Technical Advisory Committee Presentation to the ERCOT Board of Directors November 17, 2008

TAC Summary 2 PRRs for Approval 2 PRRs for Approval 9 NPRRs for Approval 9 NPRRs for Approval 1 LPGRR for Approval 1 LPGRR for Approval Notice of 4 Revision Requests Notice of 4 Revision Requests Notice of a new workgroup Notice of a new workgroup Appeal of OGRR 208 Appeal of OGRR 208

PRR 769 – EECP Media Appeal Change Purpose (Operations Working Group) Moves the required energy conservation media appeal from EECP Step 2 to EECP Step 3 and allows ERCOT to issue a media appeal for energy conservation at management’s discretion without CEO authorization at any time in the EECP progression. Benefit Allows ERCOT to use operational judgment in issuing energy conservation media appeal. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommended approval following remand from the Board of Directors; all Market Segments were present Effective Date December 1, 2008

PRR 769 – EECP Media Appeal Change Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 777 – WGR QSE Metric Correction -- URGENT Purpose (J Aron, IPM) Exempts WGR QSEs from the Resource Plan metric that compares Day-Ahead and Adjustment Period Schedules to Resource Plans. Benefit Wind QSE compliance. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date December 1, 2008

PRR 777 – WGR QSE Metric Correction -- URGENT Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

NPRR 128– Combined Cycle Power Blocks with Multiple Voltage Interconnections Purpose (Calpine, IGen) Eliminates the restriction that requires all generators in a combined cycle power block to be interconnected to the bulk power system at the same voltage level. Benefit Should increase capacity available to the market. Market Impact Needed for “Go-Live”. System Change Yes Impacts MMS Assumptions Cost $100K - $150K TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date Upon Texas Nodal implementation; no incremental impact to nodal schedule.

NPRR 128– Combined Cycle Power Blocks with Multiple Voltage Interconnections Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact $100K - $150K Impacts to MMS

NPRR 134– Section 7 Clean-up Purpose (ERCOT for TPTF) Clarifies variables used in settling McCamey Flowgates; corrects flowgate formulae; clarifies variables and subscripts; revised OBLRACT and OPTRACT calculations. Benefit Accurately reflects McCamey Flowgate settlements. Market Impact Impacts quantity of McCamey Flowgate Rights available. Needed for “Go-Live”. System Change Yes Impacts MMS & COMS Assumptions Cost $500K - $1M TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date Upon Texas Nodal implementation; no incremental impact to nodal schedule

NPRR 134– Section 7 Clean-up Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact $500K - $1M Impacts to MMS, COMS Impacts quantity of MCFRIs allocated to Market

NPRR 136– Interim Solution for 15-Minute Settlement of Advanced Meters Purpose (AEP Texas, IOU) Companion to approved PRR 766. NPRR supports interim settlement of all provisioned Advanced Meters using actual fifteen minute data, the same way Interval Data Recorder (IDR) meters are settled today, until the long-term solution is implemented. Benefit Allows retail customers to more effectively respond to price signals by supporting innovating retail product offerings, such as demand response, dynamic pricing, and time of use pricing and accelerates the timeline for the market to take advantage of the benefits of Advanced Metering Systems (AMS). Market Impact Needed for “Go-Live” System Change Yes Coordination of minor changes to COMS & MIS Assumptions Funded under Zonal project. TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date Upon Texas Nodal implementation; no incremental impact to nodal schedule

NPRR 136– Interim Solution for 15- Minute Settlement of Advanced Meters Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Coordination of minor changes to COMS and MIS

NPRR 138– Credit Monitoring & Management Reports Purpose (ERCOT for CWG) ERCOT will post each active Counter-Party’s Credit Monitoring and Management related reports twice a day. Benefit Provide Counter-Parties with their ACL, TPE and collateral requirements to support decision-making related to CRR and DAM participation. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date Upon Texas Nodal implementation; no incremental impact to nodal budget or schedule

NPRR 138– Credit Monitoring & Management Reports Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

NPRR 139– ACL, EAL, FCE Calculation Updates Purpose (ERCOT for CWG) NPRR revises FCE calculation; eliminates 2-day requirement for prepays; establishes proxy DAM SPPs if SPPs are unavailable; and clarifies the ACL calculation. Benefit Eliminates duplication, provides credit for paid invoices, provides reasonable estimate of liability, and increases ACL. Market Impact N/A System Change Yes Impacts CMM Assumptions Cost $50K - $100K TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date Upon Texas Nodal implementation; no incremental impact to nodal schedule

NPRR 139– ACL, EAL, FCE Calculation Updates Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact $50K - $100K Impacts to CMM

NPRR 143– Section 9.9.1, Invoice Recipient Payment to ERCOT for the CRR Auction Purpose(ERCOT) Corrects conflicting language in Nodal Protocols. Benefit Eliminates 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 Upon Texas Nodal implementation; no incremental impact to nodal budget or schedule

NPRR 143– Section 9.9.1, Invoice Recipient Payment to ERCOT for the CRR Auction Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

NPRR 145– PPAs as Resource-Specific Verifiable Costs Documentation Purpose (Verifiable Costs Working Group) Allows PPAs and Tolling Agreements to be used as Resource- specific verifiable costs documentation. Benefit Allows existing PPA owners to recover their Resource O&M costs and details how PPAs will be reflected in verifiable cost submissions; provide guardrails for avoiding abuse. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date Upon Texas Nodal implementation; no incremental impact to nodal budget or schedule

NPRR 145– PPAs as Resource-Specific Verifiable Costs Documentation Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Minor post-Go-Live costs to be managed under O&M ¼ FTE to Settlements & Billing post- Go-Live to support manual effort

NPRR 148– Treatment of Financial Information as Confidential Purpose (J Aron, IPM) Clarifies that non-public financial information provided to ERCOT is to be treated as Protected Information. Benefit Ensures appropriate treatment of sensitive information. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommended approval; all Market Segments were present Effective Date Upon Texas Nodal implementation; no incremental impact to nodal budget or schedule

NPRR 148– Treatment of Financial Information as Confidential Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

NPRR 150– Responsive Reserve Service Offer Floor Purpose (DSWG for WMS) Establishes an offer floor of $0 for Responsive Reserve Service in the nodal market. Benefit Prevents large negative bids; reduces credit exposure or liability for QSEs. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval with two abstentions (Independent Generator and Independent Power Marketer); all Market Segments were present Effective Date Upon Texas Nodal implementation; no incremental impact to nodal budget or schedule

NPRR 150– Responsive Reserve Service Offer Floor Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

LPGRR 031 Profile Decision Tree Changes for Distributed Renewable Generation (Urgent) Purpose (Direct Energy for PWG)) Removes IDRRG as a profile segment, specifies information requirements based on Distributed Renewable Generation (DRG) capacity and includes mapping of new zip codes to weather zones. Benefit Better facilitates the process to set up and settle Load and generation for DRG Electric Service Identifiers (ESI IDs). Market Impact N/A System Change No Minor O & M impact to be managed under affected budgets. AssumptionsN/A TAC Vote TAC unanimously recommended approval; all Market Segments were present. Effective Date January 1, 2009.

LPGRR 031 Profile Decision Tree Changes for Distributed Renewable Generation (Urgent) Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Minor O&M costs to validate zip code & weather zone files.

Notice of Guide Changes COPMGRR007: Creating Section 3, Organizational Structure. COPMGRR007: Creating Section 3, Organizational Structure. COPMGRR008: Alignment of Appendix A with Data Extracts and Reports Service Level Agreement (SLA). COPMGRR008: Alignment of Appendix A with Data Extracts and Reports Service Level Agreement (SLA). RMGRR066: Safety-Net Move-In Process Updates. RMGRR066: Safety-Net Move-In Process Updates. RMGRR068: Out-Flow Power from Distributed Renewable Generation Facilities --Urgent RMGRR068: Out-Flow Power from Distributed Renewable Generation Facilities --Urgent

New Workgroup Formed Market Credit Work Group (MCWG): Will report to the Wholesale Markets Subcommittee. Market Credit Work Group (MCWG): Will report to the Wholesale Markets Subcommittee.

Appeal of OGRR 028: Voltage Ride- Through Requirement Originated: April 2008 by the Wind Coalition. Originated: April 2008 by the Wind Coalition. Purpose: establishes requirements for Voltage Ride Through for generating units. Purpose: establishes requirements for Voltage Ride Through for generating units. Benefit: maintain system reliability as new generating units are added to the network. Benefit: maintain system reliability as new generating units are added to the network. ERCOT Impact: none to systems and staff. ERCOT Impact: none to systems and staff. Market Impact: new wind generating resources and certain existing wind generating resources are required to meet VRT standard. Market Impact: new wind generating resources and certain existing wind generating resources are required to meet VRT standard.

Requirements Specific to Wind-powered Generating Resources (WGRs) WGRs are required to have the ability to ride through transmission faults and recover in 9 cycles. WGRs are required to have the ability to ride through transmission faults and recover in 9 cycles. WGRs with interconnection agreements signed prior to January : exempt. WGRs with interconnection agreements signed prior to January : exempt. Post 1/1/2003 WGRs with interconnection agreements signed prior to November 1, 2008: Post 1/1/2003 WGRs with interconnection agreements signed prior to November 1, 2008: Compliance required by January 1, Compliance required by January 1, Includes approximately 3,000 MW with signed interconnection agreements, but not yet on line. Includes approximately 3,000 MW with signed interconnection agreements, but not yet on line. WGRs with interconnection agreements signed on or after November 1, 2008: compliance required. WGRs with interconnection agreements signed on or after November 1, 2008: compliance required.

TAC Consideration of OGRR 208 October 2, 2008: Approved by TAC with 3 opposed (2 IPM and IG) and 3 abstentions (2 REP and IPM). October 2, 2008: Approved by TAC with 3 opposed (2 IPM and IG) and 3 abstentions (2 REP and IPM). Key Issues Discussed: Key Issues Discussed: Level of reliability risk. Level of reliability risk. Consistency with federal standards. Consistency with federal standards. Compliance date schedule. Compliance date schedule. Compliance costs. Compliance costs. Retroactive application. Retroactive application. Study horsepower. Study horsepower. November 1, 2008: Effective Date. November 1, 2008: Effective Date. November 6, 2008: November 6, 2008: Posted for TAC discussion at the request of ERCOT Legal. Posted for TAC discussion at the request of ERCOT Legal. ERCOT Legal and three appellants submitted comments for TAC consideration. ERCOT Legal and three appellants submitted comments for TAC consideration. WGRs with interconnection requests signed after November 1, 2008 must comply with VRT requirements. WGRs with interconnection requests signed after November 1, 2008 must comply with VRT requirements. ERCOT will otherwise study the need for additional protective relaying and VRT. ERCOT will otherwise study the need for additional protective relaying and VRT. Operating Guides will be revised subject to study results. Operating Guides will be revised subject to study results. TAC voted to submit comments to the Board endorsing those comments with a study completion date of June TAC voted to submit comments to the Board endorsing those comments with a study completion date of June TAC Vote: 16 in favor, 4 opposed (2 muni, 2 IOU) and 9 abstentions (4 REP, 2 IG, IOU, consumer, and IPM). TAC Vote: 16 in favor, 4 opposed (2 muni, 2 IOU) and 9 abstentions (4 REP, 2 IG, IOU, consumer, and IPM).