1 TAC Report to the ERCOT Board March 21, 2006

2 TAC Summary 3 unanimous PRRs 3 unanimous PRRs TAC discussion regarding Board Retreat Action Items TAC discussion regarding Board Retreat Action Items Other high interest issues Other high interest issues

3 PRR 635 – Resource Plan Performance Metrics Update Purpose (Tenaska, IPM, QSEMWG) Modifies metrics to, among other things, account for changes due to EMMS R4, exclude units in testing or with operational issues, clarify that the down bid/obligation measure is done by congestion zone where possible Benefit Ensures accuracy of resource plans Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommends approval ; all market segments were present Effective Date April 1, 2006

4 PRR 635 – Resource Plan Performance Metrics Update Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

5 PRR 640 – Update Provisions for Capacity/Energy Payments for RMR & Add New Standard Form Agreement For Synchronous Service Purpose(ERCOT) Revises RMR language to provide more consistency between agreement and protocols, removes synchronous condenser language and includes a new agreement for Synchronous Condenser Service Benefit Clearer payment process for RMR units Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommends approval ; all market segments were present Effective Date April 1, 2006

6 PRR 640 – Update Provisions for Capacity/Energy Payments for RMR & Add New Standard Form Agreement For Synchronous Service Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

7 PRR 642 – Lower Limit to IDR Meters in MRE for True-Up Settlement IDR Threshold Purpose (TXU Wholesale, IOU, COPS) Sets a lower limit to the number of IDR meters within a Meter Reading Entity (MRE) that would be considered when determining whether or not the IDR threshold requirement is met for True-Up Settlement Benefit Avoids impact of missed True-Up Settlement; eliminates risk of True-Up Settlement suspension; allows for more predictable exchange of dollars per the Settlement calendar Market Impact N/A System Change NoN/A AssumptionsN/A TAC Vote TAC unanimously recommends approval ; all market segments were present Effective Date April 1, 2006

8 PRR 642 – Lower Limit to IDR Meters in MRE for True-Up Settlement IDR Threshold Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

9 Recommended Board Actions Approval Approval PRR 635 – Resource Plan Performance Metrics UpdatePRR 635 – Resource Plan Performance Metrics Update PRR 640 – Update Provisions for Capacity/Energy Payments for RMR & Add New Standard Form Agreement For Synchronous ServicePRR 640 – Update Provisions for Capacity/Energy Payments for RMR & Add New Standard Form Agreement For Synchronous Service PRR 642 – Lower Limit to IDR Meters in MRE for True-Up Settlement IDR ThresholdPRR 642 – Lower Limit to IDR Meters in MRE for True-Up Settlement IDR Threshold

10 Board Retreat Action Items for TAC  Develop strawman for TAC consideration regarding possibility of only sending PRRs with priority/ranking above cut line to Board, include review of Board oversight in Protocols – TAC taskforce to address and report to TAC in May  Discuss advantages and disadvantage of Market Participants directly funding some PRRs – assigned to PRS on PRS agenda this month

11 Other High Interest Issues  Credit risk management  RMS to reconsider status of long-term solution and report to TAC in April regarding timeline for implementation with objective of improving month timeline  ERO implementation  Stakeholder input and involvement  Jurisdictional issues  Status of in-flight projects  Better market understanding as to status and available information  Review whether ERCOT can provide additional information or information in a different format