERCOT’s staff is capable, through systems or manual procedures, of implementing them. However, due to the uniqueness of this situation, TAC recommends the Board modify the effective date of NPRR 461 to coincide with the “unboxing” of protocols related to implementation of “Release 6”, but that ERCOT shall not perform manual implementation of NPRR461 prior to system implementation. Rather, upon system implementation, ERCOT shall correct settlements for the prior effective days through the normal settlement process to the extent possible. TAC acknowledges that this solution will create a delay in the reporting of the WSL prices during the affected period. ◦ The Proposed Implementation Solution as modified by TAC became the motion that passed 21-4-4  Per Mark Bruce stated at this time there is only one entity located in west Texas that will be impacted. January 3, 2013Technical Advisory Committee4

5. TAC ERCOT Board Update (cont.) Review Alternatives to Definition of Wholesale Storage Load Created by NPRR461 ◦ TAC’s recommendation was to refer this item to WMS, ROS and PRS for discussion and their recommendations. January 3, 2013Technical Advisory Committee5

6. PRS Initiatives and Votes Nodal Protocol Revision Requests (NPRRs) (Vote): ◦ NPRR474, Clarification of Price Correction Principles and Associated Timelines  Motion to Table for one-month for additional discussion at PRS to address TAC member concerns was unanimously approved by TAC ◦ NPRR492, Addition of System Lambda Information  Unanimously Approved by TAC ◦ NPRR493, Half-Hour RUC Clawback  Unanimously Approved by TAC ◦ NPRR496, Revise West Hub Definition Due to Permanent Topology Change  Unanimously Approved by TAC ◦ NPRR498, Cleanup of ERCOT Finance and Audit Committee Responsibilities in Operational Audits  Unanimously Approved by TAC ◦ NPRR499, Revisions to Digital Certificate Holder Qualification Requirements  Unanimously Approved by TAC January 3, 2013Technical Advisory Committee6

7. PRS Initiatives and Votes Nodal Protocol Revision Requests (NPRRs) (Vote): ◦ NPRR506, Correction of Reconfiguration SASM Language Inconsistency – U RGENT  Unanimously Approved by TAC ◦ NPRR507, Correction of PTP Obligation Settlement Language Related to NPRR322 and NPRR470 – U RGENT  Unanimously Approved by TAC Revision Requests Previously Tabled by TAC (Vote): ◦ NPRR489, Planning Reserve Margin  Motion to approve as amended by NRG comments Unanimously Approved by TAC ◦ PGRR018, Clarify the Prerequisites for Adding a New Generation Resource to the Planning Models and Capacity Demand and Reserves Report  Motion to approve as amended by ERCOT’s comments Unanimously Approved by TAC January 3, 2013Technical Advisory Committee7

8. ROS and WMS Initiatives and Votes Reliability and Operations Subcommittee Report * ◦ PGRR024, Clarify Planning Assumptions and Performance Criteria (Vote)  Approved by TAC with 2 abstentions Wholesale Market Subcommittee Report* ◦ TAC Review: Minimum PTP Option Bid Price Per Protocol Section 7.7.1, Charging of PTP Option Award Fee (Vote)  Unanimously Approved by TAC to make no changes to the Protocols January 3, 2013Technical Advisory Committee8

9. COPS and RMS Initiatives and Votes Commercial Operations Subcommittee Report* ◦ COMPMGRR033, Synchronization with NPRR454, Removal of Unfunded Project List Language, and Modification of Administrative COPMGRR Definition (Vote)  Unanimously Approved by TAC ◦ LPGRR047, Automatic Yearly Update of Annual Validation Usage Window (Vote)  Unanimously Approved by TAC ◦ LPGRR048, Synchronization with NPRR454, Removal of Unfunded Project List Language, and Modification of Administrative LPGRR Definition (Vote)  Unanimously Approved by TAC Retail Market Subcommittee Report* ◦ Update only– No voting items this month, Leadership only provided an RMS status update January 3, 2013Technical Advisory Committee9

10. Additional Votes or Recommendations Market Enhancements Task Force Status (Vote) ◦ Unanimously Approved the Sunset of METF by TAC ERCOT Operations, Planning, and IT Report ◦ AEPSC Airline/North Padre Island Area Improvements Project Review (Possible Vote)  Endorsed by TAC with 1-abstention  Cost Estimate for improvements is ~$54.7 Million ◦ TAC Review: Market Impacts of the Dollar Value of Energy for Generation Resources Committed by the RUC Process Per Protocol Section 6.4.3.1, Energy Offer Curve for RUC-Committed Resources  TAC referred this item to WMS for discussion and recommendation. ◦ Approval Process for Telemetry Standards and State Estimator Standards (Possible Vote)  Approved by TAC with this becoming a function of ROS Annual TAC and TAC Subcommittee Structure Review ◦ Revised TAC Procedures (Vote)  Approved TAC and Subcommittee Procedures as modified by TAC January 3, 2013Technical Advisory Committee10

11. 12/3/12 ERCOT Outage Update ERCOT reported that a new array has been installed and systems should be fully functional with redundancy capability in about 4 weeks. Suggestion and request from TAC leadership: ◦ ERCOT will need to provide more detailed information to the Board concerning root cause, analysis and lessons learned at this point along with possible recommendations going forward. January 3, 2013Technical Advisory Committee11

12. Questions? 12January 3, 2013Technical Advisory Committee