1. Nodal Settlement Delta Calculations and Statements  Objective: Describe the recommended design of nodal settlement delta calculations and statements.

2. What is the problem?  Zonal Settlement System produces excessive interval data of questionable value to ERCOT and Market Participants

3. Zero Data Statistics (Production Lodestar Database as of 4/26/05) Data- base Table Total Row Count ZC Row Count Total Disk Space Total ZC Disk Space % Row Count % Disk Space Byte / Row ZERO- CHARGE 52,000,000 26 GB 100% 500 LSCH 398,500,000270,600,000224 GB146 GB 68% 65%562 LSCD 398,500,000270,600,000390 GB254 GB 68% 65%978

4. 5 CM Zones500 CM Zones 1000 CM Zones Job Run Time45 Min20 Hours41 Hours Zero Charge Database Records 16,797403,039787,423 Transaction Database Records 579 Interval Database Records 173,7604Million7.9Million Zonal Settlements System Architecture Stress Test Results

5. Current Settlements System Characteristics  Always produce 5 output interval cuts regardless of value PRICE, QUANTITY, AMOUNT, BILLAMT, BILLQTY Force PRICE X QUANTITY format  Deltas (BILLQTY, BILLAMT) calculated at interval level  Zero data calculated at interval level and calculated for deltas  Statements repeat previous settlement data

6. Regulation Up Service Charge - LARU  LARUAMT = (PCRUAMTew + PCOOMRUAMTew) / (RULRSOBew – RUSAQew) * (RULRSOBqse – RUSAQqse)  LARUPRICE = (PCRUAMTew + PCOOMRUAMTew) / (RULRSOBew – RUSAQew)  LARUQTY = (RULRSOBqse – RUSAQqse)  LARUAMT = LARUPRICE * LARUQTY  LARUBILLQTY = Current LARUQTY – Previous LARUQTY  LARUBILLAMT = Current LARUAMT – Previous LARUAMT

7. Current Settlements System Example First Settlement Run Formula: D_AMT = (A + B) * C Input Interval Cut A = 5,4,6,5,4 Input Interval Cut B = 0,0,0,0,0 Input Interval Cut C = 2,2,2,2,2 Forced PRICE*QTY -> D_QTY = A + B, D_PRICE = C Output Interval Cut D_QTY = 5,4,6,5,4 Output Interval Cut D_PRICE = 2,2,2,2,2 Output Interval Cut D_AMT = 10,8,12,10,8 Total = 48 Output Interval Cut D_BILLQTY = 5,4,6,5,4 Output Interval Cut D_BILLAMT = 10,8,12,10,8 Total = 48

8. Current Settlements System Example Second Settlement Run Formula for D_AMT = (A + B) * C Input Interval Cut A = 5,4,6,5,4 Input Interval Cut B = 1,1,1,1,1 Input Interval Cut C = 2,2,2,2,2 Forced PRICE*QTY -> D_QTY = A + B, D_PRICE = C Output Interval Cut D_QTY = 6,5,7,6,5 Output Interval Cut D_PRICE = 2,2,2,2,2 Output Interval Cut D_AMT = 12,10,14,12,10 Total = 58 Output Interval Cut D_BILLQTY = 1,1,1,1,1 Output Interval Cut D_BILLAMT = 2,2,2,2,2 Total = 10

9. Current Settlements System Inefficiencies  Input interval cuts are restated as PRICE and QTY cuts  Deltas (BILLQTY, BILLAMT) calculated at interval level (15min, hourly) Excessive interval data  Zero data calculated at interval level and calculated for deltas High zero data overhead, excessive interval data

10. Nodal Protocol Needs Increased number of charge and payment types to process  55 to 80 → More data + Lower granularity of settlement output  Settlement Points, RUC → More data + Increased use of interim calculations  More data + New statements and invoices ______________________________________ = Differing Architectural Needs for Nodal Settlement and Billing System

11. Nodal Settlements System Design Proposal  Simplify data requirements while still giving the Market what they need – we need to be lean and efficient No PRICE and QTY cuts  Inputs and Outputs specified in Nodal Protocols No BILLQTY delta cut  Quantity cuts do not exist in Nodal Protocols so we will not create them nor the corresponding delta cut BILLAMT delta cut NOT at interval level  BILLAMT calculated at Trade Date summary level Zero AMT output saved at Trade Date summary level unless non-zero values sum to zero  No zero amount interval data when every interval is zero Statements will not repeat previous settlement data Statements roll up charges/payments to statement recipient level (even if charges/payments are at SPP or Resource Node level) All Input and Output data available in extracts

12. Nodal Settlements System Example 1 First Settlement Run Formula: D_AMT = (A + B) * C Input Interval Cut A = 5,4,6,5,4 Input Interval Cut B = 0,0,0,0,0 Input Interval Cut C = 2,2,2,2,2 Output Interval Cut D_AMT = 10,8,12,10,8 Total = 48 Output D_BILLAMT = 48 1 st Statement IntervalD_AMT 110 28 312 410 58 D_AMT Total = 48 D_BILLAMT = 48

13. Nodal Settlements System Example 1 Second Settlement Run Formula: D_AMT = (A + B) * C Input Interval Cut A = 5,4,6,5,4 Input Interval Cut B = 1,1,1,1,1 Input Interval Cut C = 2,2,2,2,2 Output Interval Cut D_AMT = 12,10,14,12,10 Total = 58 Output D_BILLAMT = 10 2 nd Statement IntervalD_AMT 112 210 314 412 510 D_AMT Total = 58 D_BILLAMT = 10

14. Nodal Settlements System Example 1 Third Settlement Run Formula: D_AMT = (A + B) * C Input Interval Cut A = 5,4,6,5,4 Input Interval Cut B = 1,1,1,1,1 Input Interval Cut C = 2,2,2,2,2 Output Interval Cut D_AMT = 12,10,14,12,10 Total = 58 Output D_BILLAMT = 0 3 rd Statement D_AMT Total = 58 D_BILLAMT = 0

15. Nodal Settlements System Example 2 First Settlement Run Formula: D_AMT = (A + B) * C Input Interval Cut A = 5,4,6,5,4 Input Interval Cut B = 1,1,1,1,1 Input Interval Cut C = 0,0,0,0,0 Output D_AMT = 0 Output D_BILLAMT = 0 1 st Statement D_AMT Total = 0 D_BILLAMT = 0

16. Nodal Settlements System Example 2 Second Settlement Run Formula: D_AMT = (A + B) * C Input Interval Cut A = 5,4,6,5,4 Input Interval Cut B = 1,1,1,1,1 Input Interval Cut C = 1,1,1,1,1 Output Interval Cut D_AMT = 6,5,7,6,5 Total = 29 Output D_BILLAMT = 29 2 nd Statement IntervalD_AMT 16 25 37 465 D_AMT Total = 29 D_BILLAMT = 29

17. Nodal Settlements System Example 3 First Settlement Run Formula: D_AMT = (A + B) * C Input Interval Cut A = 5,4,6,5,4 Input Interval Cut B = 1,1,1,1,1 Input Interval Cut C = 0,1,0,0,-1 Output Interval Cut D_AMT = 0,5,0,0,-5 Total = 0 Output D_BILLAMT = 0 1 st Statement IntervalD_AMT 10 25 30 40 5-5 D_AMT Total = 0 D_BILLAMT = 0

18. Nodal Protocol Compliance 9.2.1Settlement Statement Process for the DAM ERCOT shall produce daily Settlement Statements for the Day-Ahead Market (DAM), as defined in Section 9.2.2, Settlement Statements for the DAM, that show a breakdown of financial obligations between ERCOT and a Market Participant incurred in the DAM, including any administrative and miscellaneous charges applicable to the DAM. 9.2.2 Settlement Statements for the DAM (7)Settlement Statements for the DAM must break fees down by Charge Types into the appropriate one-hour Settlement Interval for that type. 9.2.3DAM Settlement Charge Types ERCOT shall provide, on each Settlement Statement, the dollar amount for each DAM Settlement charge and payment. 9.2.5DAM Resettlement Statement (3)A DAM Resettlement Statement must reflect differences to financial records generated on the previous Settlement Statement for the given DAM. 9.5.1Settlement Statement Process for the Real-Time Market ERCOT shall produce daily Settlement Statements for the Real-Time Market (RTM), as defined in Section 9.5.2, Settlement Statements for the RTM, that show a breakdown of Charge Types incurred in the RTM, including any administrative and miscellaneous charges applicable to the RTM. 9.5.2Settlement Statements for the RTM (8)A Settlement Statement for the RTM must break the fees down by Charge Type into the appropriate 15-minute or one-hour Settlement Interval for that type. 9.5.3Real-Time Market Settlement Charge Types ERCOT shall provide, on each RTM Settlement Statement, the dollar amount for each RTM Settlement charge and payment. 9.5.5RTM Final Statement (2)An RTM Final Statement will reflect differences to financial records generated on the previous Settlement Statement for the given Operating Day 9.5.6RTM Resettlement Statement (6)An RTM Resettlement Statement will reflect differences to financial records generated on the previous Settlement Statement for the given Operating Day. 9.5.8RTM True-Up Statement (3)An RTM True-Up Statement will reflect differences to financial records generated on the previous Settlement Statement for the given Operating Day.