1. 1 Next Steps to Reduce the RTM Settlement Timeline COPS Workshop August 29, 2013

2. 2 Agenda Level Set - Workshop Objectives –Why are we here? Current State –Evolution of RTM Settlement timeline Stakeholder & ERCOT Input –TDSP Process –Lessons learned from 9 to 7 –Concerns & Solutions Next Steps –What to report to TAC & Board?

3. 3 Workshop Objectives

4. 4 Objectives – Problem Statement –What problem are we trying to solve? –Increase in offer caps as of 6/1/2014 to $7000 and 6/1/2015 $9000 –Why is reducing the timeline part of the solution? Capture Input from Stakeholders & ERCOT –Risks, Impacts, Challenges & Benefits –Lessons learned Discuss Options and Address Key Questions –At what point does the risk of generation data availability become a “showstopper” or require a solution? –At what point do we anticipate transitioning from settlement on predominantly TDSP-submitted usage data to predominantly ERCOT-estimated usage data? –At what point is an additional settlement iteration needed in order to mitigate risk associated with waiting until Final Settlement to resolve data availability and accuracy issues? –At what point do we anticipate introduction of credit risk that may outweigh credit benefit?

5. 5 Current State

6. 6 Evolution of ERCOT’s RTM Settlement Timeline PeriodStatementInvoice 8/2000 –2/2002OD+3Issued Weekly, due in 5 BDs 3/2002 – 12/2005OD+17Issued Weekly, due in 5 BDs 1/2006 – 11/2011OD+10Issued Weekly, due in 5 BDs 12/2011 – 3/2013OD+9Issued Weekly, due in 5 BDs Daily, OD+9, due in 2 BDs 4/2013 – 7/2013OD+8Daily, OD+8, due in 2 BDs 8/2013 to currentOD+7Daily, OD+7, due in 2 BDs Under DiscussionX < OD+7Daily, OD+X, due in 2 BDs

7. 7 Cash Clearing Stats on the Current OD+7 Schedule OD + "X" $ to ERCOT: # of ODs $ to ERCOT: % of ODs $ to Market: # of ODs $ to Market: % of ODs 914740.27%00.00% 105214.25%9526.03% 1113837.81%5113.97% 12246.58%17949.04% 1341.10%328.77% 1400.00%61.64% 1500.00%10.27% 1600.00%10.27% Total365100%365100% On an OD+7 timeline, the vast majority of the Operating Days have cash cleared through ERCOT within 13 calendar days from the OD. For each day removed from the timeline, a corresponding day is removed from the cash clearing timeline

8. 8 Benchmarking with Other ISOs/RTOs Statement T+3, T+12, T+55,… Cash Clears ~OD+12* Statement T+7, T+59, T+180 Cash Clears ~OD+12* Statement T+7, T+47, T+77, T+137,… Cash Clears ~OD+22* Statement T+4 (credit only), T+7, T+14, T+55, T+105 Cash Clears ~OD+21* Statement T+1, EOM+5, ~T+120, ~T+240 Cash Clears ~OD+12* Statement T+4B, ~EOM+120, ~EOM+300 Cash Clears ~OD+12* T+10B, T+20B Cash Clears ~OD+43* Statement T+7B, T+2M Cash Clears ~OD+49* Statement Wkly (T+3 to T+9) Cash Clears ~OD+11* *Cash clearing timeline based on an example day of 6/6/2013. However, non-business days have the effect of creating a range of dates during which this activity can occur. Cash clearing is from OD to payment to the Market Participant. The statement and cash clearing timelines added to this map are approximations for an “apples to apples” comparison

9. 9 Advanced Meter Settlement Impacts – July 2013 July 2013: At month end, settling 6.3M ESIIDs using Advanced Meter data. July 2013: 97.0% of the load in ERCOT is settled with 15- min interval data (AMS, Competitive IDR, and NOIE IDR).

10. 10 ERCOT Wide Load Volumes by Meter Type – INITIAL Settlement – July 2013

11. 11 ESI ID Data Availability “Look-Back” Analysis – August 2013

12. 12 ESI ID Data Availability “Look-Back” Analysis – August 2013

13. 13 ESI ID Data Availability “Look-Back” Analysis – August 2013

14. 14 ESI ID Data Availability “Look-Back” Analysis – August 2013

15. 15 Next Steps

16. 16 Next Steps - Complete finals for August 2013 before finalizing recommendations? –By October 31 we will have final statements for all Initial days of August 2013 posted & invoiced & cash cleared –Impact of moving data agg to day 6 will be known by each MP Homework –Outstanding questions or data needs –Draft NPRR for review at subsequent workshop? –Or clearly defined alternatives as options to TAC to get more direction Schedule another workshop with or in lieu of September COPS meeting –General update to TAC and the BOD in September –May delay if receive different direction from TAC/Board Stakeholder Process –Continue Weekly webex calls to gather feedback on OD+7 timeline