Economic Analysis Proposed Scope ERCOT RPG Meeting September 17, 2010

Economic Analysis Process Review Pattern’s proposed Economic Analysis Modeling Approach Description distributed to RPG on 8/30 21-day stakeholder comment period ends 9/20 Pattern reviews comments and provides responses back to RPG Pattern finalizes economic analysis scope definition with ERCOT assistance as needed Economic Study completion expected 6 to 8 weeks after finalization of study scope 1

Overview of Modeling Process Use UPLAN platform Full nodal SCUC SCED processes 8760-hour simulation for single study year, 2015 Base Case and two Change Cases Base Case = markets with expected development and average conditions Change Case = Base Case + Southern Cross Change Case A: ERCOT-expected 2015 wind build out assumptions (~10,500 MW of total ERCOT wind) Change Case B: ERCOT-assumed wind and 3000 MW additional wind development stimulated by the Southern Cross project Comparison of the Base Case with each Change Case will yield economic impacts 2

Input Assumptions Use ERCOT input assumptions (publicly available from ERCOT) where possible Use alternative sources when ERCOT assumptions are not made publicly available, such as: Information used by ERCOT but not released: ERCOT’s generator heat rate characteristics Fuel forecasts Certain ERCOT information where modifications will allow more direct comparison of of two markets, e.g.: ERCOT’s weather-normalized load will not be used for ERCOT given that similarly normalized load data is not available for SERC. Will instead use comparable load data from NERC and FERC filings 3

Input Assumptions – SERC detail SERC input assumptions from either: Publicly available sources Topology Load Generating units: location, capacity, type Operating reserve requirements and regions Emissions costs Wheeling rates LCG Proprietary Sources Fuel forecast Generator heat rates External regional supply Capacity additions (total capacity values provided in RPG document) 4

Detailed Modeling Assumptions: Provided in RPG Document 5

Metrics ERCOT metrics consistent with RPG charter and procedures Societal Benefits/Production cost impacts for ERCOT and by Load Zone Consumer Benefits/Energy cost savings LMP * consumption at each load node Producer Savings Over ERCOT and by Load Zone “Export Charges” that will reduce the transmission revenue requirement and other charges paid by loads Emissions Impacts Changes in CO 2, NO x, and SO x 6

Questions?

Contact Information Chris Shugart, Project Developer (713) David Parquet, Executive Sponsor (415) Matt Dallas, Media Relations (917)