1. 1 North American Energy Standards Board EPSA Regulatory Affairs Conference NAESB Activities in the Wholesale Electric Market Washington, DC October 25, 2006

2. 2 North American Energy Standards Board Organizational Profile Organizational Profile

3. 3 North American Energy Standards Board Who we are: Organizational Profile Organization by Quadrant and Segment Wholesale Gas – 5 Segments Wholesale Electric – 5 Segments 1 2 3 4 5 1 2 3 4 Retail Electric – 4 Segments 1.End Users 2.Local Distribution 3.Pipelines 4.Producers 5.Services 1.End Users 2.Distributors 3.Service Providers 4.Suppliers Retail Gas – 4 Segments 1.End Users 2.Distributors 3.Service Providers 4.Suppliers 1 2 3 4 NAESB 1 2 3 4 5 1.End Users 2.Distribution/LSE 3.Transmission 4.Generation 5.Marketers/Brokers

4. 4 North American Energy Standards Board Who we are: Organizational Profile Membership Profile September 2006 Total Membership 319 Quadrant StatisticsWEQWGQREQRGQTotal Membership YE 200514012328 319 Net Change0+20-20 Change in Quadrant00000 Membership YTD1401252826319

5. 5 North American Energy Standards Board Who we are: Organizational Profile Two Governing Bodies with identical structures – Board of Directors – strategic direction, financial well being, annual planning for standards development, coordination of activities with other groups Executive Committee – Carries out the annual plan, develops and maintains the standards and business practices through its subcommittees and task forces

6. 6 North American Energy Standards Board NAESB Efforts – Interactions with FERC Interactions with FERC

7. 7 North American Energy Standards Board NAESB Efforts – Interactions with FERC NAESB Filing of standards with FERC  All wholesale electric and wholesale gas standards that are federally jurisdictional are filed with the FERC  The standards themselves and any standards that failed to pass due to a segment vote failure are forwarded  The NAESB record of minutes, work papers, voting, comments related to the standards are forwarded, including all minority positions noted in comments  Related transcripts are made available to FERC and can be purchased by any other interested party  Any regulatory agency can request access to or copies of NAESB standards

8. 8 North American Energy Standards Board Active FERC Dockets Related to NAESB WEQ Standards Active Dockets for WEQ:  RM05-5-000: Order No. 676 issued on April 25, 2006 for implementation by the industry on July 1, 2006  RM05-17-000 and RM05-25-000: OATT NOPR Reform – in the comment and reply comment phase.  RM05-28-000: Gas-Electric Interdependency. No NOPR issued yet. Standards and 6 issues identified and filed.

9. 9 North American Energy Standards Board NAESB WEQ Standards – RM05-5-000  OASIS Standards (WEQ BPS-001-000)  OASIS Standards &Communication Protocols (WEQ SCP-001- 000)  OASIS Data Dictionary (WEQ DD-001-000)  Coordinate Interchange Standards (WEQ BPS-002-000)  Area Control Error Equation Special Cases Standards (WEQ BPS-003-000)  Manual Time Error Correction Standards (WEQ BPS-004-000)  Inadvertent Interchange Payback Standards (WEQ BPS-005- 000)  Standards of Conduct (WEQ BPS-007-000)

10. 10 North American Energy Standards Board NAESB WEQ Possible Activities – RM05-25-000 Timeline RM05-25-000:  March 29, 2005: NAESB and NERC reviewed need for OASIS 2 development versus incremental improvements to existing OASIS systems. Report provided to FERC on April 22, 2005.  September 15, 2005: Notice of Inquiry issued by FERC regarding comments on reforming Order No. 888 Open Access Tariff  May 19, 2006: Notice of Proposed Rule-making on RM05-5- 000/RM05-17-000 issued.  August 7, 2006: NAESB files comments on areas that may need standards developed and initial assessment of the level of difficulty.  October 12, 2006: NAESB participates in a FERC Technical Conference on this issue.

11. 11 North American Energy Standards Board NAESB WEQ Standards – RM05-28-000 Timeline RM05-28-000:  November 14, 2003: Letter from Chm. Wood asking NAESB to develop interdependency standards  April 16, 2004: Gas Electric Coordination Interim Status Report, filed with FERC  November 30, 2004: Gas Electric Coordination Final Report, filed with FERC, 31 issues discussed  June 27, 2005: Gas-Electric Communication Standards filed with the FERC in Docket No. RM05-28-000, 13 issues described  February 24, 2006: 6 Interdependency Issues raised in Docket No. RM05-28-000

12. 12 North American Energy Standards Board NAESB WEQ Standards – RM05-28-000 Summary of Report Filed June 27, 2005 for RM05-28-000:  Business practices were developed to address communications between pipelines and generators in three situations (R04021): For generation facilities that have gas scheduled For generation facilities that do not have gas scheduled but need it For gas that is needed in extreme unanticipated demand  13 issues were identified related to gas-electric interdependency, and were categorized as to the type of issue raised –policy, business practices, reliability, regional or infrastructure related

13. 13 North American Energy Standards Board NAESB WEQ Standards – RM05-28-000 Summary of Report Filed February 2006 for RM05-28-000:  6 issues were identified in the report – three focus primarily on gas market changes, and 3 focus primarily on electric market changes  All six issues have policy implications.  All could result in standards development if so directed by either the market participants or the regulators.  The report does not ask regulators to give policy direction, but it does note that it would be very difficult to garner industry consensus without either strong direction from the market participants or strong direction from policy makers.

14. 14 North American Energy Standards Board NAESB WEQ Standards – RM05-28-000 NAESB Report February 2006 for RM05-28-000: Gas Issues  Issue 1: Consider the development of standards to support Capacity Release pricing on an index for pipelines that have the FERC authority to enter into negotiated rates and discount capacity on an index basis.  Issue 2: Review the possibility of adding an additional intraday nomination cycle with bumping rights to provide more flexibility to shippers, including power generators, with firm transportation rights such that they can nominate for natural gas supporting their market clearing times.  Issue 3: Review the ability of pipelines to shift gas for primary firm transportation within a pipeline path without having to re-offer as secondary firm transportation service.

15. 15 North American Energy Standards Board NAESB WEQ Standards – RM05-28-000 NAESB Report February 2006 for RM05-28-000: Electric Issues  Issue 4: Review and modify the requirements for organized electric markets so that the markets clear in sufficient time to nominate within the existing gas nomination timelines.  Issue 5: Consider the development of business practices for generators that offer into the day ahead market to have the appropriate commercial arrangements to fulfill the needed obligations.  Issue 6: Develop the appropriate supporting definitions for new business practices for the Wholesale Electric Quadrant, including but not limited to definitions for: alternate fuel capability, usable alternate fuel capability, firm transportation service, firm sales service, firm supply, and “must run” generator.

16. 16 North American Energy Standards Board 2006 Wholesale Electric Quadrant Annual Plan 2006 Annual Plan for WEQ

17. 17 North American Energy Standards Board Wholesale Electric Quadrant 2006 Annual Plan 2006 Wholesale Electric Annual Plan:  Continue to develop business practices to complement reliability standards  Develop joint operators training manual with NERC  Identify e-Tag enhancements, Registry enhancements and IDC enhancements with NERC  Complete PKI standards for security  Modify and complete business practices standards for Standards of Conduct and Affiliate Reporting  Enhance OASIS business practices to support market needs

18. 18 North American Energy Standards Board How to Contact NAESB

19. 19 North American Energy Standards Board How to Participate  Join the distribution lists on the NAESB Web Site : www.naesb.org  All meetings are open and accessible via telephone  All materials are posted on the NAESB web site  Your comments are welcome and will be posted on any NAESB standards issues  If you are not a member, but are interested in membership, please call the NAESB Office: 713-356-0060

20. 20 North American Energy Standards Board Contact Information  Web Site : www.naesb.org  Quadrant Procedures, Bylaws, Certificate for NAESB  Calendar of Meetings, Agendas, Work Papers, Comments  Board minutes, EC Minutes, How to order Transcripts  Standards and Related Work Products  Membership Information  Contact Information  Phone – 713-356-0060  Fax – 713-356-0067  Email – naesb@naesb.orgnaesb@naesb.org  For further information on the organization, please contact Veronica Thomason (713-356-0060, naesb@naesb.org)

21. 21 North American Energy Standards Board How To Monitor Activities Monthly Update Calls: http://www.naesb.org/monthly_update.asp Monthly Update Calls: http://www.naesb.org/monthly_update.asp http://www.naesb.org/monthly_update.asp Review updated annual plans quarterly: http://www.naesb.org/materials/gov.asp Review updated annual plans quarterly: http://www.naesb.org/materials/gov.asp http://www.naesb.org/materials/gov.asp Review Board minutes quarterly: http://www.naesb.org/weq/weq_bod.asp Review Board minutes quarterly: http://www.naesb.org/weq/weq_bod.aspwww.naesb.org/weq/weq_bod.asp Sign up for email distribution notices on subcommittees of interest: http://www.naesb.org/listserv/mail/mail_register.cfm Sign up for email distribution notices on subcommittees of interest: http://www.naesb.org/listserv/mail/mail_register.cfm http://www.naesb.org/listserv/mail/mail_register.cfm Call NAESB office (713-356-0060, naesb@naesb.org) Call NAESB office (713-356-0060, naesb@naesb.org)naesb@naesb.org