1. Lead from the front Texas Nodal http://nodal.ercot.com 1 Texas Nodal EDS 3 Early Delivery System Plan TPTF April 24, 2007

2. Lead from the front Texas Nodal http://nodal.ercot.com 2 Agenda Nodal Timelines Nodal summary release schedule EDS Release Philosophy EDS 3 Plan Objectives and Transition Plan requirements Activities Release and testing timelines Market Participant Readiness How can the TPTF continue to help in the effort?

3. Lead from the front Texas Nodal http://nodal.ercot.com 3 EDS 3 Plan - Background Presented EDS 3 Plan to TPTF on April 2 nd, 2007 Converted the presentation into the EDS 3 Plan on April 5 th, 2007 ERCOT internal review signoff April 19 th, 2007 Posted EDS 3 Plan for TPTF comment on April 19 th, 2007 –Comments expected by April 30, 2007 –Post redlined document and comment disposition by May 3, 2007 –Discussion and possible vote on May 7, 2007 TPTF on April 23 rd, 2007 requested a walk through of the plan

4. Lead from the front Texas Nodal http://nodal.ercot.com 4 Texas Nodal Program Summary Release Schedule High Level Version 2.0

5. Lead from the front Texas Nodal http://nodal.ercot.com 5 Release Overview EDS 1 Release 1 – Alarm Processing EDS 1 Release 2 – Point-to-Point Checkout EDS 2 Release 3 – State Estimator & Network Security Analysis EDS 2 Release 4 – Network Model Validation EDS 3 Release 5 – SCED execution and Reasonable LMP’s EDS 3 Release 6 – Load Frequency Control EDS 3 Release 7 – Settlement Statements, CRR Allocation & Auction EDS 4 Release 8 – RT Settlements (no Shadow Settlements) EDS 4 Release 9 – DAM, RUC, SASM, Full Settlements, EDW Extracts

6. Lead from the front Texas Nodal http://nodal.ercot.com 6 We are working to “start early” EDS to encourage earlier MP involvement – quality and support expectations must be managed appropriately During the ERCOT quality control process, “early” software versions will be used for EDS testing that have not completed ERCOT's full quality control cycle EDS Software versions will have known defects and additional defects discovered during EDS that will be incorporated into the internal release management schedule for prioritization and correction. Potential for periods of reduced service level due to unexpected circumstances such as server failures. These systems will be available to the market for testing the processes required to run SCED, LFC and CRR The EDS environment will be upgraded incrementally with new functionality coordinated with the internal release management schedule. Market Participants will be notified in advance of system upgrades and new functionality. System availability, quality of LMPs and other data and support responses will improve over time but may not likely meet production standards at the initial start

7. Lead from the front Texas Nodal http://nodal.ercot.com 7 Early SCED Release Timeline Objectives Enable MPs (limited) to upload offers to SCED (API or UI) Scripted testing with limited QSEs Enable MPs to review LMPs Obtain feedback on user experience Test MP ability to submit offers through API into SCED System Needs MMS SCED SCED UI (As Is) LMP Output (CSV) EIP Three Part Offer Offer Acceptance Error notification* Data / Stubs Registration (QSE, Resources) EMS (Telemetry Simulator, Resource Limit Calculator, Shift Factors, Constraints) SCED Input data Creation / Submission Tool Testing Tools Defect tracking & communication process / tool * Interface may be delivered in next phase Objectives (Incremental) Test MP ability to utilize API’s - Output Schedules - COP - Inc/Dec Offers System Needs MMS No Change MIS Portal with all portlets configured (Minimal data / linkable apps) EIP Output Schedule COP Inc/Dec Offer* Data / Stubs No Change Testing Tools No Change * Interface may be delivered in next phase Objectives (Incremental) Execute SCED utilizing Real- Time ICCP data All MPs to participate together Publish LMPs and Base points via MIS System Needs MMS SCED UI Upgrade EMS SE, Transmission Constraint Manager, Resource Limit Calculator S&B FIP, FOP, Heat Rate Curves NMMS Network Model MIS Data and linkable apps incorporated as available EDW LMP Reports (MIR) EIP EMS-to-MMS MMS-to-EMS NMMS-to-MMS REG-to-MMS S&B-to-MMS PLATT-to-MMS Data / Stubs No Change Testing Tools No Change Objectives (Incremental) Publish all SCED reporting per Nodal Transition Plan System Needs MMS Hub & Load Zone Price Calculations MIS Full System SCED Reporting (Graphical) EIP MMS-to-MIS Data / Stubs No Change Testing Tools No Change Infrastructure No Change Objectives (Incremental) Stable & quality SCED Begin publishing of LMPs for 6 months as required by Nodal Transition Plan System Needs MMS Bug fix only MIS Bug fix only EMS Bug fix only EIP Bug fix only NMMS Bug fix only MIS Bug fix only EDW Bug fix only Data / Stubs No Change Testing Tools No Change Infrastructure No Change Support levels: The quality, system availability and support levels during early stages may not match production standards. ERCOT will ramp up to 8*5 support for SCED operations by Jan 08 JulyAugSepOctNovDecJan 2007 2008

8. Lead from the front Texas Nodal http://nodal.ercot.com 8 Early LFC Release Timeline Objectives Test the process for AS qualification of Generator and Load resources Issue draft report to QSE and ERCOT and evaluate process making adjustments as necessary Software and communications testing Calculation of ACE & comparison with existing control system Validate EMS Ability of QSE to receive Regulation Signal QSE internal system / processing validation System Needs EMS1 ICCP Generation Subsystems Resource Qualification Testing Tool LFC MMS1 SCED EIP None? Data / Stubs None? Testing Tools Ancillary Service Qualification Testing Tool Tool to provide base points to LFC Defect tracking & communication process / tool Infrastructure Temporary Hardware – OK Objectives (Incremental) Evaluate each generator and load resource Verify data requirements for LFC, for each QSE qualified to provide either Reg- Up, Reg-Down or Response Reserve Services Compare Area Control Error on EDS environment and existing control systems for seven days Verify each QSEs ability to provide Regulation Control and Dispatch Instructions for Manual Response Reserve Deployment Dispatch System Needs EMS Bug fix only MMS Bug fix only MIS Bug fix only EMS Bug fix only EIP Bug fix only NMMS Bug fix only MIS Bug fix only EDW Bug fix only Data / Stubs No Change Testing Tools No Change Infrastructure No Change JanFebMarAprMayJunJul 2008 Support levels: The quality, system availability and support levels during early stages may not match production standards. ERCOT will ramp up to 8*5 support for SCED operations by Jan 08

9. Lead from the front Texas Nodal http://nodal.ercot.com 9 Early CRR Release Timeline Objectives Registration of QSEs as CRR Account Holders Validate MP CRR Digital Certificate rights Enable AH to upload Bids Validate AH bids System Needs CRR CRR UI (As Is) Data / Stubs Registration (Account Holders) CMM Network Model, Settlement Point Prices, etc Testing Tools Defect tracking & communication process / tool Infrastructure EDS 3 Environment Objectives (Incremental) Conduct mock CRR auction Validate allocation methodology Issue test PCRRs and CRRs to MPs Mock CRR Invoices System Needs CRR CRR mock auction results (CSV/XML) EIP – CRR interfaces with NMMS Registration CMM Data / Stubs None Testing Tools No Change Infrastructure No Change Objectives (Incremental) Conduct monthly and multi month CRR auctions Stable & Quality CRR Conduct bilateral trading View CRRs System Needs CRR Bug fixes CRR Reports EDW CRR Extracts Data / Stubs None Testing Tools No Change Infrastructure No Change JanFebMarAprMayJunJul 2008 Support levels: The quality, system availability and support levels during early stages may not match production standards. ERCOT will ramp up to 8*5 support for SCED operations by Jan 08

10. Lead from the front Texas Nodal http://nodal.ercot.com 10 What should QSE’s have in place? Release 5 - SCED Personnel have attended Nodal Training Courses Provided new and updated Registration data to ERCOT QSE ability to create and submit offer curves to ERCOT QSE Interactions with Interface Testing –Obtained digital certificates –Connectivity and ID Authentication –Offer submissions capability demonstrated QSE ability to receive Base Points and other data Market Participant operators available 8 to 5 Release 6 - LFC QSE EMS Nodal system changes complete to support LFC QSE Ancillary Service Qualification complete Release 7 - CRR CRR Digital Certificate access requested CRR Account Holder: Completed Registration with ERCOT and Application Process CRR Account Test Credit Limit established

11. Lead from the front Texas Nodal http://nodal.ercot.com 11 Web Service Implementation Timeline Objectives The following Web Services should be available by June 30th, 2007 Web Services – EIP Three Part Offer Incremental/Decremental Offers Congestion Revenue Rights Current Operating Plan Energy-Only Offer Output Schedule Bid Set Acceptance Bid Set Errors Get mRID System Status JunJulAugSeptOctNovDec Objectives The following Web Services should be available by July 30th, 2007 Web Services – EIP Forecasted Load Market Totals Market LMPs and SPPs Binding Constraints Active Contingencies in SCED Voltage Profiles Shift Factors Proxy Curves Mitigated Curves Objectives The following Web Services should be available by August 30th, 2007 Web Services – EIP Energy Bid PTP Obligation Self Schedule Real-Time System Load Total Regulation Load Ratio Share Load Distribution Factors Unit Availability Startup and Shutdown Instructions CRR Awards Objectives The following Web Services should be available by September 30th, 2007 Web Services – EIP Self Arranged Ancillary Services Ancillary Service Offers Ancillary Service Trades Capacity Trade DC Tie Schedule Energy Trade Get Award Set Market MCPCs Ancillary Service Schedule Obligations Customer Load Profile PTP Obligation Awards Objectives The following Web Services should be available by October 30th, 2007 Web Services – EIP Dynamic Ratings Competitive Constraints Aggregated Ancillary Service Offer Curves Ancillary Service System Plan Pending Trade Energy Offer Awards Energy Only Offer Awards Energy Bid Awards Ancillary Service Awards Outage Creation Objectives The following Web Services should be available by November 30th, 2007 Web Services – EIP Total Ancillary Service Offers Total DAM Energy Derated CRRs Notices and Alerts Outage Notifications Alert Acknowledgement Outage Query Outage Cancellation 2007

12. Lead from the front Texas Nodal http://nodal.ercot.com 12 Next Steps EDS 3 Transition Plan Details 1.Develop a method for Market Participants to create and provide individual Resource offer curves to SCED 2.Identify MIS reporting requirements – “posting LMPs and other data available on the EDS…” if required in NP 6.3.2 3.Define LMP posting requirements – “at least six months” –What is needed & How much Analysis Requirements ----- 4.Define details of Load Frequency Control Testing 5.Create a CRR detailed test plan describing each step of trial allocation & auction 6.Define PCR / CRR allocation process for testing 7.Finalization and signoff of Entry / Exit criteria 8.Other items as needed

13. Lead from the front Texas Nodal http://nodal.ercot.com 13 EDS 3 Transition Plan Details Development Step 1 – Meet with Nodal project teams, ERCOT business owners and MP volunteers to define and document a recommended approach Step 2 – Send 1-2 page recommended approach to TPTF for review Step 3 – Discuss the recommended approach at TPTF for feedback and consensus Step 4 – TPTF approval Step 5 – Document recommended approach into the EDS3 Detailed Plan

14. Lead from the front Texas Nodal http://nodal.ercot.com 14 Transition Plan Details – Draft Development & Approval Schedule Transition Plan RequirementTPTF VolunteerPresentation to TPTF Approval by TPTF Develop a method for Market Participants to create and provide individual Resource offer curves to SCED May 21, 2007June 11, 2007 Identify MIS reporting requirements – “posting LMPs and other data available on the EDS…” if required in NP 6.3.2 May 21, 2007June 11, 2007 Define LMP posting requirements – what does “at least six months” mean? May 21, 2007June 11, 2007 Define a method for Load Frequency Control Testing, including the plan for settlement of nodal testing periods (if required) May 21, 2007June 11, 2007 Create a CRR detailed test plan describing each step of trial allocation & auction May 21, 2007June 11, 2007 Define PCR / CRR allocation process for testingMay 21, 2007June 11, 2007 Draft of Entry / Exit criteriaMay 21, 2007June 11, 2007 We are seeking volunteers to work with ERCOT personnel for resolution of these issues.

15. Lead from the front Texas Nodal http://nodal.ercot.com 15 EDS 4 Preview

16. Lead from the front Texas Nodal http://nodal.ercot.com 16 Release Overview EDS 1 Release 1 – Alarm Processing EDS 1 Release 2 – Point-to-Point Checkout EDS 2 Release 3 – State Estimator & Network Security Analysis EDS 2 Release 4 – Network Model Validation EDS 3 Release 5 – SCED execution and Reasonable LMPs EDS 3 Release 6 – Load Frequency Control EDS 3 Release 7 – Settlement Statements, CRR Allocation & Auction EDS 4 Release 8 – RT Settlements (no Shadow Settlements) EDS 4 Release 9 – DAM, RUC, SASM, Full Settlements, EDW Extracts

17. Lead from the front Texas Nodal http://nodal.ercot.com 17 EDS 4 Objectives Execution of DAM, RUC, SASM 5.4.6(1) Verify convergence of QSE provided bids and offers and expand testing to allow Market Participants to submit energy-only offers and bids for any settlement point on the ERCOT Transmission Grid 5.4.6(2) Verify that DAM can co-optimize energy and ancillary service procurement 5.4.6(3) Execution of the DAM shall continue for 7 consecutive days 5.4.7(1) Verify proper RUC commitment of available off-line resources 5.4.14 Conduct SASM coordinated testing Settlements and Data Extracts 5.4.6(4) Verify RT Operations, DAM, and SASM settlement statements 5.4.7(4) Verify RUC settlement statements Outage Scheduler 5.4.1(2h) Verify for proper operation the functions of the Outage Scheduler 5.4.1(2i) Verify that ERCOT operators are able to determine if the Outage of a Transmission Facility had been scheduled in the Outage Scheduler or is a Forced Outage Emergency Electric Curtailment Plan 5.4.16 Conduct tests for the proper operation of the system under EECP conditions Performance and Compliance Measurement 5.4.12 Provide sample performance and compliance reports to the Market Participants for review and comment 168 Hr Test 5.4.9 ERCOT shall develop real time dispatch market readiness criteria that will include a systems stability test. The systems stability test generally will require the real time systems performing SCADA, Network Security Analysis, Transmission Constraint Management, SCED, RUC and LFC to operate without significant error for at least 168 continuous hours Daylight Savings Time 5.4.15 ERCOT shall develop procedures and conduct the tests for the proper transition of systems to and from daylight savings time Data Center - Site fail over and system fault tolerance Test

18. Lead from the front Texas Nodal http://nodal.ercot.com 18 EDS 4 – DAM, RUC, SASM, Settlements Testing Approach PhaseActivitiesIncremental System / Features / Artifacts Upload BidsCreate and upload offers for Physical Resources Create and upload bids for Load Create and upload offers for physical offline resources for testing RUC Validate DAM, RUC, SASM input data QSE Energy-Only Offers submittals and bids for any settlement point on the ERCOT transmission grid QSE Bilateral Trade submittals DAM, RUC and SASM DAM External Input Interfaces available External User Interface updates available Initial EDS 4 MP Handbook complete Perform Outages Test Outage Scheduler Synchronize use of the Outage Scheduler for transmission elements and resource outages Outage Scheduler Outage Evaluation Integrated DAM & RUC Test Settlements Download and verify real-time settlements statements Test the operation of DAM to procure Ancillary Services Update offers for SASM Test transition of systems to and from DST Real Time Settlements Shadow Settlements 24 x 7 Operation 7 day trial Operation of DAM Review the test settlement statements for errors and provide feedback Download and verify full settlements statements & extracts Training Complete 24* 7 support during EDS Final EDS 4 MP Handbook Site redundancy for environments 168 Hour TestParticipate in 168 hour test Perform systems stability test for real time systems – SCADA, NSA, TCM, SCED, RUC and LFC Generate Settlements statements using dispatches and LMPs from SCED and actual meter data Review Settlements statements for each operating day and provide feedback Final Nodal Configuration

19. Lead from the front Texas Nodal http://nodal.ercot.com 19 What should QSE’s have in place? Release 8 – Energy-Only Offers and Outage Scheduler Personnel have attended recommended Nodal Training Courses and reviewed associated reading materials Provided new and updated Registration data to ERCOT QSE ability to create energy-only offers and bids for any settlement point on the ERCOT grid Release 9 – DAM, RUC, SASM, Settlements QSE ability to create and submit bid curves, offer curves and trades to ERCOT Designate resources providing ancillary services Attest for ancillary services qualification of resources Complete registration and qualification process Market Participant operators available 24 x 7

20. Lead from the front Texas Nodal http://nodal.ercot.com 20 Questions Questions?

21. Lead from the front Texas Nodal http://nodal.ercot.com 21 EDS 3 Objectives SCED Execution and Reasonable LMP’s TP 5.4.4(3) Verify SCED inputs from real time operations (Resource Limits, RTS) TP 5.4.4(2) Verify that QSEs are capable of submitting offer curves TP 5.4.4(3) Produce LMPs and Base Points calculated by SCED TP 5.4.4(3) Attain “Reasonable” LMPs Load Frequency Control TP 5.4.8(1) Verify data requirements for LFC, for each QSE qualified to provide either Reg- Up, Reg-Down or Response Reserve Services TP 5.4.8(2) Compare Area Control Error on EDS environment and existing control systems for seven days TP 5.4.8(3) Verify each QSEs ability to provide Regulation Control and Dispatch Instructions for Manual Response Reserve Deployment Dispatch CRR Allocation & Auction TP 5.4.5(1) Verify MP’s ability to submit test bids for CRRs on Transmission Elements TP 5.4.5(1) Execute Trial Auction for Monthly and Annual CRRs TP 5.4.5(1) Assign trial PCRs / CRRs to MPs for DAM and RT Operations testing of Settlement Systems during EDS4 Settlement Statements Verify MP’s ability to connect and download

22. Lead from the front Texas Nodal http://nodal.ercot.com 22 Posting of LMPs The Nodal Transition Plan states: –Once QSEs are providing sufficient information, ERCOT shall begin trial operation of SCED and calculation of Resource Base Points. The LMPs calculated by SCED shall be verified for reasonability. Once general reasonability has been achieved as determined by ERCOT, ERCOT shall begin posting LMPs and other data available on the EDS if such posting is required in Nodal Protocols, Section 6.3.2, Activities for Real-Time Operations. Reasonability in this context means: 1.LMPs are generally consistent with the offers submitted by QSEs or from test offers created by ERCOT 2.When needed, test offers for Generation Resources will be created by ERCOT using typical energy prices considering the fuel type of the Resource 3.Some LMPs may be in error in given areas of the Transmission system, but the majority of LMPs appear correct. Other Data available means the Hub prices and Load Zone prices

23. Lead from the front Texas Nodal http://nodal.ercot.com 23 EDS 3 – SCED Testing Approach PhaseActivitiesIncremental System / Features / Artifacts Early Drop 1 Validate SCED input data Validate MP Digital Certificates access rights QSE Output Schedule submittal QSE Inc/Dec Energy Offer Curves (DSR) QSE Offer Curve submittal, modification, withdrawal RMR Energy Offer Curve & Output Schedule submission Stand Alone Accelerated SCED System Digital Certificate Security Enabled External User Interface available Initial EDS 3 MP Handbook complete Early Drop 2 (Above activities continued) SCED Execution ERCOT LMP evaluation Publish LMPs Initial Integration of MMS – Registration – Machine to Machine Interface (API) – EMS (SE, RLC, TCM) – Network Model Integrated Release Evaluate LMPs Continue Publishing LMP’s & other RT data Fully Integrated MMS Release – MIS / EDW Registration complete MPs ready QC Process All QSE’s Participating Declare LMPs reasonable to TPTF Begin 6 month LMP Posting Scenario based Offers uploaded by MPs ERCOT Quality Control process Training Complete Final EDS 3 MP Handbook

24. Lead from the front Texas Nodal http://nodal.ercot.com 24 EDS 3 – Release 5 System Configuration - SCED Objectives TPTF Activities Mapping 5.4.4 (3) Verify Base Points and associated LMPs calculated by SCED for reasonability and Post LMPs and other data available as required in the Network Protocols Verify SCED inputs from real time operations (look in TP) Verify that QSEs are capable of submitting offer curves. Produce LMPs and Base Points calculated by SCED Attain “Reasonable” LMPs

25. Lead from the front Texas Nodal http://nodal.ercot.com 25 EDS 3 – LFC PhaseActivitiesIncremental System / Features / ??? Preliminary Testing Software and communications testing Calculation of ACE & comparison with existing control system Validate EMS Ability of QSE to receive Regulation Signal QSE internal system / processing validation EMS System w/ LFC upgrade (Not integrated with SCED) QC Process Complete communication and resource dispatch control response capability Individual resource performance evaluation with AS-monitor ACE calculations EMS Integrated with SCED

26. Lead from the front Texas Nodal http://nodal.ercot.com 26 EDS 3 – Release 6 System Configuration - LFC Objectives TPTF Activities Mapping Verify data requirements for LFC, for each QSE qualified to provide either Reg-Up, Reg-Down or Response Reserve Services Compare Area Control Error on EDS environment and existing control systems for seven days Verify QSEs ability to provide Regulation Control and Dispatch Instructions for Manual Response Reserve Deployment Dispatch 5.4.8 (1) - ERCOT shall verify the proper operation of the Load Frequency Control functions 5.4.8 (2) – The calculation of Area Control Error on the Nodal system and the existing control systems shall be continuously compared for accuracy for seven days ERCOT shall begin testing of individual QSEs to provide Regulation control and Dispatch Instructions for manual Responsive Reserve deployment dispatch through actual deployment of regulation energy 5.4.8 (3) - ERCOT shall test one QSE at a time verifying proper operation of each QSE. ERCOT shall also verify the QSE’s ability to operate on constant frequency required by Protocols

27. Lead from the front Texas Nodal http://nodal.ercot.com 27 EDS 3 – CRR Allocation & Auction Approach PhaseActivitiesIncremental System / Features / Artifacts Early Drop 1 Validate CRR input data QSE Register as CRR Account holders Validate MP Digital Certificates access rights Validate MP bids Mock CRR auction Stand Alone CRR System CRR Handbook Complete Integrated Release ERCOT issues test PCRs/CRRs QSEs use CRRs issued to test Secondary Trading QSEs test bidding strategy QSEs enter monthly and annual bids View CRRs Trial Settlement of CRRs Fully Integrated Release

28. Lead from the front Texas Nodal http://nodal.ercot.com 28 EDS 3 – Release 7 System Configuration - CRR Objectives TPTF Activities Mapping 5.4.5 (1) Execute a trial auction of monthly and annual CRRs Assigned test CRRs/PCRs to be used for trial operation of DAM and trial operations testing of the settlement systems Verify MP’s ability to submit test bids for CRRs on Transmission Elements Execute Trial Auction for Monthly and Annual CRRs Assign trial PCRs / CRRs to MPs for DAM and RT Operations testing of Settlement Systems during EDS4

29. Lead from the front Texas Nodal http://nodal.ercot.com 29 EDS 3 – Early Delivery System – SCED Testing All QSEs ready Oct 1, 2007 QSEs enter offer curves Evaluate LMPs with QSEs Declare “Reasonable LMPs” QSEs continue to provide offers 8-5 Post LMPs on MIS portal EDS Input & Data ValidationEDS SCED Integrated Release 6 Month LMP Posting 20072008 Build and Maintain EDS Release 7 - CRR EDS Release 6 - LFC EDS LFC Data Validation EDS CRR Data Validation OctNovDecJanFebMarAprMayJunJulAugJulAugSep Testing with selected QSEs Test for validity of offers and other input data from QSEs ERCOT enters test offers as needed

30. Lead from the front Texas Nodal http://nodal.ercot.com 30 EDS 3 – Early Delivery System – LFC Testing All QSEs (One QSE at a time) Performed by system operators Test the process for regulation Test process for AS qualification of Generator & Load resources Issue draft report to QSEs and ERCOT and evaluate process making adjustments as necessary All QSEs Performed by system operators Evaluate each generator and load resource Qualify each resource Issue report to ERCOT QSEs Report presented at TPTF EDS Input & Data ValidationEDS SCED Integrated Release 6 Month LMP Posting 20072008 Build and Maintain OctNovDecJanFebMarAprMayJunJulAugJulAugSep EDS Release 7 - CRR EDS Release 6 - LFC EDS LFC Data Validation EDS CRR Data Validation

31. Lead from the front Texas Nodal http://nodal.ercot.com 31 EDS 3 – Early Delivery System – CRR Testing 20072008 Selected QSEs Mock CRR auction Detailed methodology for allocating PCRs to MPs QSEs register as CRR Account Holders Mock statements All QSEs ERCOT issues test PCRs/CRRs Testing stages range from scripted to non scripted testing QSEs use CRRs issued to test Secondary Trading QSEs test bidding strategy QSEs enter monthly and annual bids View CRRs Trial Settlement of CRRs EDS Input & Data ValidationEDS SCED Integrated Release 6 Month LMP Posting 20072008 Build and Maintain OctNovDecJanFebMarAprMayJunJulAugJulAugSep EDS Release 7 - CRR EDS Release 6 - LFC EDS LFC Data Validation EDS CRR Data Validation

32. Lead from the front Texas Nodal http://nodal.ercot.com 32 Staffing EDS 3 Execution –Staffed by ERCOT employees from the departments responsible for operations ERCOT Operators, End Users, and IT Support ERCOT Account Managers EDS 3 Hours of Operation –Execution and support will be 8x5 M-F (Calendar in process) –Systems may continue to run 24x7 EDS 3 Analysis & Support –Performed by Business SME’s responsible for the functions and support post Go-Live, some contractor support where required –Extended support by ERCOT business departments Market Participants –Nodal EDS preparation and execution team expected to be in place

33. Lead from the front Texas Nodal http://nodal.ercot.com 33 EDS 3 QSE Test Phases (Source – NRG Energy) 1. Validation of input data to SCED other than resource limits - not the same as EDS1 or EDS2, this step is about VALIDITY, however limited since we are on Zonal: a. Resource Output schedule b. Resource Energy offer curve (Inc/Dec for DSR) c. Resource Proxy offer curve d. Resource A/S Responsibilities e. Regulation deployment signal – by EDS3 f. Responsive deployment signal – by EDS3 g. Non-Spin deployment signal – by EDS3 MMS 2. Validation of SCED calculated input data a. HASL, LASL b. HDL, LDL c. SURAMP, SDRAMP 3. Validation of SCED solutions - for QSE - not algorithmic since only ERCOT and their consultants can do it: a. Mapping from Resource Node (Settlement point) to resource b. Received 5-min LMP c. Received 5-min BP d. Relationship between LMP vs BP (for resources with output schedule/offer curve/RMR – proxy curve if it’s the case) e. Combined Cycle – valid LMP and BP 4. Validation of LFC 4-sec base point a. ramp from BP (t) to BP (t+1) b. Ramp rate validation c. Stop ramp validation (BP = actual gen) d. Operating Limit checks 5. Testing of SCED failure (or emergency declaration) a. 5-min Emergency base point (MW) b. 5-min Emergency base point INDICATOR (STATUS) The above phases are needed to ensure that, when the QSEs sends data and receives the instructions from EDS3, the QSEs have some confidence to actually operate on them. The above Validation steps can be tested with one QSE at a time, and one unit at a time where applicable. To test SCED and A/S deployment, the following phases can be used, for each QSE at a time, and one unit at a time where applicable: 6. Preparation for test: a. Notification of ERCOT Compliance and Settlement of test b. For whole QSE test, ERCOT Zonal should not deploy A/S to the QSE being tested. ERCOT can deploy A/S to other QSEs, or ask them to be on Constant Frequency – case by case. 7. Testing of SCED base point deployment – one unit at a time, 1 or 2 units for each case below: a. For unit with Energy Offer Curve b. For unit with Output Schedule c. For Unit requiring Proxy Curves (including RMR) 8. Testing of SCED failure – Emergency Base point – one unit at a time, 1 or 2 units. 8. Testing of Non-Spin deployment – one unit at a time, 1 on-line and 1 off-line. 9. Testing of Responsive deployment – at least 2 units at a time if possible, to verify allocation logic. 10. Testing of Regulation Deployment – at least 2 units at a time if possible, to verify allocation logic. 11. Portfolio test for QSE. Its is probably easier in general, for QSEs to be either in Zonal or Nodal, instead of having some units on Zonal and some on Nodal. The choice should be discussed with the QSEs, and ERCOT to ensure that they have the capabilities. From a technical standpoint, we have the ability to be on Zonal, while having certain units on nodal (e.g. it is tough to maintain SCE if STP is the only units on Zonal, and the rest is on Nodal). Obviously, it depends on the season – statistically, more flexibility in summer, less flexibility in transition months and mild winter.

34. Lead from the front Texas Nodal http://nodal.ercot.com 34 EDS 3 Release Quality Gates Integration 1Integration 2 Security & Performance End To End Testing EDS Input and Data Validation EDS Release Testing Registration EMS (RLC, TCM) Projects perform FAT testing... …followed by Application Integration completion... …followed by ERCOT Internal Quality Control process... MMS (SCED) NMMS Integration Testing Testing to ensure application is stable, secure and meets system performance requirements Testing of application integration and data flows between systems Testing of business functionality across systems to support EDS Build 1Build 2 Early Delivery of Stand Alone Systems will be available for Data Validation EDS Interface Testing External Facing Machine to Machine Interface Stubs Market Testing with all Participants Early Drop 1 QC Testing Release Early Drop 2 Integrated Release

35. Lead from the front Texas Nodal http://nodal.ercot.com 35 Software quality during EDS testing During the ERCOT quality control process, early software versions will be used for EDS testing These systems will be available to the market for testing the processes required to run SCED, LFC and CRR Updates will be installed as new functionality becomes available System availability, quality of LMPs and other data and support responses will improve over time but may not likely meet production standards

36. Lead from the front Texas Nodal http://nodal.ercot.com 36 Quality and application maturity Software Maturity / Stability / Time Quality Early Drop New software versions New software version Final version Trend