Protocol Revision Subcommittee Presentation to the ERCOT Technical Advisory Committee September 7, 2006

PRS Summary RPRS Update RPRS Update 6 NPRRs for Approval 6 NPRRs for Approval 2 PRRs Rejected 2 PRRs Rejected 7 PRRs for Approval 7 PRRs for Approval 4 Non-System Changes – IA only 4 Non-System Changes – IA only 3 System Change – CBA/IA 3 System Change – CBA/IA 5 Urgent 5 Urgent

Nodal PRRs PRS unanimously recommended approval of: PRS unanimously recommended approval of: NPRR011 – Revision to Credit Requirements NPRR011 – Revision to Credit Requirements NPRR012 – CRR Granularity in CRR Auction NPRR012 – CRR Granularity in CRR Auction NPRR014 – Zonal PRR Synchronization for Section 16 NPRR014 – Zonal PRR Synchronization for Section 16 NPRR015 – Zonal PRR Synchronization Section 22, Attachment H NPRR015 – Zonal PRR Synchronization Section 22, Attachment H NPRR016 – TPTF Clean-up Items for Section 2, 3, & 16 NPRR016 – TPTF Clean-up Items for Section 2, 3, & 16 ERCOT believes these changes can be absorbed into the initial requirements/design/schedule ERCOT believes these changes can be absorbed into the initial requirements/design/schedule PRS, with 1 abstention, recommended approval of: PRS, with 1 abstention, recommended approval of: NPRR013 – Section 2 (Zonal PRR Synchronization & ERCOT Staff Clarifications) NPRR013 – Section 2 (Zonal PRR Synchronization & ERCOT Staff Clarifications) ERCOT believes these changes can be absorbed into the initial requirements/design/schedule ERCOT believes these changes can be absorbed into the initial requirements/design/schedule

Rejected PRRs PRR 607 – One Minute Ramp Schedules PRR 607 – One Minute Ramp Schedules Motion to approve received 12 Nays, and 3 Abstentions Motion to approve received 12 Nays, and 3 Abstentions PRR 674 – Temporary Alteration of Settlement Equations Related to the RPRS Under-Scheduled Charge – URGENT PRR 674 – Temporary Alteration of Settlement Equations Related to the RPRS Under-Scheduled Charge – URGENT Motion to reject approved to with 2 abstentions Motion to reject approved to with 2 abstentions

PRR 653 – OOME Ramp Rate Adherence Purpose (Constellation, IPM) Allows a QSE to request a VDI when being un- deployed from OOME instructions at a rate greater than the QSE’s ramp rate. Benefit Corrects payments to generators providing reliability services and eliminates a disincentive to providing OOME service. Market Impact Some minor uplift due to OOME un-deployment System Change NoN/A AssumptionsN/A PRS Vote PRS recommended approval with 5 abstentions; all market segments were present Effective Date November 1, 2006

PRR 653 – OOME Ramp Rate Adherence Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 671 – Remove Sunset Date on Floor for Responsive Reserve Service Bids Purpose (Reliant for DSWG, IPM) Removes the 1/1/07 sunset date while maintaining the requirement that offers not be submitted for less than $0. Benefit Continues current practice. Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS unanimously recommended approval; all market segments were present Effective Date November 1, 2006

PRR 671 – Remove Sunset Date on Floor for Responsive Reserve Service Bids Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 682 – Emergency Electric Curtailment Plan (EECP) Event Realignment -- URGENT Purpose (Garland P&L for ROS, Muni) Aligns Protocols with OGRR 186, realigning EECP procedures to allow ERCOT to perform faster communication of system conditions. Benefit Improved EECP communications. Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS recommended approval with 1 abstention; all market segments were present Effective Date October 1, 2006

PRR 682 – Emergency Electric Curtailment Plan (EECP) Event Realignment -- URGENT Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 688 – ERCOT Nodal Implementation Surcharge-- URGENT Purpose(ERCOT) Implements PUCT Order for Nodal Implementation Surcharge. Benefit Conforms to PUCT Order. Market Impact Establishes a new ERCOT surcharge. System Change Yes ERCOT implements new charge type. Assumptions 2007 Priority 1, Rank 7.5. PRS Vote PRS recommended approval with 1 abstention; all market segments were present Effective Date Upon System Implementation

PRR 688 – ERCOT Nodal Implementation Surcharge-- URGENT Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact <$50K Impacts Lodestar/Billing Systems

PRR 690 – Termination of the Modified Competitive Solution Method-- URGENT Purpose (Suez, IGEN) Implements PUCT Order in Project 31972, Market Power & Resource Adequacy. Benefit Conforms to PUCT Order. Market Impact Establishes a new ERCOT surcharge. System Change NoN/A AssumptionsN/A PRS Vote PRS unanimously recommended approval; all market segments were present Effective Date October 1, 2006

PRR 690 – Termination of the Modified Competitive Solution Method-- URGENT Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

RPRS Update PRS’ RPRS TF completed its investigation of RPRS procurement PRS’ RPRS TF completed its investigation of RPRS procurement In general, TF determined that the procurement engine was working properly In general, TF determined that the procurement engine was working properly QSE WG will continue to look at RPRS operational solutions/alternatives QSE WG will continue to look at RPRS operational solutions/alternatives Thanks to Manny Munoz (CenterPoint) & Gary Miller (BTU) Thanks to Manny Munoz (CenterPoint) & Gary Miller (BTU) PRS provides its recommendation to TAC today PRS provides its recommendation to TAC today

PRR 687 – RPRS Under-Scheduled Capacity Delineation -- URGENT Purpose(ERCOT) Modifies PRR 666. Benefit Clarifies PRR 666. Market Impact N/A System Change Yes Same as PRR 666 Assumptions PRS Vote PRS unanimously recommended approval as revised by PRS; all market segments were present Effective Date Upon System Implementation

PRR 687 – RPRS Under-Scheduled Capacity Delineation -- URGENT Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Same as PRR 666

PRR 676 – RPRS Solution with Nodal RUC-Type Procurement & Cost Allocation -- URGENT Purpose (CPS Energy, Muni) PRR revises RPRS to use Nodal RUC-Type procurement and cost allocation. Benefit Reduces capacity insufficiency fees and eliminates excess funds/costs. Market Impact Market participants would need to revise RPRS shadow settlement. System Change Yes Work would accompany PRR 666/687 Assumptions C/B Ratio – Priority 2, Rank 10 PRS Vote Motion to approve with PRR 674 features failed by to with 4 abstentions PRS recommended approval to with 4 abstentions; all market segments were present Effective Date Upon System Implementation

PRR 676 – RPRS Solution with Nodal RUC-Type Procurement & Cost Allocation -- URGENT Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact <$500K with PRR 687 Impacts Lodestar, POS/MOS

Recommended TAC Actions Approval Approval PRR 653 – OOME Ramp Rate Adherence PRR 653 – OOME Ramp Rate Adherence PRR 671 – Remove Sunset Date on Floor for RRS Bids PRR 671 – Remove Sunset Date on Floor for RRS Bids PRR Emergency Electric Curtailment Plan (EECP) Event Realignment -- URGENT PRR Emergency Electric Curtailment Plan (EECP) Event Realignment -- URGENT PRR RPRS Solution with Nodal RUC-Type Procurement & Cost Allocation -- URGENT PRR RPRS Solution with Nodal RUC-Type Procurement & Cost Allocation -- URGENT PRR RPRS Under-scheduled Capacity Delineation -- URGENT PRR RPRS Under-scheduled Capacity Delineation -- URGENT PRR ERCOT Nodal Implementation Surcharge – URGENT PRR ERCOT Nodal Implementation Surcharge – URGENT PRR Termination of Modified Competitive Solution Method – URGENT PRR Termination of Modified Competitive Solution Method – URGENT