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

PRS Summary 2 Rejections 2 Rejections 1 Withdrawal 1 Withdrawal 1 NPRRs for Approval 1 NPRRs for Approval 4 PRRs for Approval 4 PRRs for Approval 3 Non-System Changes – IA only 3 Non-System Changes – IA only 1 System Change 1 System Change

Rejected PRRs PRR 680 – Procurement of Capacity for Load Forecast Uncertainty -- URGENT PRR 680 – Procurement of Capacity for Load Forecast Uncertainty -- URGENT PRS unanimously voted to reject PRR 680; all market segments were present PRS unanimously voted to reject PRR 680; all market segments were present PRR 692 – Corrections to Replacement Reserve Service PRR 692 – Corrections to Replacement Reserve Service PRS voted to reject with 2 votes “no” and 2 abstentions; all market segments were present PRS voted to reject with 2 votes “no” and 2 abstentions; all market segments were present CNE appealing rejection to TAC CNE appealing rejection to TAC

Withdrawn PRRs PRR 553 – Scheduling Trading Hubs PRR 553 – Scheduling Trading Hubs Previously approved by PRS and reviewed by TAC – requires TAC confirmation of withdrawal acceptance Previously approved by PRS and reviewed by TAC – requires TAC confirmation of withdrawal acceptance

Nodal PRRs PRS recommended approval, with abstentions, of: PRS recommended approval, with abstentions, of: NPRR024 – Synchronization of PRRs 627 & 640 NPRR024 – Synchronization of PRRs 627 & 640 Revises protocols related to RMR including revisions to the incentive factor calculation, development of target and actual availability, reporting of actual fuel costs and environmental provisions Revises protocols related to RMR including revisions to the incentive factor calculation, development of target and actual availability, reporting of actual fuel costs and environmental provisions ERCOT will conclude the impact analysis prior to November 12. ERCOT will conclude the impact analysis prior to November 12.

PRR 677 – Substitute Source for Fuel Price Index (FIP) Purpose (Calpine (IGen) for TPTF) Establishes the procedure for determining an alternative FIP index if the publication noted in the protocols fails to publish the information Benefit Provides certainty of cost data if the noted publication ceases to publish the FIP data Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS unanimously recommended approval; all market segments were present Effective Date December 1, 2006

PRR 677 – Substitute Source for Fuel Price Index (FIP) Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 681 – Discontinuation of Interest Charge for Defaulting Entities at Time of Uplift Purpose(LCRA) Allows ERCOT to cease calculation of late fees for defaulting entities when the condition for uplifting are met. Benefit Reduction of QSE’s accounting issues related to late fees that are posted to invoices but unlikely to be received. Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS recommended approval with 1 abstention; all market segments were present Effective Date December 1, 2006

PRR 681 – Discontinuation of Interest Charge for Defaulting Entities at Time of Uplift Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

PRR 684 – Mass Transition Process Necessary for PUCT Rule Purpose (CenterPoint (IOU) & Green Mountain (IREP) for TX SET) Revises mass transition process and conforms protocols to PUC Subst. Rules established in Project No –Evaluation of Default Service for Residential Customers and Review of Rules Relating to the Price To Beat and Provider of Last Resort Benefit Significantly reduces time to execute a mass transition and conforms to PUC rules Market Impact Market participants impacted based on their current functionality System Change Yes Covered in RMGRR042 (TX SET 3.0) AssumptionsN/A PRS Vote PRS unanimously recommended approval with RMS’ comments; all market segments were present Effective Date Upon System Implementation

PRR 684 – Mass Transition Process Necessary for PUCT Rule Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Included in TX SET 3.0

PRR 689 – Down Balance Qualification for Renewable Resources Purpose (FPL Energy (IGEN)) Reduces the BES DN bid qualification for QSEs representing only uncontrollable renewable resources to at or below the deployment level requested by ERCOT Benefit Removes existing barrier to uncontrollable renewable resource QSEs meeting their mandatory BES DN requirement Market Impact N/A System Change NoN/A AssumptionsN/A PRS Vote PRS unanimously recommended approval; all market segments were present Effective Date Upon System Implementation

Item Reviewed Description NoImpact Credit Monitoring/ Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact PRR 689 – Down Balance Qualification for Renewable Resources4

Recommended TAC Actions Approval Approval PRR 677 – Substitute Source for Fuel Index Price (FIP) PRR 677 – Substitute Source for Fuel Index Price (FIP) PRR 681 – Discontinuation of Interest Charge for Defaulting Entities at Time of Uplift PRR 681 – Discontinuation of Interest Charge for Defaulting Entities at Time of Uplift PRR 684 – Mass Transition Process for PUCT Rule PRR 684 – Mass Transition Process for PUCT Rule PRR 689 – Down Balance Qualification for Renewable Resources PRR 689 – Down Balance Qualification for Renewable Resources

Discussion of PRR/SCR System Change Moratorium TPTF/Nodal Project Management requested PRS to evaluate a moratorium on PRR/SCR system changes TPTF/Nodal Project Management requested PRS to evaluate a moratorium on PRR/SCR system changes PRS discussed and concluded: PRS discussed and concluded: Not comfortable with moratorium Not comfortable with moratorium Will rely on existing tools and conduct stricter review of PRRs/SCRs requiring system changes Will rely on existing tools and conduct stricter review of PRRs/SCRs requiring system changes CBA with benefits dependent on time before nodal implementation if not carried over CBA with benefits dependent on time before nodal implementation if not carried over Decision tree analysis that considers impact on nodal resources and schedule Decision tree analysis that considers impact on nodal resources and schedule PRS/ERCOT looking for means to pre-determine if system change is likely to be rejected prior to in-depth ERCOT analysis PRS/ERCOT looking for means to pre-determine if system change is likely to be rejected prior to in-depth ERCOT analysis