September 23, 2011 Report On ERCOT Action Items From September 6, 2011 RTDF Meeting John Dumas ERCOT

2 Action Item 1: Estimate Effect Of Different Floors On System Lambda for Non-Spin Deployments (12/1/2010 – 8/29/2011) September 23, 2011 Action item 1: Corresponding to the PNM additional revenue reported by ERCOT for the different floors, calculate the impact on System Lambda for 7 X 24 and 5 X 16 time blocks. a)Calculate the time-weighted ( by SCED interval duration ) average of system lambda from 12/1/2010 to 8/29/2011. This is the original price (system lambda) for the 7 X 24. b)Calculate the change in system lambda for each SCED interval during non- spin deployment for each floor. Note : Similar to the PNM change we are only looking at SCED intervals where the GTBD >= Initial GTBD at time of Non-Spin deployment and applicable floor would have set price.

3 Action Item 1: Non-Spin Deployments (12/1/2010 – 8/29/2011) Estimate Effect Of Different Floors On System Lambda September 23, 2011 Original System Lambda ($/MWHr) and corresponding increase in System Lambda for different floors Increase to System Lambda for Various Floors Original System Lambda

4 Action Item 1: Non-Spin Deployments (12/1/2010 – 8/29/2011) Estimate Effect Of Different Floors On Heat Rate (5X16) September 23, 2011 Original Heat Rate (MMBTU/MWHr) and corresponding increase in Heat Rate for different floors (5X16). Assume FIP=4 Increase to Heat Rate for Various Floors Original Heat Rate

5 Action Item 2: Estimate Reduction in PNM (12/1/2010 – 8/29/2011) September 23, 2011 Action item 2: Estimate Reduction in PNM if ONLINE Non-Spin Capacity available To SCED when Non-Spin NOT deployed for capacity (12/1/2010 – 8/29/2011) for SCED intervals where System Lambda > $2999/MWHr. Assume System Lambda would be equal to the floor and FIP=$4/MMBTU. Floor level ($/MWh) Additional “PNM” when Non- Spin deployed Reduction in PNM when Non-Spin NOT deployed Net PNM *Current PNM = $112,000 (Sept 1) 72$2,803$-8,656$106, $17,149$-8,337$120, $27,195$-8,130$131, $91,852$-6,948$196,904 1,000$151,299$-5,913$256,386 2,000$322,323$-2,958$431,365 3,000$493,891$-2$605,889 *Current PNM = $112,000 (Sept 1)

6 Action Item 3: Number Of Hours System Lambda Greater Than Floor During Non-Spin Deployment (12/1/2010 – 8/29/2011) September 23, 2011 Action item 3: In the PNM analysis using the Morgan Stanley proposal for floors, how many hours was the system lambda GREATER than the various floors? Note: Only consider the intervals consistent with previous PNM analysis, (i.e. out of the total of 194 hours) that satisfy the following conditions:- 1. NSPIN was deployed for Capacity 2. GTBD >= GTBD before the NSPIN deployment (with exception for deployment between 02/02-02/04, consider all deployment as qualified period regardless of load difference) 3. System lambda GREATER than the floor PRICE_FLOORNumber of Hours System Lambda > Floor