1. EILS Improvement Subgroup January 21, 2011

2. © 2008. CONSTELLATION ENERGY GROUP, INC. THE OFFERING DESCRIBED IN THIS PRESENTATION IS SOLD AND CONTRACTED BY CONSTELLATION NEWENERGY, INC., A SUBSIDIARY OF CONSTELLATION ENERGY GROUP, INC. BRAND NAMES AND PRODUCT NAMES ARE TRADEMARKS OR SERVICE MARKS OF THEIR RESPECTIVE HOLDERS. ALL RIGHTS RESERVED. ERRORS AND OMISSIONS EXCEPTED. 2 ESIIDs limited to one Aggregation The Technical Requirements currently include: “(3) Aggregated EILS Loads consist of distinct groups of Sites that remain intact for all Time Periods in a Contract Period. QSEs must ensure that no Sites are submitted in multiple aggregations. ERCOT will reject any offer containing a Site that has been submitted as part of more than one EILS Load.” The problem is that if a customer can only participate in a subset of hours, they may have to be aggregated with other customers that are participating in other hours.

3. © 2008. CONSTELLATION ENERGY GROUP, INC. THE OFFERING DESCRIBED IN THIS PRESENTATION IS SOLD AND CONTRACTED BY CONSTELLATION NEWENERGY, INC., A SUBSIDIARY OF CONSTELLATION ENERGY GROUP, INC. BRAND NAMES AND PRODUCT NAMES ARE TRADEMARKS OR SERVICE MARKS OF THEIR RESPECTIVE HOLDERS. ALL RIGHTS RESERVED. ERRORS AND OMISSIONS EXCEPTED. 3 Example Three ESIIDs, each 600 kW in curtailable load. –One ESIID(a) can only participate in BH1. –All three ESIIDs have to be aggregated to meet 1 MW threshold. –Offers for NBH, BH2 & BH3 have to take into consideration the load from ESIID(a) that could be on during a test/deployment. –If a deployment were to occur in BH2 and the aggregation fails, ESIID(a) could be suspended for an event that occurred when they were not participating. Simple solution (not currently allowed) is to have two aggregations. –Aggregation(a) contains all ESIIDs for BH1 –Aggregation(b) contains the other two ESIIDs for all other time periods

4. © 2008. CONSTELLATION ENERGY GROUP, INC. THE OFFERING DESCRIBED IN THIS PRESENTATION IS SOLD AND CONTRACTED BY CONSTELLATION NEWENERGY, INC., A SUBSIDIARY OF CONSTELLATION ENERGY GROUP, INC. BRAND NAMES AND PRODUCT NAMES ARE TRADEMARKS OR SERVICE MARKS OF THEIR RESPECTIVE HOLDERS. ALL RIGHTS RESERVED. ERRORS AND OMISSIONS EXCEPTED. 4 Issues / Possible Solutions Issues: –Preventing duplication within Time Periods –Testing  Simplified example in last slide does not capture all the permutations making it more difficult for ERCOT to administer Possible Solutions: –Logic to ensure no duplication –Test status per ESIID  Must maintain eligibility status by ESIID today  This would potentially allow greater flexibility of Aggregation composition without triggering the need for a re-test  Ask for ERCOT to consider most efficient test schedules

5. Tim Carter Director, Market Development tim.carter@constellation.com 713-646-5476