1. RCWG Update to WMS December 5, 2012 1

2. General Update Agenda Items for Today: Verifiable Cost Manual clarifications (vote) White Paper on Long Term Fuel Cost Solution for fuel adder (on going discussions) NPRR 444, Supplemental Reliability Deployment report (Possible Vote) Other Items NPRR 385 – Impact Test to CMWG Load Providing Capacity – Tabled 2

3. VC Manual Clarifications The Verifiable Cost Manual has been updated to clarify how the value of X is applied. These clarification are not a change to the application. Below is a sample of the clarifications. 3

4. Long Term Fuel Cost Solution for Fuel Adder Determine a fuel cost adder that better reflects the deliver cost of fuel Seven different options (including, not limited to) location market value of gas type of fuel formula based solution vs study by resource. The objective is to narrow the list of options to be voted on at WMS. 4

5. NPRR 444 Supplemental Reliability Deployment Report Generation and Load Resources deployed for reliability purposes often result in market distortions that artificially lower prices. This NPRR removes those influences. Changes to NPRR 444 to be posted by ERCOT The instruction from WMS was to review the NPRR for technical integrity. “Does it technically Work”. ERCOT’s backcast analysis was also reviewed. “Does it meet the objectives” Posted to RCWG Nov 16 th meeting page. 5

6. “Does NPRR 444 technically Work” 6 Yes, NPRR 444 technically works. Made changes to the language and addressed issues We determined that on line Quick Start Generation was already addressed in NPRR 487. Since the QSGR has no LSL to relax there are no make whole payments under NPRR 444. Ramp rate limit in SCED 3 could result in consistent high prices that could be limited by reducing the relaxation of the 0 to LSL by percentage. Local congestion could result in SCED 2 prices higher than SCED 3, this is addressed by allowing make whole in both directions. (SCED 2 above or below SCED 3). Verification of offer curves would continue to be the responsibility of QSE, ERCOT to spot check. Various questions on Load Resources and ERS, use 100% of deployment, duration from deployment to recall, not UFR. Various clean up.

7. Does NPRR 444 meet the Objectives ERCOT provided backcasted PNM for different combinations of relaxing constraints (LSL) and adding DR into GTBD. Generally considering the NPRR 444 changes the backcast on 2011 resulted in a $48.3K increase in PNM Assumes a $3000 SWCAP Most ($36.1 K) of the increase was due to ramp limiting. However, there where concerns expressed about the study Is 2011 a representative year? On Line Non Spin is now continuously deployed. 7