1. Utilization of Fuel Costs in Ercot Markets Ino González RCWG Meeting 2/24/2016

2. Agenda Current Protocols NPRR617– Energy Offer Flexibility 2

3. PUBLIC 3 Current Protocols – Fuel Prices Description of Fuel Prices Fuel Index Price (FIP) – NP Section 2 Fuel Oil Price (FOP) – NP Section 2 Solid Fuel Price ($1.5/MMBtu) – NP Section 2 and 5.6.1.2

4. PUBLIC 4 Rules for Utilizing Fuel Prices – Current Protocols OfferVC 1 Offer CAPMOC 2 EOC MWP 3 CAP Cost Guarantee (DAM) Cost Guarantee (RUC) YY% in Offer 4 % in Offer n/a (use Offers) n/a (use Offers) YN% in Offer n/a (use Offers) n/a (use Offers) NY% in VC Min(FIP,FOP)n/a% in VC NNMin(FIP, FOP) Min(FIP, FOP) 5 n/aMin(FIP, FOP) 1 Verifiable Cost 2 Mitigated Offer Cap 3 Make Whole Payment 4 Fuel percent submitted in Offer 5 Coal and Lignite Generic MWP Cap = $18/MWh

5. PUBLIC 5 Rules for Utilizing Fuel Prices – With NPRR 617 Energy Offer Flexibility OfferVCOffer CAPMOCEOC MWP 1 CAP Cost Guarantee (DAM) 3 Cost Guarantee (RUC) 3 YY% in Offer % in VC YN% in Offer % in Offer 2 NY% in VC Min(FIP,FOP)n/a% in VC NNMin(FIP, FOP) Min(FIP, FOP) 4 n/aMin(FIP, FOP) 1 Make Whole Payment 2 Applicable only to Minimum Energy Cost. Generic Start-Up cost do not contain fuel rates 3 Guarantee Cost = Min(Offer, Resource Cost). Resource Cost based on Generic or VC 4 Coal and Lignite Generic MWP Cap = $18/MWh