1. COMPLIANCE UPDATE ERCOT ROS Meeting April 9, 2002

2. NERC SAR’s Blackstart Abnormal Conditions Coordinating Interchange Coordinating Operations Disturbance Conditions Facility Ratings Operating within Limits Physical Connection Requirements Protection Systems Transmission Assessments

3. Support for SAR Process – NEED ROS APPROVAL ERCOT will draft response Forward to ROS and to relevant working groups Ask chairs to gather comments, or concur with ERCOT view TIME IS SHORT. Due early May to NERC

4. NERC Compliance Enforcement Program Background – Overall Program/Process  NERC CEP Is Beginning Its 4 th Year.  New Measurements Were Introduced for Field-testing During Each of the 1 st, 2 nd, and 3 rd Years.  New Measures for the 4 th Year Have Been Delayed  NO New Standards Will Be Introduced Unless They Have Been through the New Standards Process.  Current Operating Policies Do NOT Support Formal Compliance.

5. How Did We Do? - 2001 Compliance Program Major Objectives  Field-tested 30 “New” Planning Measures and 1 “New” Operating Measure  Further Refine the Process  Conduct Audits – Both Reliability Authority (Formerly, Called Security Coordinator) and Control Area  Continue TLR Investigations  Initiated When TLR 5 (Firm Curtailments) Occur

6. 2001 Compliance Program Preliminary Results

7. 2001 Report to NERC Planning – evaluated 39 measures, 98% compliance, $14000 possible fines Operations – evaluated 13 measures, 91% compliance, $816,331 possible fines Other non-compliance exists – QSE’s not assessed; generator modelling not assessed; small TDSP’s not assessed

8. NERC TSOLV PENALTY MATRIX

9. REPORTED 2001 ERCOT TSOLV’S

10. 2002 NERC Compliance Basically, repeat activities from 2002 Schedules and measure details will be posted on the website Generator information will be followed up, rather than re-certified. QSE reviews will continue

11. ERCOT Specific Issues 2002 (Protocol Compliance) Net dependable capability testing – use old RSS templates as a pilot Reactive testing – same as above QSE frequency control performance Execution of ERCOT dispatch instructions QSE qualification process

12. Frequency CONTROL Study Consultant hired Interviewed stakeholder representatives and ERCOT staff Initial data for analysis has been collected or is being collected Howard is staying on track to supply preliminary assessments at the end of May

13. Transmission Issues The annual underfrequency load shedding survey will be conducted on May 9. Security criteria violations – TO’s are sending log information, ERCOT Operations and Compliance reviewing. Planning issues. ERCOT expects compliance with the schedules and procedures of its working groups.

14. Other Issues from Operating Guides, Etc. Load as a resource Reactive standards Power system stabilizers

15. QSE/Generation Issues Modelling. Working with System Planning to first identify which are complete, will begin “discussions” with those who are not. 4 ½ QSE’s reviewed for energy emergency plans and real time. Compliance has asked for data from QSE’s to support the frequency study, disturbance analysis and explanation of “apparent Protocol violations”