Hurricane Rita

2 ERCOT Preparation ERCOT started alerts to QSEs and TOs on 9/21 Did a site failover of EMMS system Austin Taylor Procured satellite voice communications between ERCOT and TOs in impact area Cancelled planned transmission outages as of Friday, 9/23 Delayed scheduled implementation of Release 4 on 9/28 Requested QSEs to: – Staff all plants unless safety dictated otherwise – Notify ERCOT of all evacuated plants –Keep Resource Plans, Schedules, Bids up to date –Bid in all available capacity into BES market, particularly DBES –Be prepared to take plants off line quickly if requested by ERCOT

3 ERCOT Preparation (cont.) Distributed frequency control guidelines to all QSEs and Generators in case of loss of communication ERCOT QSE Generator Created link for hurricane updates on ercot.com Scheduled MP conference calls for September 23, 24, 25 Set up separate 24-hour phone hot lines for media and market participants for issues not concerning real time operations beginning 9/23 Arranged for extra ERCOT System Operators and Supervisors to come in if needed Stated intent to keep market operating as long as possible

4 Rita Track 120 MPH 50 MPH

5 ERCOT Customer Outages Customer outages started 17:00 on 9/23 in Galveston/Houston (CenterPoint)– hit a peak of 715,000 at 07:00 9/24 Customer outages started 06:00 on 9/24 in Lufkin/Nacogdoches/Tyler (TXUED) – up to 70,000 customers ultimately affected Vast majority of customer outages due to distribution system damage Service to almost all customers in ERCOT restored by 9/30

6 ERCOT Transmission and Generation Outages Transmission  KV lines  1 – 138/69KV autotransformer  9 – 69 KV lines  1 – 69 KV substation  All back in service by 06:00 9/28  No 345 KV outages Generation  One plant (76 MW) forced out by storm  Twelve of 30 plants in Houston area were shut down before the storm

7 ERCOT Summary The ERCOT system remained stable throughout the storm No significant communications problems with Market Participants ERCOT market systems functioned normally Experienced record September peak temperatures and demands in the four days following the storm without operational problems However …………

8 Entergy Hit Very Hard Transmission Outages – 82% of system  4 – 500 KV lines  28 – 230 KV lines  87 – 138 KV lines  161 – 69 KV lines  293 substations Affected 300,000 Entergy Texas customers East Texas was isolated from rest of Entergy system Generation deficient in East Texas

9 Block Load Transfers (BLTs) On 9/25 discussions started about possibility of BLTs from Entergy to ERCOT Decision to close normally open 138 KV tie between CenterPoint and Entergy at Crosby Critical Houston water supply pumps on Trinity river Line energized the evening of 9/26 Entergy started putting load on line on 9/27 Limit ~ 175 MW 138 KV tie established between TXUED and Deep East Texas Electric Coop at Huntington Energized on 10/1 Limit ~ 40 MW

10 State and Federal Action On 9/26 the State Emergency Operations Center created a Tiger Team to determine how service can be restored in East Texas ASAP Actions: –Governor issued order suspending eminent domain requirements for temporary facilities –On 9/27 PUCT issued order suspending CCN requirements and allowing ERCOT TDSPs to extend service in area –DOE agreed to issue order maintaining ERCOT’s FERC exemption for these emergency connections

11 Commercial Impact of Hurricane Rita

12 BLT Settlements Section 5.7 of Protocols define requirements for BLT events Two BLT points were implemented Each BLT is: –Initiated with a specific Dispatch Instruction –A wholesale delivery point(s) defined by an ESIID –Metered with an interval data recorder installed –Associated with a Load Serving Entity (LSE) –Represented by a Qualified Scheduling Entity (QSE)

13 BLT Settlements Estimated aggregate load is 100 to 150 MW For Settlement purposes, the BLTs are: –Treated as non-competitive wholesale load Transmission losses are applied No UFE is applied –Settled as load in the Congestion Zone in which their ESIID is located BLTs are excluded from 4CP calculations

14 Other Commercial Impacts due to Rita Initial settlement has only about 40% of meter reads available –Profiled ESIIDs use most recent usage for profile scaling factor –IDR ESIIDs may be estimated with prior period Final & True-Up settlement have over 99% of meter reads available –Profiled ESIIDs will use meter reads covering period. However, application of usage to profile will result in load being assigned during outages –IDR ESIIDs will use actual data available covering the period and will reflect what actually occurred for the ESIID

15 Other Commercial Impacts due to Rita Mass evacuation impacted UFE even before hurricane struck UFE = Generation – (Load + Losses) –Negative UFE means load is overestimated –Positive UFE means load is underestimated UFE may be created in a region but is allocated ERCOT-wide according to Protocols Pre-Initial (PRR 568 Analysis)Initial Settlement DateDaily Avg UFEApprox. Range UFEDaily Avg UFEApprox. Range UFE Sep-190%-3% - +2%0%-3% - +2% Sep-200%-4% - +2%0%-4% - +2% Sep-21-2%-5% - +1%-1%-5% - +1% Sep-22-11%-15% - -4%-8%-12% - -1% Sep-23-13%-22% - -8%-9%-17% - -5% Sep-24-16%-24% - -11%-12%-19% - -9% Sep-25-9%-20% - -2%-6%-14% - 0%

16 UFE on September 24, 2005