1. PRS RPRS Task Force Report from July 27 th Meeting Special PRS Meeting August 2, 2006

2. RPRS Capacity Procurement Scheduled On-line Capacity Day Ahead Forecast Load Regulation & Responsive

3. RPRS Procurement (Takeaway from Joel Mickey’s Presentation) When procuring RPRS, ERCOT system utilizes the recent Load forecast produced by the mid-term Load forecast tools (includes the added standard deviation). The available High Sustained Limit (HSL) as indicated in the Resource Plan is considered in the RPRS procurement process; those Off-line and available Resources are subject to RPRS procurement. Before procuring capacity in Step 2, the step 1 Local Congestion procurement will be considered as On-line and available capacity. Schedule mismatches are not considered in the RPRS procurement process. RPRS does not consider schedules with ERCOT as a Resource during procurement; if there is enough online capacity from other QSes to cover the forecast load then there is no impact. If however, many QSEs schedule with ERCOT as resource, it could result in RPRS procurement.

4. Desired Market Behavior Accurate load forecast QSE’s scheduled load should approximate that QSE’s corresponding Resource Plan prior to RPRS procurement unless the QSE is willing to pay for RPRS procurement. ERCOT should minimize day-ahead load forecast error within some “reliability” tolerance; this tolerance can be applied to other a/s in order to minimize RPRS procurement. Resource Plan should reflect the sum of all QSE day-ahead load schedules finalized prior to the time of RPRS procurement.

5. Desired Market Outcomes Through market-based mechanisms, the market procures enough capacity that minimizes the need for ERCOT-based capacity procurement. The difference between revenues collected for capacity service approximates the payments made for this service.

6. How do PRRs 674, 676, and 678 measure against Desired Market Behaviors and Outcomes ?

7. Action Items for August 2 nd PRS Meeting Finish discussion on PRRs 674, 676, and 678 Vote on one or two PRR alternatives to take to TAC Recommendation that a task force continue the assessment of the ERCOT standard deviation (SD) or “reliability tolerance” procurement in addressing: –The application of the SD into the same day a/s market –The proper amount of additional load forest “reliability” tolerance. Closure on the Resource Plan vs. actual load RPRS procurement for June 20, 2006.