CRR Issues Transparency provided by CRR Reports CRR EDS handbook Business process NPRR TPTF November 27, 2007

2 2 TPTF – CRR Issues November 27, 2007 Today’s issues Transparency provided by CRR Reports –“Explanation of Market Submission / Retrieval Items” document will be updated this week per comments received –Guidance requested about proposed report contents CRR EDS handbook –Content updated –Reminder / Status on registration Business process NPRR –Discuss alternate implementation of PCRR release mechanism

3 3 TPTF – CRR Issues November 27, 2007 Level of transparency for CRR ownership and market results ERCOT is looking for TPTF guidance on whether protocols were correctly interpreted Three data items in particular: 1.CRR ownership of record (all owned CRRs) 2.“Base loading” CRRs (owned CRRs that are inputs into an auction) 3.Auction results

4 4 TPTF – CRR Issues November 27, CRR Ownership of Record Protocol language: NP : ERCOT shall post monthly, by the fifth Business Day of the month, on the MIS Public Area CRR ownership of record for each source and sink pair and each flowgate: the identities of the CRR Account Holders, type of CRR held by that account holder, and total MWs held by that account holder. Current design:

5 5 TPTF – CRR Issues November 27, Base loading CRRs Protocol language: NP (1): Not less than 20 days before each annual CRR Auction and not less than 10 days before each monthly CRR Auction, ERCOT shall post the following to the MIS Public Area: (a) For the CRR Auction, number and type (PTP Options or PTP Obligations) of CRRs previously awarded or allocated for each appropriate month, including the source and sink for each such CRR; (b) For the CRR Auction, number of MCFRIs that have been previously awarded or allocated for each appropriate month, including the flowgate for each such MCFRI Current design:

6 6 TPTF – CRR Issues November 27, Auction Results (Public) Protocol language: NP (2): Following each CRR Auction, ERCOT shall post to the MIS Public Area the following information for all outstanding CRRs following this auction: (a) PTP Options and PTP Options with Refund – the source and sink, and total MWs; (b) PTP Obligations and PTP Obligations with Refund – the source and sink and total MWs; (c) FGRs – the identity of each directional flowgate, and the magnitude of positive flow (MW) on each directional network element represented by each flowgate; (d) The identities of the CRR Account Holders that were awarded or allocated CRRs in or before the CRR Auction; (e) The clearing prices for each strip of CRR blocks awarded in the CRR Auction; Current design (2 files – allocation results and auction results):

7 7 TPTF – CRR Issues November 27, 2007 EDS3 – Release 7 Handbook CRR EDS Handbook (EDS3 – R7) –V1.0 specifies multi-month auction trial –In reviewing readiness metrics, a strong desire was expressed for a full annual (24 month) CRR auction to be part of EDS –CRR EDS Handbook has been updated (v1.04) to include testing of a full annual (24 month) CRR Auction –Reserving request for TPTF approval of an updated version of the EDS Handbook until January, giving us time to finalize more details.

8 8 TPTF – CRR Issues November 27, 2007 EDS Reminders December 1, 2007 –Declare intent to participate in the EDS3-R7 with Primary Contact Name, and Telephone Number, as well as DUNS number of participating CRR AH. –NOIEs submit PCRR Allocation Eligibility Form, along with proof of eligibility Proof of eligibility includes copy of long-term contract or, if own resource, the following: Board of Directors Resolutions, Construction Contracts, Certificates of Completion of Construction, Property Tax Statements, Insurance Policies Listing the Generation Resource or Audited Financial Statements. –NOIEs wishing to be considered as NOIE Load Zones during EDS 3 R7 must submit the NOIE Load Zone Establishment form This notification will not be considered binding for Nodal go-live, however the indication will allow ERCOT to appropriately form the network model for EDS activities. –Wind Generation Resources (WGRs ) within the boundaries McCamey Area wishing to receive MCFRIs during EDS must submit the Allocation Eligibility Form –NOIEs and WGRs who submit the Allocation Eligibility Form must also submit the CRR AH application.

9 9 TPTF – CRR Issues November 27, 2007 EDS Reminders January 15, 2008 –Market Participants wishing to participate in EDS3-R7 submit the CRR AH application. –Market Participants wishing to participate must have registered for and completed ERCOT CRR Training. Note: only one representative from each participant organization is required to attend CRR Training.

10 TPTF – CRR Issues November 27, 2007 CRR Registration status 20 entities (5 NOIEs) have ed their intent to participate in EDS3-R7 –Of those, 8 entities (3 NOIEs) have completed CRR AH registration 10 entities (3 NOIEs) have completed CRR AH registration but have not declared their intent to participate in EDS3-R7 Notable absentees: –CPS Energy(San Antonio), STEC, Brownsville, McCamey WGRs Registration status as of Monday, November 26 as known by the CRR team

11 TPTF – CRR Issues November 27, 2007 Business process clarification NPRR – “release mechanism” ERCOT proposes to remove the “release mechanism” language in the protocols as existing design provides a more elegant solution The following slides aim to explain the “release mechanism” compared to proposed implementation Feedback desired on appropriate percentage for ‘base loading’ for Monthly Auction Assumptions made in this example (which may not exist in reality): –The network capacity for is the same for all months –The nominated MW is the same for all months –The nominated MW amount is fully allocated; no monthly true-up allocation required

12 TPTF – CRR Issues November 27, 2007 Available network capacity for 2010 and MW (capacity) Year 2010Year 2011 annual allocation annual auction before the monthly auc. Jan monthly auction after the monthly auc. before the annual auc.

13 TPTF – CRR Issues November 27, 2007 Nominations for 2010 and 2011 submitted by NOIEs 100 MW (capacity) 60 MW (nominated) Year 2010Year 2011 annual allocation annual auction before the monthly auc. Jan monthly auction after the monthly auc. before the annual auc.

14 TPTF – CRR Issues November 27, 2007 All nominations for 2010 and 2011 allocated – but only some released 100 MW (capacity) 60 MW (allocated) 60*55% = 33 MW (released) 60*15% = 9 MW (released) Year 2010Year 2011 annual allocation annual auction before the monthly auc. Jan monthly auction after the monthly auc. before the annual auc.

15 TPTF – CRR Issues November 27, 2007 Remainder network capacity (up to 55% and 15%) auctioned 100 MW (capacity) 100*55% - 33 MW = 22 MW (auctioned) 60*55% = 33 MW (released) 60*15% = 9 MW (released) 100*15% - 9 MW = 6 MW (auctioned) 60 MW (allocated) 55% 15% Year 2010Year 2011 annual allocation annual auction before the monthly auc. Jan monthly auction after the monthly auc. before the annual auc.

16 TPTF – CRR Issues November 27, 2007 Balance of PCRRs (up to 90% or additional 35%) released to NOIEs 100 MW (capacity) 100*55% - 33 MW = 22 MW (auctioned) 60*55% = 33 MW (released) 60*90% - 33 = 21 MW (released) Year 2010Year 2011 annual allocation annual auction before the monthly auc. Jan monthly auction after the monthly auc. before the annual auc. 60*15% = 9 MW (released) 100*15% - 9 MW = 6 MW (auctioned) 60 MW (allocated)

17 TPTF – CRR Issues November 27, 2007 Remainder network capacity (up to 90%) auctioned 100 MW (capacity) 90% Year 2010Year 2011 JAN 100*55% - 33 MW = 22 MW (auctioned) 60*55% = 33 MW (released) 60*90% - 33 = 21 MW (released) 100*90% = 14 MW (auctioned) annual allocation annual auction before the monthly auc. Jan monthly auction after the monthly auc. before the annual auc. 60*15% = 9 MW (released) 100*15% - 9 MW = 6 MW (auctioned) 60 MW (allocated)

18 TPTF – CRR Issues November 27, 2007 Balance of PCRRs (additional 10%) for Jan 2010 released to NOIEs 100 MW (capacity) 100*90% = 14 MW (auctioned) 60*100% = 6 MW (released) Year 2010Year 2011 JAN 100*55% - 33 MW = 22 MW (auctioned) 60*55% = 33 MW (released) 60*90% - 33 = 21 MW (released) 60 MW (allocated) 90% annual allocation annual auction before the monthly auc. Jan monthly auction after the monthly auc. before the annual auc. 60*15% = 9 MW (released) 100*15% - 9 MW = 6 MW (auctioned)

19 TPTF – CRR Issues November 27, 2007 Summary of CRRs Distributed Proposed implementation simplifies the process Per PCRR release mechanism Allocation60 Annual Auction 22 Monthly Auction 14 Total distributed prior to DAM 96 Current PCRR release mechanism does not provide 10% cushion

20 TPTF – CRR Issues November 27, 2007 Available network capacity for 2010 and MW (capacity) Year 2010Year 2011 annual allocation annual auction Jan monthly auction

21 TPTF – CRR Issues November 27, 2007 All nominations for 2010 and 2011 allocated 100 MW (capacity) 60 MW (nominated & allocated) Year 2010Year 2011 annual allocation annual auction Jan monthly auction

22 TPTF – CRR Issues November 27, 2007 Network capacity (up to 55% and 15%) auctioned 100 MW (capacity) 100*55% - 33 MW = 22 MW (auctioned) 60*55% = 33 MW (base loaded in Auction) 60*15% = 9 MW (base loaded in Auction) 100*15% - 9 MW = 6 MW (auctioned) 60 MW (allocated) 55% 15% Year 2010Year 2011 annual allocation annual auction Jan monthly auction

23 TPTF – CRR Issues November 27, 2007 Network capacity (up to 90%) auctioned 100 MW (capacity) 90% Year 2010Year 2011 JAN 60*90% = 54 MW (base loaded in auction) 60 MW (allocated) 100*90% = 16.2 MW (available for auction) annual allocation annual auction Jan monthly auction 60*15% = 9 MW (base loaded in Auction) 100*15% - 9 MW = 6 MW (auctioned) 22*90% = 19.8 MW (based loaded in auction) 2.2 MW (previously auctioned) 6 MW (previously allocated)

24 TPTF – CRR Issues November 27, 2007 Summary of CRRs Distributed Per PCRR release mechanism Proposed Implementation 90% base loading for Monthly Alternate Implementation 100% base loading for monthly Allocation60 Annual Auction 22 Monthly Auction Total distributed prior to DAM