Technical Advisory Committee Presentation to the ERCOT Board of Directors May 20, 2009

TAC Report Summary 2 PRRs for Board approval 2 PRRs for Board approval 4 NPRRs for Board approval 4 NPRRs for Board approval 1 SCR for Board approval 1 SCR for Board approval Recommendation: NPRR Parking Deck Recommendation: NPRR Parking Deck Update: ERCOT planning charter Update: ERCOT planning charter Preview: June Board meeting Preview: June Board meeting 2

Protocol Revision Requests PRR 797 Removal of Reference to ERCOT Business Processes PRR 800 QSE Day Ahead Metric – URGENT 3

PRR 797 – Removal of Reference to ERCOT Business Process Purpose(ERCOT) Revises term “Generation Resource Asset Registration Form” in Section (LSL Requirements for WGRs) to “as registered with ERCOT” Benefit Clarifies that the requirement is asset registration and not a specific type of form Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date June 1, 2009

PRR 797 – Removal of Reference to ERCOT Business Process Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 800 – QSE Day-Ahead Metric -- URGENT Purpose(ERCOT) Re-defines the Day Ahead metric for QSEs with and without WGRs to ensure that both categories of QSE schedule enough capacity in the Day Ahead to meet their planned energy schedules plus A/S obligations; removes WGR QSE exemption established by PRR 777, WGR QSE Metric Correction Benefit Establishes an appropriate Day Ahead metric for all QSEs Market Impact N/A System Change No ERCOT source systems will not be modified or impacted by this PRR. Assumptions ERCOT will develop a reporting solution which will query and report data from source systems. TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date Upon system implementation

PRR 800 – QSE Day-Ahead Metric -- URGENT Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Less than $50K (project required)

PRR 800 – QSE Day-Ahead Metric -- URGENT TAC discussion regarding funding mechanisms for TRE system projects TAC discussion regarding funding mechanisms for TRE system projects TRE / ERCOT Service Level Agreement TRE / ERCOT Service Level Agreement TRE Fee vs. ERCOT Administrative Fee TRE Fee vs. ERCOT Administrative Fee NOGRR 025 budget assumptions NOGRR 025 budget assumptions

Nodal Protocol Revision Requests NPRR 157 Extending Black Start Service Bid Timeline NPRR 163 Removal of Late Fee Language NPRR 166 Timing for Required Black Start Unit Load Carrying Test NPRR 167 Options for Filing Verifiable Costs – QSEs or Resources 9

NPRR 157– Extending Black Start Service Bid Timeline Purpose(ROS) Changes the Black Start Service bids from a 1-year period to a 2- year period (companion was PRR780) Benefit Gives Transmission Operators and Market Participants more time to prepare and train their system operators Market Impact Allows more time to train system operators System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date ERCOT believes NPRR 157 is needed for “go-live”; effective upon Nodal implementation; no impact to schedule

NPRR 157– Extending Black Start Service Bid Timeline Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

NPRR 163– Removal of Late Fee Language Purpose(ERCOT) Eliminates conflicting language by removing the concept of late fees calculated on all delinquent accounts; states that late fees are only calculated on delinquent DAM, RTM and RTM uplift amounts Benefit Removes conflicting language Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date ERCOT believes NPRR 163 is needed for “go-live”; effective upon Nodal implementation; no impact to schedule

NPRR 163– Removal of Late Fee Language Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

NPRR 166– Timing for Required Black Start Unit Load Carrying Test Purpose(ERCOT) Synchronizes the Nodal Protocols for PRR 785, Timing for Required Black Start Unit Load Carrying Test (BOD Approved 3/09); changes test from once every six years to once every five years Benefit Reduces risk of NERC compliance violation Market Impact More frequent load carrying tests System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date ERCOT believes NPRR 166 is needed for “go-live”; effective upon Nodal implementation; no impact to schedule

NPRR 166– Timing for Required Black Start Unit Load Carrying Test Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

NPRR 167– Options for Filing Verifiable Costs – QSEs or Resources Purpose (Verifiable Cost WG) Allows either QSEs or Resource Entities to file verifiable costs Benefit Eliminates confidentiality issues associated with Resource- specific verifiable cost data Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date ERCOT has no opinion on whether NPRR 167 is needed for “go- live”; no Nodal impacts

NPRR 167– Options for Filing Verifiable Costs – QSEs or Resources Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

System Change Request SCR 753 Transmission Outage Notice Detail Enhancements Enhances transparency of grid operations by publishing additional information regarding outages. Enhances transparency of grid operations by publishing additional information regarding outages. This information is already available in ERCOT systems, just needs to be extracted and published This information is already available in ERCOT systems, just needs to be extracted and published Will make outages easier to track for all market participants Will make outages easier to track for all market participants Minor cost impact to be absorbed by affected departments O&M budgets Minor cost impact to be absorbed by affected departments O&M budgets Requires approximately one month to complete after Board approval Requires approximately one month to complete after Board approval Unanimously recommended by TAC Unanimously recommended by TAC 18

Recommendation: NPRR Parking Deck 19 Post-“Go-Live” NPRRs Post-“Go-Live” NPRRs Parking Deck white paper and supporting materials included in Board packet Parking Deck white paper and supporting materials included in Board packet After PRS approves NPRR, they will suggest a rank on the Nodal tab of the Project Prioritization List (PPL) – Parking Deck After PRS approves NPRR, they will suggest a rank on the Nodal tab of the Project Prioritization List (PPL) – Parking Deck Only Approved Items will be on Parking Deck Only Approved Items will be on Parking Deck PRS sends approved NPRRs to TAC with rank PRS sends approved NPRRs to TAC with rank TAC sends approved NPRRs to Board TAC sends approved NPRRs to Board If Board approves NPRR, language added to Nodal Protocols as a grey-box If Board approves NPRR, language added to Nodal Protocols as a grey-box Approved rank will be tracked in PPL and projects in the PPL will be grouped into post-Go-Live releases Approved rank will be tracked in PPL and projects in the PPL will be grouped into post-Go-Live releases Before NPRRs on the PPL can be implemented, ERCOT will provide impact analyses, cost-benefit analyses, and the post-Go- Live releases will be included in the annual Admin Fee budgeting process Before NPRRs on the PPL can be implemented, ERCOT will provide impact analyses, cost-benefit analyses, and the post-Go- Live releases will be included in the annual Admin Fee budgeting process

Update: ERCOT Planning Charter In January, ERCOT Staff presented recommended changes to the ERCOT Planning Charter. TAC endorsed the proposed changes. In January, ERCOT Staff presented recommended changes to the ERCOT Planning Charter. TAC endorsed the proposed changes. The Board approved the revisions except the proposal to exempt transmission projects relating to generation interconnection from ERCOT and RPG review. Treatment of such facilities was remanded to TAC for further discussion and recommendation. The Board approved the revisions except the proposal to exempt transmission projects relating to generation interconnection from ERCOT and RPG review. Treatment of such facilities was remanded to TAC for further discussion and recommendation. The current Planning Charter language requires generation interconnection projects costing more than $15 million or requiring CCNs be reviewed by the RPG (including ERCOT independent review and Board approval as appropriate). The current Planning Charter language requires generation interconnection projects costing more than $15 million or requiring CCNs be reviewed by the RPG (including ERCOT independent review and Board approval as appropriate). 20

Current Review Process 21

Summary of stakeholder discussion Consensus on 2 procedural changes for TSPs to raise visibility of large generation interconnection projects Consensus on 2 procedural changes for TSPs to raise visibility of large generation interconnection projects Require in Generation Interconnection (GI) Procedure that the Lead TSP for the Full Interconnection Study (FIS) communicates to other TSPs when the FIS indicates that the direct interconnection facilities will cost >$50 million so that the other TSPs will know to particularly focus on the FIS Require in Generation Interconnection (GI) Procedure that the Lead TSP for the Full Interconnection Study (FIS) communicates to other TSPs when the FIS indicates that the direct interconnection facilities will cost >$50 million so that the other TSPs will know to particularly focus on the FIS The Lead TSP for GI FIS will communicate direct generation interconnection projects >$50 million out to full RPG (no review by RPG) once generation Interconnection Agreement is signed The Lead TSP for GI FIS will communicate direct generation interconnection projects >$50 million out to full RPG (no review by RPG) once generation Interconnection Agreement is signed 22

Summary of stakeholder discussion Support for ERCOT/RPG Review of interconnection facilities Support for ERCOT/RPG Review of interconnection facilities Commission Staff testimony in Kelson CCN docket expressed need for ERCOT review of these types of CCNs Commission Staff testimony in Kelson CCN docket expressed need for ERCOT review of these types of CCNs Increase transparency / awareness of significant projects Increase transparency / awareness of significant projects Concerns with ERCOT/RPG Review of interconnection facilities Concerns with ERCOT/RPG Review of interconnection facilities Reliability impacts are already considered in generation interconnection study process Reliability impacts are already considered in generation interconnection study process ERCOT and RPG review of these projects results in stakeholder judgment on the economic merits of the proposed generation ERCOT and RPG review of these projects results in stakeholder judgment on the economic merits of the proposed generation Potential for RPG review to delay generation interconnection Potential for RPG review to delay generation interconnection Additional considerations Additional considerations Open access regime should be preserved in whatever process is adopted Open access regime should be preserved in whatever process is adopted Appropriateness of ERCOT role / recognition of ERCOT work load Appropriateness of ERCOT role / recognition of ERCOT work load 23

Planning Charter options considered Regional Planning Group: no consensus Regional Planning Group: no consensus Reliability and Operations Subcommittee: recommended Planning Charter language proposed to the Board in January with the 2 procedural changes Reliability and Operations Subcommittee: recommended Planning Charter language proposed to the Board in January with the 2 procedural changes Wholesale Market Subcommittee: Agreed with 2 procedural changes and agreed to revert to January Planning Charter proposal but evenly split whether to add language requiring ERCOT and/or RPG review for informational purposes when proposed direct interconnection facilities >$25 million or >$50 million Wholesale Market Subcommittee: Agreed with 2 procedural changes and agreed to revert to January Planning Charter proposal but evenly split whether to add language requiring ERCOT and/or RPG review for informational purposes when proposed direct interconnection facilities >$25 million or >$50 million 24

Status of TAC deliberations In addition to other identified issues, TAC discussed whether this is a policy determination best made by the PUCT rather than stakeholders and whether TAC and the Board might receive policy guidance from the PUCT soon through a final order in the Kelson CCN docket In addition to other identified issues, TAC discussed whether this is a policy determination best made by the PUCT rather than stakeholders and whether TAC and the Board might receive policy guidance from the PUCT soon through a final order in the Kelson CCN docket Motion to recommend the January Planning Charter proposal with a requirement ERCOT perform economic analysis for facilities >$50 million failed: 17 Yes, 11 No, 2 Abstain Motion to recommend the January Planning Charter proposal with a requirement ERCOT perform economic analysis for facilities >$50 million failed: 17 Yes, 11 No, 2 Abstain Motion to recommend the January Planning Charter proposal with requirement ERCOT perform economic analysis for facilities >$25 million when requested by PUCT Staff failed: 5 Yes, 21 No, 3 Abstain Motion to recommend the January Planning Charter proposal with requirement ERCOT perform economic analysis for facilities >$25 million when requested by PUCT Staff failed: 5 Yes, 21 No, 3 Abstain Motion to Table passed on voice vote with 3 abstentions Motion to Table passed on voice vote with 3 abstentions 25

Preview: June Board meeting PRR 796 Resource Plan Performance Metrics Revision PRR 796 Resource Plan Performance Metrics Revision PRR 802 TCR Transition to CRR Refund Revision PRR 802 TCR Transition to CRR Refund Revision Quarterly CREZ Report to PUCT Quarterly CREZ Report to PUCT Draft Texas Renewables Integration Plan Draft Texas Renewables Integration Plan Restructured TAC engagement in nodal project Restructured TAC engagement in nodal project 26