Protocol Revision Subcommittee Presentation to the ERCOT Technical Advisory Committee February 2, 2006

PRS Summary 5 PRRs for Approval 1 System Changes – IA/CBA 4 Non-System Changes – IA only 1 PRR for Withdrawal

PRR 567 – Simplified 3-Part Bidding for A/S Purpose (Constellation, IPM) PRR creates parameters for start-up costs, capacity offers, minimum operating costs and others that would allow ERCOT to reduce AS costs and provides for make-whole payments where appropriate Benefit Greater participation in A/S markets; lower AS costs Market Impact Requires redesign of bid submittal interface with ERCOT systems; may also require more complex bidding strategy System Change Yes Net Benefits -- $6.3MM; Ratio – 3.21 Assumptions TXU analysis of each day (11/04-10/05); High Implementation Cost Case -- $3MM; in effect 12 months; reduced benefits by 50% for conservatism PRS Vote PRS maintained a 1.2 Priority & 54.5 Rank with 7 no votes & one abstention (use of ERCOT resources could delay nodal); all market segments were present Effective Date Upon system implementation

PRR 567 – Simplified 3-Part Bidding for A/S Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Impacts several systems $1-$3 MM system cost Resource use could delay nodal

PRR 630 – Private Use Networks Purpose (TXU Wholesale, IOU) Requires private use networks (PUN) to maintain and report appropriate watt/VAR metering data at each substation and the addition/deletion of load points Benefit Improved system reliability by requiring PUNs to meet same power factor/voltage standards as other market participants Market Impact Places additional reporting requirements on certain PUNs System Change NoN/A AssumptionsN/A PRS Vote PRS recommended approval with 2 no votes and 2 abstentions; all market segments were present; CNP Comments to PRS Report Effective Date April 1, 2006

PRR 630 – Private Use Networks Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 635 – Resource Plan Performance Metrics Update Purpose (Tenaska, IPM, QSEMWG) Modifies metrics to, among other things, account for changes due to EMMS R4, exclude units in testing or with operational issues, clarify that the down bid/obligation measure is done by congestion zone where possible Benefit Ensures accuracy of resource plans Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS recommended approval unanimously; all market segments were present Effective Date April 1, 2006

PRR 635 – Resource Plan Performance Metrics Update Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 640 – Update Provisions for Capacity/Energy Payments for RMR & Add New Standard Form Agreement For Synchronous Service Purpose(ERCOT) Revises RMR language to provide more consistency between agreement and protocols, removes synchronous condenser language and includes a new agreement for Synchronous Condenser Service Benefit Clearer payment process for RMR units Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS recommended approval with one no vote; all market segments were present Effective Date April 1, 2006

PRR 640 – Update Provisions for Capacity/Energy Payments for RMR & Add New Standard Form Agreement For Synchronous Service Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 642 – Lower Limit to IDR Meters in MRE for True-Up Settlement IDR Threshold Purpose (TXU Wholesale, IOU, COPS) Sets a lower limit to the number of IDR meters within a Meter Reading Entity (MRE) that would be considered when determining whether or not the IDR threshold requirement is met for True-Up Settlement Benefit Avoids impact of missed True-Up Settlement; eliminates risk of True-Up Settlement suspension; allows for more predictable exchange of dollars per the Settlement calendar Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS recommended approval unanimously; all market segments were present Effective Date April 1, 2006

PRR 642 – Lower Limit to IDR Meters in MRE for True-Up Settlement IDR Threshold Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 602 – AS Obligation for DC Tie Exports Purpose (Tenaska, IPM) Removes AS obligations for DC Tie exports, PRR remanded by TAC for further CBA development Benefit Reflects the true impact of the QSE exporting over the DC Tie to the ERCOT grid Market Impact N/A System Change YesN/A AssumptionsN/A PRS Vote PRS recommended withdrawal unanimously; all market segments were present Effective Date N/A

Recommended TAC Actions ApprovalApproval PRR 567 – Simplified 3-Part Bidding for ASPRR 567 – Simplified 3-Part Bidding for AS PRR 630 – Private Use NetworksPRR 630 – Private Use Networks PRR 635 – Resource Plan Performance Metrics UpdatePRR 635 – Resource Plan Performance Metrics Update PRR 640 – Update Provisions for Capacity & Energy Payments for RMR Service and Add a New Standard Form Agreement for Synchronous Condenser ServicePRR 640 – Update Provisions for Capacity & Energy Payments for RMR Service and Add a New Standard Form Agreement for Synchronous Condenser Service PRR 642 – Lower Limit to IDR Meters in MRE for True-Up Settlement IDR ThresholdPRR 642 – Lower Limit to IDR Meters in MRE for True-Up Settlement IDR Threshold WithdrawalWithdrawal –PRR 602 – AS Obligation for DC Tie Exports