1. http://nodal.ercot.com 1 Market Trials DAM/RUC/SASM Weekly Update June 11, 2010

2. http://nodal.ercot.com 2 Antitrust Admonition ANTITRUST ADMONITION ERCOT strictly prohibits Market Participants and their employees who are participating in ERCOT activities from using their participation in ERCOT activities as a forum for engaging in practices or communications that violate the antitrust laws. The ERCOT Board has approved guidelines for members of ERCOT Committees, Subcommittees and Working Groups to be reviewed and followed by each Market Participant attending ERCOT meetings. If you have not received a copy of these Guidelines, copies are available at the Client Relations desk. Please remember your ongoing obligation to comply with all applicable laws, including the antitrust laws. DISCLAIMER All presentations and materials submitted by Market Participants or any other Entity to ERCOT staff for this meeting are received and posted with the acknowledgement that the information will be considered public in accordance with the ERCOT Websites Content Management Operating Procedure.

3. http://nodal.ercot.com 3 Agenda DAM/ RUC/SASM summary QSE Activities for Next Week General Reminders/Updates Environment Report –Outages –Known Issues FAQ Question and Answers / General Discussion Appendix ERCOT asks that Market Participants log into the WebEx session using their company name and then their name. This will allow ERCOT to take roll-call offline.

4. Market Trials 2010 Roadmap http://nodal.ercot.com 4

5. http://nodal.ercot.com 5 Submission Overview for Friday June 4 DAM submission overview 201 QSEs participated for Op Day 6/5 Energy Bids in the range of 26,685 to 47,145 MW per hour Cleared 23,591 to 34,549 MW per hour Four major Load Zone prices ranged from $22.29 to $42.03

6. http://nodal.ercot.com 6 RUC Overview for Op Day June 5 RUC overview DRUC published 19 Resource commitments on Friday for Op Day June 5. Results were published to exercise market and ERCOT downstream systems - RUC clearing engine software results were consistent with input data

7. http://nodal.ercot.com 7 Submission Overview for Monday June 7 DAM submission overview 213 QSEs participated for Op Day 6/8 Energy Bids in the range of 38,941 to 75,225 MW per hour Cleared 23,607 to 42,901 MW per hour Four major Load Zone prices ranged from $24.54 to $64.96

8. http://nodal.ercot.com 8 RUC Overview for Operating Day 6/8 RUC overview for Op Day 6/8 DRUC published 20 Resource commitments on Monday for Op Day June 8. There was also one unit manually committed by the Operator as an input to the RUC run. HRUC published 49 Resource commitments for on Tuesday for Op Day June 8. Results were published to exercise market and ERCOT downstream systems - RUC clearing engine software results were consistent with input data

9. http://nodal.ercot.com 9 Submission Overview for Tuesday June 8 DAM submission overview 217 QSEs participated for Op Day 6/9 Energy Bids in the range of 28,817 to 46,582 MW per hour No DAM published due to DAM failure operational scenario

10. http://nodal.ercot.com 10 Scenario Overview for Tuesday June 8 No DAM execution per the operational scenario All AS was procured in the SASM per the planned operational scenario –SASM market was opened at 6:14 pm and closed at 6:44 pm. Awards were published at 6:53 pm. –The Operators entered the entire DAM AS Plan as the SASM AS Plan for all of Op Day 6/9. –The DAM AS Plan for Op Day 6/8 hours 22-24 was also entered, in error. –SASM AS awards for this date were not able to be queried – this issue is still under investigation –Market trials team will send a spreadsheet with your QSE’s awards for this date upon request – email markettrials@ercot.commarkettrials@ercot.com

11. http://nodal.ercot.com 11 RUC Overview for Operating Day 6/9 RUC overview for Op Day 6/9 DRUC published 15 Resource commitments Tuesday for Op Day June 9. There were also 2 Resources manually committed by the Operator as an input to the RUC run. HRUC published 8 Resource commitments Wednesday for Op Day June 9. Reasonable operational result and was consistent with input data

12. http://nodal.ercot.com 12 Submission Overview for Wednesday June 9 Submission overview 198 QSEs participated for Op Day 6/10 Energy Bids in the range of 33,066 to 54,475 MW per hour Cleared 26,428 to 38,331 MW per hour Four major Load Zone prices ranged from $21.27 to $250.

13. http://nodal.ercot.com 13 RUC Execution Overview for Operating Day 6/10 RUC execution overview: DRUC published 8 Resource commitments on Wednesday for Op Day June 10. There were also 2 Resources manually committed by the Operator as an input to the RUC run. –Reminder that ERCOT replaced the QSE COPs for this DRUC run HRUC published 41 Resource commitments on Thursday for Op Day June 10. Reasonable operational result and was consistent with input data

14. http://nodal.ercot.com 14 Submission Overview for Thursday June 10 Submission overview 219 QSEs participated for Op Day 6/11 –DAM close delayed until 11 am due to system issues affecting submissions Energy Bids in the range of 42,704 to 79,597 MW per hour Cleared 28,037 to 46,668 MW per hour Four major Load Zone prices ranged from $26.47 to $126.68.

15. http://nodal.ercot.com 15 RUC Execution Overview for Operating Day 6/11 RUC execution overview: DRUC published 106 Resource commitments on Thursday for Op Day June 10. Results were published to exercise market and ERCOT downstream systems - RUC clearing engine software results were consistent with input data

16. http://nodal.ercot.com 16 Scenario Overview for Thursday June 10 Recap of Thursday’s operational scenario –Ran two SASMs for the same Operating Hour The first was for Operating Hours 13-18, all AS types –Opened at 9:16 am and closed at 9:46 am. SASM awards published at 9:52 am. –Note AS Obligations were published in error for Hour 12 The second was for Operating Hour 16, all AS types –Opened at 12:59 pm and closed at 1:29 pm. SASM awards published at 1:45 pm. –Planned scenario for simulating increased load forecast (such as for a weather event missed by earlier load forecasts) between DAM, DRUC, and HRUC, will be moved to June 29 due to the environment outage today (won’t be running HRUC for Operating Day June 11)

17. http://nodal.ercot.com 17 Next Week’s Activities Next week – Op Days are 6/15-6/19 DAM executing on 6/14-6/18 No guardrails - Bids/offers should be reasonable COPs should reflect zonal throughout the week. We are requesting no COP updates as a result of nodal market processes. Operational Scenarios: –On June 15, ERCOT will simulate insufficient AS offers to meet AS Plan ERCOT will adjust AS Plan as needed to simulate this scenario ERCOT will evaluate the insufficiency and send a notice that DAM will be extended for 30 minutes for additional AS offers –This notice will take the form of a VDI alert as a workaround until the operator notices (section 5.3.1.4 of the External Interfaces Specification) are available ERCOT may adjust the AS Plan further to ensure that DAM is still AS insufficient DRUC will procure resources for the purpose of providing the insufficient amount of AS –Per the business procedure, system operators would contact the QSE operator before committing any resource for AS but no calls will be made during this test Week 7 Note: Dates are DAM execution days 6/14/2010 - 6/18/2010 Objective Executing Op Scenarios 1x a week Network Constraints Included DAM 5 x week DAM submissions No guardrails COP Updates Reflect zonal DRUC W/ each DAM HRUC Limited SASM As needed Op Scenarios Simulate insufficient AS offers to meet AS Plan

18. http://nodal.ercot.com 18 Next Week’s Activities DRUC executing on 6/14-6/18 after DAM HRUC and SASM executing on 6/15-6/18 HRUC and SASM –HRUC will be executed on Tuesday, Wednesday, Thursday and Friday at 1 pm (target Operating Hours will be the balance of the Op Day) –SASM will be opened if needed based on system conditions (with the exception of operational scenarios) Next week Reminder that we transfer zonal outages to nodal every week on Monday –This transfer represents approximately 85% of the actual zonal outages Again, next week ERCOT may do workarounds outside the normal business process to sidestep any issues that arise. Furthermore, we may approve the results of the RUC software even if the result is operationally unreasonable. The purpose of this is to exercise settlement and billing determinants related to RUC. Week 7 Note: Dates are DAM execution days 6/14/2010 - 6/18/2010 Objective Executing Op Scenarios 1x a week Network Constraints Included DAM 5 x week DAM submissions No guardrails COP Updates Reflect zonal DRUC W/ each DAM HRUC Limited SASM As needed Op Scenarios Simulate insufficient AS offers to meet AS Plan

19. http://nodal.ercot.com 19 General Reminders/Updates Network Model Update –Last data load was 6/10 –An updated settlement points and MP short name list was posted for the 6/10 load at http://nodal.ercot.com/readiness/markettrials/index.htmlhttp://nodal.ercot.com/readiness/markettrials/index.html –Next scheduled load is 6/15 Reminder that the restriction for the number of combined cycle configurations that can be offered into the DAM was removed. –Simulate post go-live behavior for these submissions Reminder that there are no DAM/RUC activities today due to the planned environment outage

20. http://nodal.ercot.com 20 Support Metrics Market Participant Inbound Questions * This week, 22 out of 269 questions were responded to outside of the 24 hour time frame. Last Week

21. http://nodal.ercot.com 21 Day-to-day operations summary: Planned / Unplanned Outages Outages Planned Outages –06/11/2010 8:30 A.M – 01:00 P.M. Application patches are being deployed for EWS (Web Services) and OS (Outage Scheduler) systems and as a result will affect availability of following services: –EWS –OS UI –Market Manager –06/12/2010 9:00 A.M – 12:30 P.M. Market Manager and CRR systems will be unavailable during this window in order to support application patch installations..The web services will be continue to be available during this timeframe. Unplanned Outages –06/10/2010 07:55 A.M – 09:00 A.M. Market system submissions were impacted as result of an application server performance degradation. Users may have encountered timeout errors during this submission window. –06/08/2010 06:00 P.M. Users were unable to fully view SASM Obligation via the Market Manager system. A defect has been identified and being addressed in upcoming Market Manager release on 06/12/10. –06/08/2010 06:30 P.M. Users encountered errors when trying to retrieve SASM Awards via EWS and Market Manager.

22. Environment Report-Known Issues Full DAM/RUC/SASM known issues list will post every Friday night at http://nodal.ercot.com/readiness/markettrials/dam/index.html http://nodal.ercot.com/readiness/markettrials/dam/index.html New DAM/RUC/SASM known issues CRR Offers were not fully awarded even though the minimum reservation price was less than the awarded price (offers were only partially awarded that should have been fully awarded) http://nodal.ercot.com 22

23. FAQ Q: How does DAM consider startup costs when transitioning for combined cycle resources? A: In general, it is the difference between startup costs of the configurations. Transition Cost(A->B) = Startup Cost B(Warmth state B) – Startup Cost A(Warmth state B). Note that the startup cost for both configuration A and B depend on the warmth state (cold/intermediate/hot) of B. For details, see combined cycle workshop materials posted at http://www.ercot.com/content/meetings/mt/keydocs/2010/20100602- MT/CCWorkshop_June2_2010_Final.ppthttp://www.ercot.com/content/meetings/mt/keydocs/2010/20100602- MT/CCWorkshop_June2_2010_Final.ppt Q: How does DAM consider combined cycle resources that self-commit? A: If one configuration self-commits (startup/minimum energy costs = NULL), but TPOs are entered for other configurations for the same hour, this means that DAM will need to make commitment decision for this CCU about choosing which configuration. Therefore, it is not considered a self-committed resource for DAM. In order for DAM to consider this a self-commitment offer, there should be no other energy or AS offers for this hour. http://nodal.ercot.com 23

24. Summary of DAM/RUC/SASM market trials Next week: - Focus on quality will continue to supersede timelines (i.e., may re-run DAM/RUC late to get better solution) -Implementing tighter controls on operator preselections for RUC -ERCOT continuing to address data issues -In short-term continue to need COPs to reflect actual plans (to compare with zonal) -More communication between ERCOT and MPs to address submission/data issues -We will continue to contact QSE periodically to address zonal/nodal COP inconsistencies to assist QSEs in identifying mismatches. http://nodal.ercot.com 24

25. http://nodal.ercot.com 25 Q&A Q&A / Open Forum

26. Appendix –AS Info for the week –Pre- and post-DAM reports –Special Topics http://nodal.ercot.com 26

27. http://nodal.ercot.com 27 Submission Overview for June 4

28. http://nodal.ercot.com 28 Submission Overview for June 7

29. http://nodal.ercot.com 29 Submission Overview for June 9

30. http://nodal.ercot.com 30 Submission Overview for June 10

31. Other Note: All transactions will be supported. Trade submission and confirmation (Energy, Capacity and AS Trades) may be exercised at this time. DAM notifications will be active. Phase 2 Validation process will be active and supported. QSE transactions that do not follow the guidelines are subject to cancellation at ERCOT’s discretion. ERCOT may run DAM on non-supported days. No QSE participation is requested, and ERCOT staff will not be available to answer questions regarding the outputs of these non-supported processes. CRR information from the market trials auction will be integrated into the market system. CRR Offers (by NOIEs) must contain CRR IDs from this auction in order to be valid. http://nodal.ercot.com 31

32. Supplemental Materials Slide 32 Reference and DescriptionLocationVersion External Interfaces Specification http://nodal.ercot.com/readiness/sandbox/index.html1.19 Explanation of Market Submission Items http://nodal.ercot.com/readiness/markettrials/connectivity/in dex.html 0.26 Market Manager User Guidehttp://nodal.ercot.com/readiness/markettrials/connectivity/in dex.html 0.06 MMS Requirementshttp://nodal.ercot.com/docs/pd/mms/index.html#reqVarious Market Connectivity Handbookhttp://nodal.ercot.com/readiness/markettrials/connectivity/in dex.html 0.97 DAM/RUC Known Issues Listhttp://nodal.ercot.com/readiness/markettrials/dam/index.ht ml N/A Web Services XSDshttp://nodal.ercot.com/readiness/sandbox/index.html1.3.19 Sample Reports, Extracts, and DDLs http://nodal.ercot.com/readiness/reports/index.htmlVarious DAM ERCOT Operating Procedures http://nodal.ercot.com/readiness/markettrials/dam/index.ht ml 2.0 DRUC/WRUC ERCOT Operating Procedures http://nodal.ercot.com/readiness/markettrials/dam/index.ht ml 0.2 http://nodal.ercot.com 32

33. http://nodal.ercot.com 33 Report Postings Posted by 6 am: Ancillary Services (AS) Plan Load Ratio Shares (these will be static based on Zonal production data as of October 16, 2009) * AS Obligations * Wind Generation Resource Power Potential (WGRPP) forecast * and Aggregated WGRPP forecast List of all Settlement Points and the mapping to Electrical Buses Load forecasts for ERCOT system, Weather Zones and Load Zones Load forecast distribution factors Distribution Loss Factors and forecasted Transmission Loss Factors Weather assumptions * Denotes MIS Certified reports

34. http://nodal.ercot.com 34 Report Postings Posted after each DAM: Awards (AS Offers, Energy Offers, DAM Energy-Only Offers, DAM Energy Bids, CRR Offers, and PTP Obligation Bids) * DAM Clearing Price for Ancillary Services (MCPC) Day-Ahead hourly Settlement Point Prices (SPPs) Day-Ahead hourly Locational Marginal Prices (LMPs) Shadow Prices Quantity of AS Offers Aggregated AS Offer Curve Total quantity of energy (in MWh) bought and sold in DAM See DAM Handbook for a list of all DAM/RUC/SASM reports available starting in Phase 4.0 - http://nodal.ercot.com/readiness/markettrials/dam/index.html. See MIS Handbook for a comprehensive list of reports available - http://nodal.ercot.com/readiness/markettrials/mis/index.html.http://nodal.ercot.com/readiness/markettrials/dam/index.html http://nodal.ercot.com/readiness/markettrials/mis/index.html * Denotes MIS Certified reports

35. Special Topics Phase 2 Validation reports and process Phase 2 validation re-evaluates all submitted transactions at 7 am in the day-ahead with updated information, such as AS Obligation, CRR ownership, credit limits, etc. If there is a validation error, ERCOT will cancel the transaction We send a notification that a Phase 2 report is available for a particular transactions type, and notification containing the cancellation for the transaction. You can query for the Phase 2 report via web service or on the Reports page of the Market Manager in order to view the reason for the cancellation. Correct and resubmit prior to 10 am. Note that submissions are locked out during the Phase 2 process, which is currently taking about 10 minutes to complete. http://nodal.ercot.com 35

36. Special Topics Day-Ahead Self Commitment DAM clearing engine treats your TPO differently if you submit Startup and Minimum Energy (SU/ME) costs as $0 vs. NULL If you submit with SU/ME as $0, DAM engine treats this as a normal offer where the QSE is not requesting SU/ME to be covered. HSL/LSL constraints will be respected. Also, if you are selected for an online Ancillary Service, you will also be awarded at least LSL on your offer curve. If you submit with SU/ME as NULL, DAM engine is signaled to ignore the HSL/LSL constraints for the resource. In this scenario, the offer curve submitted will start at 0 MW and go to the max MW quantity desired – again, DAM will ignore LSL/HSL constraints. If the offer curve submitted doesn’t start at 0 MW, it will be extended to 0 MW by DAM. If the resource is selected for Ancillary Services, no requirement to also award TPO at LSL (since no LSL constraint honored in this case). http://nodal.ercot.com 36

37. Special Topics Day-Ahead Self Commitment The purpose of the NULL: It allows a QSE to use part of a Resource to serve its own load, and then offer in the rest to the DAM and enable the offer to be co- optimized with its AS Offer. Example: A Resource has 100 MW LSL and 400 MW HSL, and the QSE has already committed 300 MW of the Resource through some other mechanism. The QSE wishes to offer the remaining 100 MW, which would otherwise be ignored due to the 100 MW LSL. Then going into real-time, so QSEs will need to update their TPO to cover the full capacity of the resource, from LSL to HSL, rather than from 0 MW. TPOs for real-time should always cover the entire capacity of the resource to avoid the proxy curve creation. To do the TPO update if the resource is awarded in the DAM, the QSE must provide a reason code, which is DSCM. This functionality came about due to TPTF subgroup on the issue. It has not yet been added to the protocols but will during our protocol traceability/cleanup effort. http://nodal.ercot.com 37

38. Special Topics Bid/Offer efficiencies ERCOT has identified efficiencies in Bid/Offers submission with regard to the format of submission This applies to all transaction that use a Bid ID or an Offer ID (Energy Only Offers, Energy Only Bids, PTP Obligation Bids, and CRR Offers) Preference is for QSEs to submit the same Bid/Offer ID for each hour in the submission, versus submitting a different Bid/Offer ID for every hour. The market system treats the submission the exact same way, regardless of which format is used Using the preferred format will optimize DAM system performance For xml examples detailing this issue, please view a document that will be posted along with this presentation on the calendar page at http://www.ercot.com/calendar/2010/04/20100409-MT http://www.ercot.com/calendar/2010/04/20100409-MT This was discussed at NATF 4/6, we send an email to the nodal technical contacts that we have on file for all QSEs, and we will add it to the External Interfaces Specification http://nodal.ercot.com 38

39. Special Topics JOUs and COP consistencies In DAM, if the different owners of the jointly-owned unit have submitted conflicting COP statuses for the current day, online statuses will overwrite offline statuses when DAM is determining the initial condition of the unit (i.e., is the unit online or offline at the start of the next operating day). In RUC, if the different owners have conflicting COP statuses for the next operating day: –If any owner has OUT status for any hour then the unit is considered OUT. –If all owners have submitted a COP, and at least one of them has an online status in a particular hour then the resource status for the unit is online (unless any owner has OUT) http://nodal.ercot.com 39

40. Special Topic – Jointly Owned Units JOUs are modeled as a single physical unit –DAM uses the separate logical resources when evaluating energy and ancillary services, but Network Security Monitoring (NSM), which is a sub-process of DAM, must consider the physical unit. –http://nodal.ercot.com/docs/pd/ida/wp/sgrm/IDA041_White_Paper_for_Split_Generation_Resource_M odeling_v1.dochttp://nodal.ercot.com/docs/pd/ida/wp/sgrm/IDA041_White_Paper_for_Split_Generation_Resource_M odeling_v1.doc JOUs offering into DAM –Owners offer their share into the DAM separately, but the physical unit must be committed together –All owners have to offer in the unit (energy or AS) to the DAM or else it cannot be committed to any owner (one exception for a self-commitment scenario described below). DAM must make a commitment decision about the physical unit, which it cannot do without offers from all the owners. –Self-commitment examples (assume three owners) – remember that self-committing by submitting Startup and Minimum Energy Costs as ‘NULL’ (leaving them out of the submission altogether rather than submitting zeroes) signals the DAM software that it doesn’t need to make a commitment decision and to ignore resource constraints. If two owners self-commit (startup/minimum energy costs are NULL) and the other submits nothing, the unit can be awarded without making a commitment decision. If one owner self-commits, another submits a TPO with startup/minimum energy costs, and the third submits nothing, the unit cannot be awarded If one owner self-commits, and the other two submit TPOs with startup/minimum energy costs, the unit can be awarded after making a commitment decision based on the resource constraints and the submitted startup/minimum energy costs. –Note that if self-committed, do not submit an OFFNS offer. That offer negates the self-commitment and the DAM software will not consider it as a self-committed resource (since the QSE is requesting ERCOT to evaluate the unit offline) http://nodal.ercot.com 40