Protocol Revision Subcommittee Presentation to the ERCOT Technical Advisory Committee October 6, 2006

PRS Summary 2 Rejections 2 Rejections 2 Withdrawals 2 Withdrawals 8 NPRRs for Approval 8 NPRRs for Approval 3 PRRs for Approval 3 PRRs for Approval 1 Non-System Changes – IA only 1 Non-System Changes – IA only 1 System Change – CBA/IA 1 System Change – CBA/IA 1 Urgent 1 Urgent

Rejected PRRs PRR 683 – Reduce Timeline for Notice & Cure and Create a Working Credit Limit PRR 683 – Reduce Timeline for Notice & Cure and Create a Working Credit Limit Motion to reject received 5.75 segment votes in favor and 0.75 segment votes opposed with 4 abstentions; all market segments were present Motion to reject received 5.75 segment votes in favor and 0.75 segment votes opposed with 4 abstentions; all market segments were present NPRR 021 – Reduce Timeline for Notice & Cure and Create a Working Credit Limit NPRR 021 – Reduce Timeline for Notice & Cure and Create a Working Credit Limit Motion to reject received same vote as PRR 683; all market segments were present Motion to reject received same vote as PRR 683; all market segments were present

Withdrawn PRRs PRR 652 – Customer Information Repository PRR 652 – Customer Information Repository PRR 678 – Allocation of RPRS Over- Collection to QSEs -- URGENT PRR 678 – Allocation of RPRS Over- Collection to QSEs -- URGENT

Nodal PRRs PRS unanimously recommended approval of: PRS unanimously recommended approval of: NPRR017 – Discontinuation of Interest Charge for Defaulting Entities at Time of Uplift NPRR017 – Discontinuation of Interest Charge for Defaulting Entities at Time of Uplift Companion to PRR 681 Companion to PRR 681 NPRR022 – MIS Posting Area for Trades NPRR022 – MIS Posting Area for Trades Changes area from Secure to Certified Changes area from Secure to Certified NPRR023 – Correction to Formatting of Section NPRR023 – Correction to Formatting of Section It is what it says It is what it says NPRR025 – Definition of Annual Planning Model NPRR025 – Definition of Annual Planning Model Provides the definition in Section 3, Management Activities for the ERCOT System Provides the definition in Section 3, Management Activities for the ERCOT System NPRR030 – Addition to CRR Account Holder Qualification Criteria NPRR030 – Addition to CRR Account Holder Qualification Criteria Adds description of an entity not eligible to own CRRs (e.g., TSPs) Adds description of an entity not eligible to own CRRs (e.g., TSPs) NPRR029 – Network Model Testing Clarification NPRR029 – Network Model Testing Clarification Differentiates between RT and simulation testing process and requirements Differentiates between RT and simulation testing process and requirements ERCOT believes these changes can be absorbed into the initial requirements/design/schedule ERCOT believes these changes can be absorbed into the initial requirements/design/schedule

Nodal PRRs PRS recommended approval, with abstentions, of: PRS recommended approval, with abstentions, of: NPRR027 – Block Offers in CRR Auction NPRR027 – Block Offers in CRR Auction Revises how CRRs may be offered in CRR Auction Revises how CRRs may be offered in CRR Auction Awarded monthly 7X24 strips may only be re-auctioned or sold as 3-part strips (3 8-hour periods) Awarded monthly 7X24 strips may only be re-auctioned or sold as 3-part strips (3 8-hour periods) 2 Abstentions 2 Abstentions NPRR028 – CRR Trading in Blocks Only NPRR028 – CRR Trading in Blocks Only Revises how CRRs traded in bilateral and CRR Auction Revises how CRRs traded in bilateral and CRR Auction CRR trading limited to time-of-use blocks for a certain date CRR trading limited to time-of-use blocks for a certain date CRR holders would not be able to trade the CRR for an hour or block of hours that is not one of the hours defined CRR holders would not be able to trade the CRR for an hour or block of hours that is not one of the hours defined 1 Abstention 1 Abstention ERCOT believes these changes can be absorbed into the initial requirements/design/schedule and will reduce overall package costs by approximately $300K ERCOT believes these changes can be absorbed into the initial requirements/design/schedule and will reduce overall package costs by approximately $300K

PRR 673 – Adjust SCE Performance Charge Scale Factor Purpose (FPL Energy, IGEN for the Frequency Control TF) Modifies the scale factor monthly based on ERCOT’s CPS-1 score and sets max/min values. Benefit Increasing the SCE Performance Charge may motivate Resources to minimize SCE. Market Impact May lower performance standards for some QSEs System Change Yes 2006 Priority 1.1, Rank 50 Assumptions See Market Benefit PRS Vote PRS unanimously recommended approval; all market segments were present Effective Date Upon system implementation

PRR 673 – Adjust SCE Performance Charge Scale Factor Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Impact <$50K Requires Package 1 coding

PRR 675 – Multiple Ramp Rates Purpose (Coral Power, IPM) Allows QSEs to submit a ramp rate curve that would be used to calculate an equivalent ramp rate to clear the BES market. Benefit May increase amount of BES available for dispatch and may improve SCE performance Market Impact N/A System Change Yes 2007 Priority 2; Rank 17.5 Assumptions See Market Benefit PRS Vote PRS unanimously recommended approval; all market segments were present Effective Date Upon system implementation

PRR 675 – Multiple Ramp Rates Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Impact $100K to $250K Requires Dbase revisions

PRR 685 – TCRs and PCRs Payment Due Date-- URGENT Purpose(ERCOT) Documents the requirements for TCR/PCR payment due date as 5 Bank Business Days after being invoiced. Benefit Clarifies the payment schedule Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS unanimously recommended approval with Garland’s comments; all market segments were present Effective Date November 1, 2006

PRR 685 – TCRs and PCRs Payment Due Date-- URGENT Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Revise procedures Lengthens the payment period

Recommended TAC Actions Approval Approval PRR 673 – Adjust SCE Performance Charge Scale Factor PRR 673 – Adjust SCE Performance Charge Scale Factor PRR 675 – Multiple Ramp Rates PRR 675 – Multiple Ramp Rates PRR TCRs & PCRs Payment Due Date -- URGENT PRR TCRs & PCRs Payment Due Date -- URGENT