Compliance Update September 2006

Control Performance Highlights  NERC CPS1 Performance ERCOT’s August score was ERCOT’s CPS1 scores show significant improvement over the same month for the past three years since the implementation of PRR 525 with the exception of January  PRR 525 Performance Scores for August indicate 32 QSEs passed / 1 non-wind-only QSE failed the measure Scores posted on the ERCOT Compliance Website Performance of Wind-Only QSEs is not improving, possibly declining

ERCOT’s CPS1 Monthly Trend

ERCOT CPS1 by Interval

QSE PRR Minute Interval Scoring

SCE Performance Monitoring  SCE Performance Monitoring scores for all QSEs are published on the Compliance Website SCE Performance Scores

525 Passing 10-Min Interval Percentage Trends

Resource Plan Performance Metrics August 2006 Results

NERC ERO Developments  On July 20 th, FERC approved NERC’s application to become the Electric Reliability Organization (ERO).  Draft Texas Regional Entity budget submitted to NERC in June.  Proposed Regional Entity Work Plan submitted to NERC in July.  Draft Delegation Agreement between NERC and ERCOT filed August 4 th.  ERCOT Compliance submitted, to NERC on September 8 th, contact information from ERCOT Entities responsible for NERC Reliability Standards.

NERC Standards (  The Interpretation of PER Requirement 1 is posted for a 30-day pre-ballot review. This is an interpretation, not a standard, and it may establish whether ERCOT TDSP and QSE real-time operators need to hold NERC Operator Certifications. The ballot pool may be joined up until Monday, Sept. 18. After this, a 30-day voting period will begin.Interpretation of PER Requirement 1  Another group of standards have an open ballot pool until Sept. 18, followed by voting: FAC-010 — System Operating Limits Methodology for the Planning Horizon FAC-010 FAC-011 — System Operating Limits Methodology for the Operations Horizon FAC-011 FAC-014 — Establish and Communicate System Operating Limits FAC-014  More Pre-ballot Windows and Ballot Pools Open from Sept. 6 to Oct. 5, 2006, for voting in October: Violation Risk Factors Matrix Missing Measures and Compliance Elements Balance Resources and Demand Standards  The Transmission Relay Loadability Standard Drafting Team posted the first draft of its standard for a 45-day comment period from August 16 through September 29, This will codify lessons learned in implementing the 2003 Blackout Recommendation #8a, including items that ERCOT System Protection WG members are working with today.Transmission Relay Loadability  NERC is hosting a standards workshop in Dallas on October  A workshop specifically on Cyber Security Standards will be in Dallas on Oct 5-6.