1. http://nodal.ercot.com 1 Market Trials DAM/RUC/SASM Weekly Update August 6, 2010

2. http://nodal.ercot.com 2 Antitrust Admonition ANTITRUST ADMONITION ERCOT strictly prohibits Market Participants and their employees who are participating in ERCOT activities from using their participation in ERCOT activities as a forum for engaging in practices or communications that violate the antitrust laws. The ERCOT Board has approved guidelines for members of ERCOT Committees, Subcommittees and Working Groups to be reviewed and followed by each Market Participant attending ERCOT meetings. If you have not received a copy of these Guidelines, copies are available at the Client Relations desk. Please remember your ongoing obligation to comply with all applicable laws, including the antitrust laws. DISCLAIMER All presentations and materials submitted by Market Participants or any other Entity to ERCOT staff for this meeting are received and posted with the acknowledgement that the information will be considered public in accordance with the ERCOT Websites Content Management Operating Procedure.

3. http://nodal.ercot.com 3 Agenda DAM/ RUC/SASM summary QSE Activities for Next Week General Reminders/Updates Environment Report –Outages –Known Issues Special Topic Question and Answers / General Discussion Appendix ERCOT asks that Market Participants log into the WebEx session using their company name and then their name. This will allow ERCOT to take roll-call offline.

4. Market Trials 2010 Roadmap http://nodal.ercot.com 4

5. http://nodal.ercot.com 5 Submission Overview for Tuesday August 3 DAM submission overview 211 QSEs participated for Op Day 8/4 Energy Bids in the range of 29,610 to 50,475 MW per hour Cleared 18,576 to 27,247 MW energy per hr Cleared 14,179 to 18,153 PTP bids per hr Four major Load Zone prices ranged from $26.99 to $500.00 Energy cleared 41.2% to 58.9% of the forecasted load.

6. http://nodal.ercot.com 6 Submission Overview for Wednesday August 4 Submission overview 201 QSEs participated for Op Day 8/5 Energy Bids in the range of 39,754 to 75,307 MW per hour Cleared 25,759 to 39,314 MW energy per hr Cleared 12,650 to 15,806 PTP bids per hr Four major Load Zone prices ranged from $30.19 to $500.00. Energy cleared 59.6% to 76.3% of the forecasted load.

7. http://nodal.ercot.com 7 RUC Execution Overview for this week RUC overview for the week:

8. http://nodal.ercot.com 8 Next Week’s Activities Op Days are 24X7 starting at 0800 8/9 DAM executing everyday No guardrails - Bids/offers should be reasonable COPs should reflect zonal prior to DRUC run. We are requesting COP updates as a result of the nodal RUC processes. Operational Scenarios: –VDI Commit –VDI RUC Cancel Week 15 Note: Dates are DAM execution daysEveryday Objective Network Constraints Included DAM 7x week DAM submissions No guardrails COP Updates Reflect zonal/Nodal DRUC W/ each DAM HRUC 24X7 WRUC 2 x week SASM As needed Op Scenarios VDI Commit VDI RUC Cancel

9. http://nodal.ercot.com 9 Next Week’s Activities DRUC executing after DAM WRUC, HRUC and SASM executing on 8/9-8/16 HRUC and SASM –WRUC executing on Monday and Wednesday –HRUC will be executed 24X7 –SASM will be opened if needed based on system conditions Week 15 Note: Dates are DAM execution daysEveryday Objective Network Constraints Included DAM 7x week DAM submissions No guardrails COP Updates Reflect zonal/Nodal DRUC W/ each DAM HRUC 24X7 WRUC 2 x week SASM As needed Op Scenarios VDI Commit VDI RUC Cancel

10. http://nodal.ercot.com 10 Week of Activities 8/16 – 8/20 Next week – Op Days are 8/17 – 8/21 DAM executing on 8/16 – 8/20 No guardrails - Bids/offers should be reasonable COPs should reflect zonal prior to DRUC run. We are requesting COP updates as a result of the nodal RUC processes. Operational Scenarios: –AS Insufficiency –De-Commits Week 16 Note: Dates are DAM execution days8/16 – 8/20 Objective Network Constraints Included DAM 5x week DAM submissions No guardrails COP Updates Reflect zonal DRUC W/ each DAM HRUC Limited WRUC 2 x week SASM As needed Op Scenarios AS Insufficiency De-Commits

11. http://nodal.ercot.com 11 Week of Activities 8/16 – 8/20 DRUC executing after DAM WRUC, HRUC and SASM executing on 8/16-8/20 HRUC and SASM –WRUC executing on Monday and Wednesday –HRUC will be executed at 1 pm (target Operating Hours will be the balance of the Op Day) May be run for additional, non-supported hours –SASM will be opened for the AS insufficiency operational scenario Week 16 Note: Dates are DAM execution days8/16 – 8/20 Objective Network Constraints Included DAM 5x week DAM submissions No guardrails COP Updates Reflect zonal DRUC W/ each DAM HRUC Limited WRUC 2 x week SASM As needed Op Scenarios AS Insufficiency De-Commits

12. http://nodal.ercot.com 12 August Scenarios Scenarios to run in August VDI Commitments VDI RUC cancel AS insufficiency De-commitments RUC Simulation Additional Scenarios are under discussion……..

13. http://nodal.ercot.com 13 General Reminders/Updates Network Model Update –An updated settlement points and MP short name list was posted for the 8/3 load at http://nodal.ercot.com/readiness/markettrials/index.html http://nodal.ercot.com/readiness/markettrials/index.html –Next scheduled load will be installed 8/18. Reminder regarding External Interfaces Specification v1.19N –Posted at http://nodal.ercot.com/readiness/sandbox/index.htmlhttp://nodal.ercot.com/readiness/sandbox/index.html –Delivered 7/22 The next planned release for the MMS has been moved until 8/6/10 ERCOT will be continuing to run WRUC –Please be aware that WRUC requires valid COP data seven days out in order to have a good solution during the study period ERCOT will continue to announce on the Market Call the operating days for the next week –Less operating days during LFC test weeks ERCOT posted the contingency lists for DSV20 and DSV21 –http://nodal.ercot.com/readiness/markettrials/index.html

14. Other topics – “e” factors NOTE: in conjunction with “e” factors being set on August 6, other variables will be set consistent with how variables will be set after the initial 60 days of the market. That is: d = 0.85 z = 0.50 a = 0.50u = 0.95 b = 0.45 t = 0.50 y = 0.45 Market Trials - Friday call

15. http://nodal.ercot.com 15 Day-to-day operations summary: Planned / Unplanned Outages of Market Trials Planned Outages 08/06/2010 1:00 P.M. – 08/06/2010 6:00 P.M –Application patch deployments are planned in the Nodal production environment and will affect services rendered by the following systems: »Market Manager UI »EWS ( Web Services) »MMS »EMS 08/08/2010 9:00 A.M. – 08/08/2010 5:00 P.M. –MIS Portal will be intermittently down during the day for system upgrades. This will affect access to reports as well as links for launching the various Nodal applications. Unplanned Outages N/A.

16. Environment Report-Known Issues Full DAM/RUC/SASM known issues list will post every Friday night at http://nodal.ercot.com/readiness/markettrials/dam/index.html http://nodal.ercot.com/readiness/markettrials/dam/index.html New DAM/RUC/SASM known issues –None http://nodal.ercot.com 16

17. http://nodal.ercot.com 17 Q&A Q&A / Open Forum

18. Appendix –AS Info for the week –Pre- and post-DAM reports –Special Topics http://nodal.ercot.com 18

19. http://nodal.ercot.com 19 Submission Overview for August 4

20. http://nodal.ercot.com 20 Submission Overview for August 5

21. Other Note: All transactions will be supported. Trade submission and confirmation (Energy, Capacity and AS Trades) may be exercised at this time. DAM notifications will be active. Phase 2 Validation process will be active and supported. QSE transactions that do not follow the guidelines are subject to cancellation at ERCOT’s discretion. ERCOT may run DAM on non-supported days. No QSE participation is requested, and ERCOT staff will not be available to answer questions regarding the outputs of these non-supported processes. CRR information from the market trials auction will be integrated into the market system. CRR Offers (by NOIEs) must contain CRR IDs from this auction in order to be valid. http://nodal.ercot.com 21

22. http://nodal.ercot.com 22 Report Postings Posted by 6 am: Ancillary Services (AS) Plan Load Ratio Shares (these will be static based on Zonal production data as of October 16, 2009) * AS Obligations * Wind Generation Resource Power Potential (WGRPP) forecast * and Aggregated WGRPP forecast List of all Settlement Points and the mapping to Electrical Buses Load forecasts for ERCOT system, Weather Zones and Load Zones Load forecast distribution factors Distribution Loss Factors and forecasted Transmission Loss Factors Weather assumptions * Denotes MIS Certified reports

23. http://nodal.ercot.com 23 Report Postings Posted after each DAM: Awards (AS Offers, Energy Offers, DAM Energy-Only Offers, DAM Energy Bids, CRR Offers, and PTP Obligation Bids) * DAM Clearing Price for Ancillary Services (MCPC) Day-Ahead hourly Settlement Point Prices (SPPs) Day-Ahead hourly Locational Marginal Prices (LMPs) Shadow Prices Quantity of AS Offers Aggregated AS Offer Curve Total quantity of energy (in MWh) bought and sold in DAM See DAM Handbook for a list of all DAM/RUC/SASM reports available starting in Phase 4.0 - http://nodal.ercot.com/readiness/markettrials/dam/index.html. See MIS Handbook for a comprehensive list of reports available - http://nodal.ercot.com/readiness/markettrials/mis/index.html.http://nodal.ercot.com/readiness/markettrials/dam/index.html http://nodal.ercot.com/readiness/markettrials/mis/index.html * Denotes MIS Certified reports

24. Special Topics Phase 2 Validation reports and process Phase 2 validation re-evaluates all submitted transactions at 7 am in the day-ahead with updated information, such as AS Obligation, CRR ownership, credit limits, etc. If there is a validation error, ERCOT will cancel the transaction We send a notification that a Phase 2 report is available for a particular transactions type, and notification containing the cancellation for the transaction. You can query for the Phase 2 report via web service or on the Reports page of the Market Manager in order to view the reason for the cancellation. Correct and resubmit prior to 10 am. Note that submissions are locked out during the Phase 2 process, which is currently taking about 10 minutes to complete. http://nodal.ercot.com 24

25. Special Topics Day-Ahead Self Commitment DAM clearing engine treats your TPO differently if you submit Startup and Minimum Energy (SU/ME) costs as $0 vs. NULL If you submit with SU/ME as $0, DAM engine treats this as a normal offer where the QSE is not requesting SU/ME to be covered. HSL/LSL constraints will be respected. Also, if you are selected for an online Ancillary Service, you will also be awarded at least LSL on your offer curve. If you submit with SU/ME as NULL, DAM engine is signaled to ignore the HSL/LSL constraints for the resource. In this scenario, the offer curve submitted will start at 0 MW and go to the max MW quantity desired – again, DAM will ignore LSL/HSL constraints. If the offer curve submitted doesn’t start at 0 MW, it will be extended to 0 MW by DAM. If the resource is selected for Ancillary Services, no requirement to also award TPO at LSL (since no LSL constraint honored in this case). http://nodal.ercot.com 25

26. Special Topics Day-Ahead Self Commitment The purpose of the NULL: It allows a QSE to use part of a Resource to serve its own load, and then offer in the rest to the DAM and enable the offer to be co- optimized with its AS Offer. Example: A Resource has 100 MW LSL and 400 MW HSL, and the QSE has already committed 300 MW of the Resource through some other mechanism. The QSE wishes to offer the remaining 100 MW, which would otherwise be ignored due to the 100 MW LSL. Then going into real-time, so QSEs will need to update their TPO to cover the full capacity of the resource, from LSL to HSL, rather than from 0 MW. TPOs for real-time should always cover the entire capacity of the resource to avoid the proxy curve creation. To do the TPO update if the resource is awarded in the DAM, the QSE must provide a reason code, which is DSCM. This functionality came about due to TPTF subgroup on the issue. It has not yet been added to the protocols but will during our protocol traceability/cleanup effort. http://nodal.ercot.com 26

27. Special Topics Bid/Offer efficiencies ERCOT has identified efficiencies in Bid/Offers submission with regard to the format of submission This applies to all transaction that use a Bid ID or an Offer ID (Energy Only Offers, Energy Only Bids, PTP Obligation Bids, and CRR Offers) Preference is for QSEs to submit the same Bid/Offer ID for each hour in the submission, versus submitting a different Bid/Offer ID for every hour. The market system treats the submission the exact same way, regardless of which format is used Using the preferred format will optimize DAM system performance For xml examples detailing this issue, please view a document that will be posted along with this presentation on the calendar page at http://www.ercot.com/calendar/2010/04/20100409-MT http://www.ercot.com/calendar/2010/04/20100409-MT This was discussed at NATF 4/6, we send an email to the nodal technical contacts that we have on file for all QSEs, and we will add it to the External Interfaces Specification http://nodal.ercot.com 27

28. Special Topics JOUs and COP consistencies In DAM, if the different owners of the jointly-owned unit have submitted conflicting COP statuses for the current day, online statuses will overwrite offline statuses when DAM is determining the initial condition of the unit (i.e., is the unit online or offline at the start of the next operating day). In RUC, if the different owners have conflicting COP statuses for the next operating day: –If any owner has OUT status for any hour then the unit is considered OUT. –If all owners have submitted a COP, and at least one of them has an online status in a particular hour then the resource status for the unit is online (unless any owner has OUT) http://nodal.ercot.com 28

29. http://nodal.ercot.com 29 FAQ Data Center LocationInternet IPWAN IP Taylor 66.128.17.125 66.128.17.128 192.168.172.126 192.168.172.128 Austin66.128.16.125192.168.175.115 EWS Notification Delivery & Network Firewall Configuration –EWS Notification deliveries are currently originating from the following ERCOT servers listed below. To meet system demand and scalability requirements, we will be adding additional servers to this mix. To prevent any service disruptions, as a result of addition of new servers, we recommend your network firewall rules be configured to allow traffic based on address range as opposed limiting them to specific IPs. Current IPs in Play: Data Center LocationInternet IP RangeWAN IP Range Taylor66.128.17.0 - 255192.168.172.0 - 255 Austin66.128.16.0 - 255192.168.175.0 - 255 Recommended IP Ranges :

30. Supplemental Materials Slide 30 Reference and DescriptionLocationVersion External Interfaces Specification http://nodal.ercot.com/readiness/sandbox/index.html1.19 Explanation of Market Submission Items http://nodal.ercot.com/readiness/markettrials/connectivity/in dex.html 0.26 Market Manager User Guidehttp://nodal.ercot.com/readiness/markettrials/connectivity/in dex.html 0.06 MMS Requirementshttp://nodal.ercot.com/docs/pd/mms/index.html#reqVarious Market Connectivity Handbookhttp://nodal.ercot.com/readiness/markettrials/connectivity/in dex.html 0.97 DAM/RUC Known Issues Listhttp://nodal.ercot.com/readiness/markettrials/dam/index.ht ml N/A Web Services XSDshttp://nodal.ercot.com/readiness/sandbox/index.html1.3.19 Sample Reports, Extracts, and DDLs http://nodal.ercot.com/readiness/reports/index.htmlVarious DAM ERCOT Operating Procedures http://nodal.ercot.com/readiness/markettrials/dam/index.ht ml 2.0 DRUC/WRUC ERCOT Operating Procedures http://nodal.ercot.com/readiness/markettrials/dam/index.ht ml 0.2 http://nodal.ercot.com 30

31. Special Topic – Jointly Owned Units JOUs are modeled as a single physical unit –DAM uses the separate logical resources when evaluating energy and ancillary services, but Network Security Monitoring (NSM), which is a sub-process of DAM, must consider the physical unit. –http://nodal.ercot.com/docs/pd/ida/wp/sgrm/IDA041_White_Paper_for_Split_Generation_Resource_M odeling_v1.dochttp://nodal.ercot.com/docs/pd/ida/wp/sgrm/IDA041_White_Paper_for_Split_Generation_Resource_M odeling_v1.doc JOUs offering into DAM –Owners offer their share into the DAM separately, but the physical unit must be committed together –All owners have to offer in the unit (energy or AS) to the DAM or else it cannot be committed to any owner (one exception for a self-commitment scenario described below). DAM must make a commitment decision about the physical unit, which it cannot do without offers from all the owners. –Self-commitment examples (assume three owners) – remember that self-committing by submitting Startup and Minimum Energy Costs as ‘NULL’ (leaving them out of the submission altogether rather than submitting zeroes) signals the DAM software that it doesn’t need to make a commitment decision and to ignore resource constraints. If two owners self-commit (startup/minimum energy costs are NULL) and the other submits nothing, the unit can be awarded without making a commitment decision. If one owner self-commits, another submits a TPO with startup/minimum energy costs, and the third submits nothing, the unit cannot be awarded If one owner self-commits, and the other two submit TPOs with startup/minimum energy costs, the unit can be awarded after making a commitment decision based on the resource constraints and the submitted startup/minimum energy costs. –Note that if self-committed, do not submit an OFFNS offer. That offer negates the self-commitment and the DAM software will not consider it as a self-committed resource (since the QSE is requesting ERCOT to evaluate the unit offline) http://nodal.ercot.com 31