Profiling Working Group March 14, PWG Update Report By Ernie Podraza of Reliant Energy ERCOT PWG Chair for COPS Meeting March 14, 2006

Profiling Working Group March 14, Voting Item PWG requests COPS recommend approval of LPGRR ??? “Changes to Governing Subcommittee” to TAC. Approval at COPS and TAC is needed in order to change the Load Profiling Guides references from RMS to COPS.

Profiling Working Group March 14, Profile ID Assignment and Annual Review Process Proposed Change

Profiling Working Group March 14, A Brief History Early 2002 – Idea was introduced that annual validation could take place at ERCOT rather than jointly among all TDSPs and ERCOT Mid 2004 – Exchange of ideas in order to craft specifics with ERCOT on a proposed PRR for Annual Validation of Load Profile IDs 8/2004 – This issue was discussed extensively at the PWG meeting 3/2005 to 5/2005 – Ideas were formulated on feasibility of moving the Load Profile ID Assignment and Annual Validation to ERCOT, between ERCOT and sub-team 5/2005 – Ideas presented at PWG, decision to move forward with workshop consisting of wider RMS and COPS committee membership. 6/2005 to 11/2005 – PWG hosted a series of conference calls and market workshops to determine preferable option 11/2005 to 2/2006 – PWG sponsored a conference call and series of PWG meetings to work on the final option and guide language (LPGRR ??)

Profiling Working Group March 14, Options Considered The Profiling Working Group after years of debate determined there were two options to improve the Profile ID Assignments and Annual Review Process: -“Option 1”: To determine the feasibility of a proposed change to move the entire Load Profile ID assignment process, maintenance process, and annual validation to ERCOT - “Option 2”: To determine the feasibility of moving a portion of the annual validation process to ERCOT where the profile is calculated annual at ERCOT and the information passed to each TDSP and/or Muni-COOP

Profiling Working Group March 14, The Profiling Working Group after years of debate determined there were two options to improve the Profile ID Assignments and Annual Review Process: –“Option 1”: To determine the feasibility of a proposed change to move the entire Load Profile ID assignment process, maintenance process, and annual validation to ERCOT –“Option 2”: To determine the feasibility of moving a portion of the annual validation process to ERCOT where the profile is calculated annual at ERCOT and the information passed to each TDSP and/or Muni-COOP

Profiling Working Group March 14, Profile Decision Tree

Profiling Working Group March 14, Load Profile ID (1) GroupSegment Profile Segment Profile Group Profile Type Code (1) GroupSegment IDRNIDR Meter Data Type Code (3) (1) GroupSegment TOU n NoTOU Time-Of-Use Code (5) Coast East FWest North West NCent SCent South Weather Zone Code (2) (1) NWS Weather Sensitivity Code (4) Example: RESHIWR_NCENT_NIDR_NWS_NOTOU

Profiling Working Group March 14, Precedent for TDSP lists; 1)Protocols Section Weather Responsiveness Determination … “ERCOT shall produce a report that contains the ESI IDs requiring profile code modifications and shall publish the report via the MIS. TDSPs shall successfully complete Weather Sensitivity Code modifications (Profile ID changes) no later than sixty (60) days after the ESI ID appears on the ERCOT report.” 2) RMS November voting item, “The vote to authorize 2005 Residential Annual Validation transactions for those ESI IDs for which ERCOT’s analysis shows such update would result in a more representative profile was APPROVED.”

Profiling Working Group March 14, PWG by consensus agreed to change the responsibility of Profile ID assignment calculation of Profile Type for Annual Validation from the TDSPs to ERCOT Staff. RMS has approved the concept. RMS presented the concept to TAC, which voiced no objections.

Profiling Working Group March 14, Option 2 Details Once per year, ERCOT calculates the profiles and provides a file of changes to each TDSP TDSPs use this file to update their systems and create the appropriate 814_20s TDSPs still responsible for new account assignments and any updates needed for normal business TDSPs responsible for keeping profile up to date with tariffs

Profiling Working Group March 14, Option 2 Details (cont.) Results in no additional implementation costs to CRs Who would be responsible for profile id assignment accuracy ERCOT – based on supplied data TDSP still responsible for accuracy of the default Disputes could now be between ERCOT and CR If the dispute is based on incorrect calculation If enough data are available to calculate a new profile segment for ESIIDs Tariff disputes handled between TDSPs and CRs No change to current methodology

Profiling Working Group March 14, Benefits of Responsibility Change ERCOT can devote more resources to the Load Research Project due to reduced coordination efforts associated with the current Annual Validation process Faster implementation of changes to the Load Profile ID assignment methodology Potential for stabilization of annual profile ID migration Potential for reduced lag between identifying the need for a Profile ID assignment change and when the change becomes effective Provides for more flexibility in implementing changes to the Load Profile ID assignment methodology, including more sophisticated algorithms Removes any TDSP limitations on the number of months of usage history that can be incorporated in calculations for Profile Type

Profiling Working Group March 14, Eliminates potential for inconsistent application of assignment process across the market Helps to minimize barriers to entry to the market –Muni/Co-Ops don’t have to implement complicated logic, hire outside consultants, or add personnel Virtually eliminates need for TDSPs to modify their systems due to ongoing changes in the Load Profile ID assignment process and Annual Validation MPs would benefit from more accurate profiles and settlements No TX SET changes required Benefits of Responsibility Change (cont.)

Profiling Working Group March 14, Audit and Oversight Along with various ERCOT settlement functions, the Annual Validation process is subjected to SAS70 audit by a 3rd party Oversight of the Profile ID assignment process by PUCT and stakeholders will continue Profile Decision Tree continues to document and provide visibility for the Profile ID assignment rules CR’s would continue to have audit capability via SCR 727 extract process One set of code will be used for assignment calculations rather than six or more independently developed sets

Profiling Working Group March 14, PWG requests COPS recommend approval of LPGRR ??? “Load Profile Type Responsibility Change” to TAC. Timely approval at COPS and TAC is needed in order to be effective for 2006 Annual Validation Voting Item

Profiling Working Group March 14, PWG requests COPS approve PRR draft - “ Approval of Temporary Modification to Annual Validation ”. TAC approval is needed for LPGRRs but Protocols requires Board approval for Annual Validation changes. This PRR make approvals consistent. Voting Item