1 Protocol Revision Subcommittee Presentation to the ERCOT Technical Advisory Committee January 12, 2006

2 PRS Summary 5 PRRs for Approval 5 PRRs for Approval 0 System Changes – IA/CBA0 System Changes – IA/CBA 5 Non-System Changes – IA only5 Non-System Changes – IA only Prioritization Process Prioritization Process

3 PRR 543 – Schedules & Emergency Assistance Over CFE-ERCOT DC Ties Purpose(ERCOT) Addresses the use of Back-to-Back ties and BLTs with CFE during emergency conditions Benefit Greater reliability in emergency conditions Market Impact None System Change NoN/A AssumptionsN/A PRS Vote Recommended approval unanimously; all segments present Effective Date March 1, 2006

4 PRR 543 – Schedules & Emergency Assistance Over CFE-ERCOT DC Ties Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Risk exists when energy flows to CFE from ERCOT Contract required prior to ERCOT use of PRR

5 PRR 627 – RMR Transmission Issues & RMR Contract Extension Purpose (TXU, IOU) Establishes TDSP reporting requirements regarding RMR exit strategy implementation; codifies ERCOT ability to extend RMR/MRA contract if exit strategy delayed Benefit Increases transparency regarding RMR/MRA exit strategy implementation Market Impact Increases transparency regarding RMR/MRA exit strategy implementation (Change from Recommendation Report) System Change NoN/A AssumptionsN/A PRS Vote Recommended approval with 3 abstentions; all market segments were present Effective Date March 1, 2006

6 PRR 627 – RMR Transmission Issues & RMR Contract Extension Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

7 PRR 638 – Change Settlement Invoice Due Date from 16 Calendar Days to 5 Bank Business Days Purpose (TXU, IOU, COPS) Changes the Settlement Invoice Due Date from sixteen (16) calendar days to five (5) Bank Business Days. Benefit Accurate settlement data Market Impact Accurate settlement data System Change NoN/A AssumptionsN/A PRS Vote Unanimously approved; all segments present Effective Date March 1, 2006

8 PRR 638 – Change Settlement Invoice Due Date from 16 Calendar Days to 5 Bank Business Days Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

9 PRR 639 – Notification of Repairs to EPS Facilities Under Emergency Conditions Purpose (TXU, IOU, MWG) Allows TDSP to repair EPS meter prior to notifying ERCOT in emergency situations Benefit Allows for more timely repairs of EPS meters during emergency situations Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote Unanimously approved; all segments present Effective Date March 1, 2006

10 PRR 639 – Notification of Repairs to EPS Facilities Under Emergency Conditions Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

11 PRR 646 – Establish a Floor for Responsive Reserve Service -- URGENT Purpose (ERCOT, ISO, CWG) Provides that until 1/1/07, all bids to provide Responsive Reserve must be equal to or greater than –$1,000 Benefit Prevents large negative bids reduces credit exposure or liability in ERCOT Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote Approved as amended by PRS with 2 abstentions; all segments present Effective Date February 1, 2006

12 PRR 643 – Shorten Payment Default Timelines -- URGENT Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

13 Recommended TAC Actions Approval Approval PRR 543 – Schedules & Emergency Assistance Over CFE- ERCOT DC TiesPRR 543 – Schedules & Emergency Assistance Over CFE- ERCOT DC Ties PRR 627 – RMR Transmission Issues & RMR Contract ExtensionPRR 627 – RMR Transmission Issues & RMR Contract Extension PRR 638 – Change Settlement Invoice Due Date from 16 Calendar Days to 5 Bank Business DaysPRR 638 – Change Settlement Invoice Due Date from 16 Calendar Days to 5 Bank Business Days PRR 639 – Notification of Repairs to EPS Meter Facilities Under Emergency ConditionsPRR 639 – Notification of Repairs to EPS Meter Facilities Under Emergency Conditions PRR 646 – Establish a Floor for Responsive Reserve Service Bids -- URGENTPRR 646 – Establish a Floor for Responsive Reserve Service Bids -- URGENT

14 Amendment to System Project Prioritization Process

System Change Prioritization Criteria PRS reviewed categorization of system projects based on review of 2005 Prioritization Process PRS reviewed categorization of system projects based on review of 2005 Prioritization Process New criteria would be used to review existing and future system prioritizations New criteria would be used to review existing and future system prioritizations

System Change Prioritization Criteria Priority Designations Priority Designations #1 – Projects required by statute, PUCT Order, NERC Compliance or critical reliability of grid operations, IT infrastructure or commercial settlement#1 – Projects required by statute, PUCT Order, NERC Compliance or critical reliability of grid operations, IT infrastructure or commercial settlement #2 – High value for a majority of market segments or ERCOT#2 – High value for a majority of market segments or ERCOT #3 – High value for one or two segments#3 – High value for one or two segments #4 -- Medium value for a majority of market segments or ERCOT#4 -- Medium value for a majority of market segments or ERCOT #5 – Medium value for only one segment#5 – Medium value for only one segment #9 – Parking lot for non-prioritized projects#9 – Parking lot for non-prioritized projects

System Change Prioritization Criteria Important considerations Important considerations Consistent application by all parties is criticalConsistent application by all parties is critical DefinitionsDefinitions Critical – operational necessity that must be addressed immediately Critical – operational necessity that must be addressed immediately High Value – operational requirement that if left unaddressed will become critical High Value – operational requirement that if left unaddressed will become critical Medium Value – important to improve service or efficiency of operations of the market Medium Value – important to improve service or efficiency of operations of the market Effective project prioritization is a combination of the following elements: Effective project prioritization is a combination of the following elements: Change RequestChange Request Impact AnalysisImpact Analysis CBA OutputCBA Output OtherOther

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