Technical Advisory Committee Presentation to the ERCOT Board of Directors July 15, 2008

TAC Summary 4 PRRs for Approval 4 PRRs for Approval 11 NPRRs for Approval 11 NPRRs for Approval Notice of Nodal Operating Guide Changes Notice of Nodal Operating Guide Changes

PRR757 –Emergency Interruptible Load Service Formula Correction Purpose(ERCOT) Corrects equations and variable subscripts to delete the undefined term “ EILS Business Hours”. Benefit Avoid confusion in Nodal Protocols. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC voted to recommend approval with two abstentions (IPM); all Market Segments were present. Effective Date August 1, ERCOT Staff requests that the Board adopt an effective date of October 1, 2008 for consistency with the next EILS procurement period.

PRR757 –Emergency Interruptible Load Service Formula Correction Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR759 – Changes to Notification to Customer of Service Establishment Purpose(ERCOT) Better align ERCOT Protocols with PUCT substantive customer protection rules by discontinuing the Move-In notifications. Benefit Cost avoidance - $450M/year based on 2007 expenses Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval with 8 opposed (Muni, Co-op (4) and IOU (3)) and 2 abstentions (IG and IPM); all Market Segments were present. TAC further recommends that the Board direct the ERCOT Staff to reduce the 2009 ERCOT system administrative fee filing request by the amount of the anticipated savings. Effective Date August 1, 2008

PRR759 – Changes to Notification to Customer of Service Establishment Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR760 – EILS Availability Factor Clarification Purpose(ERCOT) Clarifies a settlement and compliance provision relating to availability requirements for EILS Resources assigned to the alternate baseline. Benefit Clarity in Protocol language for QSEs and EILS Resources Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC voted to recommend approval with one opposed (IPM) and one abstention (IPM); all Market Segments were present. Effective Date August 1, ERCOT Staff requests that the Board adopt an effective date of October 1, 2008 for consistency with the next EILS procurement period.

PRR760 EILS Availability Factor Clarification Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR761 – Inadvertent Energy Account Revision Purpose(ERCOT) Corrects the definition for an Inadvertent Energy Account. Benefit Provides accurate terminology supporting market transparency Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval unanimously; all Market Segments were present. Effective Date August 1, 2008

PRR761 – Inadvertent Energy Account Revision Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

NPRR097– Changes to Section 8, Performance Monitoring & Compliance Purpose (ERCOT for TPTF) Conforms Section 8 with TAC-approved EMS & MMS business requirements and conceptual design documentation. Incorporates TPTF input to ERCOT Staff questions. Benefit Further defines Section 8 requirements. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommended approval as revised by TAC; all Market Segments were present. Effective Date Upon Texas Nodal implementation; $125K-$150K impact to nodal budget; no change to implementation schedule.

NPRR107 – Nodal Emergency Interruptible Load Service (EILS) Purpose(ERCOT) Incorporates EILS; includes EILS deployment methodology necessary to support SCED 5 minute deployment. Benefit Compliance with PUCT Substantive Rules. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval with two abstentions (IPM); all Market Segments were present. Effective Date Upon Texas Nodal implementation; less than $50K impact to nodal budget; no change to implementation schedule.

NPRR111– Timelines for Response by ERCOT to TSP Requests Purpose(ERCOT) Increases the approval window for the 45-day timeline from 5 days to 15 days (comparable to Zonal Protocols); edits for internal consistency. Benefit Enhance Protocol clarity and result in approval of more outages in the 45-day timeline, thereby providing more advanced market notification. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval unanimously; all Market Segments were present. Effective Date Upon Texas Nodal implementation; no impact to nodal budget or implementation.

NPRR112 – Emergency Base Point Price Revision Purpose(ERCOT) Revision by TPTF comments assures that $/MWH value for the Emergency Base Point should never exceed the Mitigated Offer Cap. Benefit Establishes consistency in Energy Offer Curve extension methodology. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval with 4 opposed (Consumer) and 2 abstentions (IREP); all Market Segments were present. Effective Date Upon Texas Nodal implementation; no impact to nodal budget or implementation.

NPRR117– Resource Registration Clarification Purpose(ERCOT) Clarifies Resource Entity data registry obligation, QSE Resource Parameter submission obligation for operational purposes, deletes QSE obligation to submit Private Use Network design/engineering data and places the obligation on Generation Entity with a Generation Resource located within a Private Use Network. Benefit Clarifies obligations for registering Resource data and submitting Resource Parameters Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval unanimously; all Market Segments were present. Effective Date Upon Texas Nodal implementation; no impact to nodal budget or implementation.

NPRR118 – Section 14, Synchronization of Zonal Protocols Purpose(ERCOT) Synchronizes Zonal Protocol Section 14, State of Texas Renewable Energy Credit Trading Program, with Nodal Protocols. Benefit Completion of Nodal Protocols. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval unanimously; all Market Segments were present. Effective Date Upon Texas Nodal implementation; no impact to nodal budget or implementation.

NPRR119 – Resource Limit Calculator Purpose(ERCOT) Changes the Low Dispatch Limit (LDL) calculation to ensure that the LDL and High Dispatch Limit (HDL) sent to SCED do not exceed the High Sustained Limit under any circumstances. BenefitN/A Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval unanimously; all Market Segments were present. Effective Date Upon Texas Nodal implementation; no impact to nodal budget or implementation.

NPRR120– Corrections & Clarifications for Real Time Settlements Purpose(ERCOT) Corrects and clarifies Real-Time Settlement formulas. Benefit Accurate settlement formulas. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval unanimously; all Market Segments were present. Effective Date Upon Texas Nodal implementation; no impact to nodal budget or implementation

NPRR122 – Simplify Ancillary Services Settlement Formulas Purpose(ERCOT) Replaces A/S trades and self-supply in the settlement formulas with the self-arranged quantities; also includes clarifying language and editorial changes to variables and subscripts. Benefit Alleviates confusion regarding the intent of the settlement formulas and simplifies design and implementation Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval unanimously; all Market Segments were present. Effective Date Upon Texas Nodal implementation; no impact to nodal budget or implementation.

NPRR123– Inadvertent Energy Account Revision Purpose(ERCOT) Corrects the definition for an Inadvertent Energy Account. Benefit Provides accurate terminology supporting market transparency. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval unanimously; all Market Segments were present. Effective Date Upon Texas Nodal implementation; no impact to nodal budget or implementation

NPRR130 – CRR Settlements Revenue Equalization Purpose(ERCOT) Adds an accounting provision to assure revenue neutrality in the Day Ahead Market while refunding the proper funds later through the CRR Balancing Account. Benefit ISO revenue equalization and credit stability. Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC recommended approval unanimously; all Market Segments were present. Effective Date Upon Texas Nodal implementation; $50K-$100K impact to nodal budget; no change to implementation schedule.

Notice of Guide Revisions NOGRR018—Synchronization of OGRR204, Hotline Technology Update NOGRR018—Synchronization of OGRR204, Hotline Technology Update NOGRR019—Synchronization of OGRR206, Black Start Satellite Phones NOGRR019—Synchronization of OGRR206, Black Start Satellite Phones

Aftermath of PRR764 BOD passed PRR764, Zonal Congestion and CSCs/CREs, on June 6 th. BOD passed PRR764, Zonal Congestion and CSCs/CREs, on June 6 th. Limits zonal congestion management tools to constraints for which the CSC or CRE is the base case or post-contingency limiting element. Limits zonal congestion management tools to constraints for which the CSC or CRE is the base case or post-contingency limiting element. Initiated a review of all CREs for optimal management of CSC/CRE related congestion. Initiated a review of all CREs for optimal management of CSC/CRE related congestion. ERCOT Protocol Section 7.2.3, Determining Closely Related Elements (CREs), provides for ERCOT staff to modify the CRE list with TAC review. ERCOT Protocol Section 7.2.3, Determining Closely Related Elements (CREs), provides for ERCOT staff to modify the CRE list with TAC review. ERCOT’s recommendations are deemed approved subject to TAC action within 7 days. ERCOT’s recommendations are deemed approved subject to TAC action within 7 days. July TAC meeting (June 26 th ): July TAC meeting (June 26 th ): ERCOT recommended that two bundles of transmission lines be adopted as CREs. ERCOT recommended that two bundles of transmission lines be adopted as CREs. Allows ERCOT to control the West to North and North to Houston stability limits using zonal congestion management tools. Allows ERCOT to control the West to North and North to Houston stability limits using zonal congestion management tools. After consideration of several motions, TAC took no action on ERCOT’s proposal. After consideration of several motions, TAC took no action on ERCOT’s proposal. Proposal became effective July 3 rd. Proposal became effective July 3 rd. CMWG and ERCOT are currently discussing options to remove certain CREs from the current list of CREs. CMWG and ERCOT are currently discussing options to remove certain CREs from the current list of CREs. Expect ERCOT’s proposal to be reviewed at the August TAC meeting. Expect ERCOT’s proposal to be reviewed at the August TAC meeting.