1. January 21, 2008 TPTF 168 Hour Test Initial Approach Discussion

2. 2 2 TPTF1/21/2008 Agenda Review applicable Nodal Transition Plan section Review Entry criteria Review 168 Hour Test timeline Review ERCOT and MP involvement Approach to handle Significant

3. 3 3 TPTF1/21/2008 ERCOT Nodal Transition Plan 5.4.9 168-Hour Test and Trial Real Time Settlement (1)ERCOT shall develop real time dispatch market readiness criteria that will include a systems stability test. The systems stability test generally will require the real time systems performing SCADA, Network Security Analysis, Transmission Constraint Management, SCED, RUC and LFC to operate without significant error for at least 168 continuous hours. On detection of any significant error of the operations systems (non-settlement), ERCOT and the Vendor will correct the problem and re-start the 168-Hour Test. (2) ERCOT shall provide QSEs with test settlement statements for each Operating Day of the 168 Hour Test as defined in the detailed test plan. The test settlement statements for each Operating Day will use calculated dispatches and LMPs from SCED and actual meter data simulating actual settlement statements for real-time operations. QSEs shall review the test settlement statements for errors and provide feedback to ERCOT for resolution. ERCOT will work with Market Participants to resolve any settlements issues identified during the 168- Hour Test prior to beginning Real-Time Operations.

4. 4 4 TPTF1/21/2008 EDS 1,2, 3 and 4 will be completed before starting the 168 Hour Test All sections under the “System Testing and Nodal Market Implementation Track” of the ERCOT Nodal Transition Plan will be completed before starting the 168 hour test, with the exception of  5.4.9168-Hour Test and Trial Real Time Settlement  5.4.10Transmission Element Outages  5.4.11Real Time Operation and Settlement NM Verification SCED & LMP Posting for 6 months ICCP / P2P SE Tuning E1 R2 E2 R3 E2 R4 E3 R5 E3 R6 LFC Testing E3 R7 CRR Testing E4 R9 CMM, DAM & RT Settlements, Ver Costs & Disputes JanFebMarAprMayJunJulAugSepOct NovDec DAM, SASM & RUC execution, DAM Stability Test, EECP, DST, Compliance E4 R8 168 H. T. EDS 1 EDS 2 EDS 3 EDS 4 Today

5. 5 5 TPTF1/21/2008 Entry Criteria for the 168 hour test  No Severity 1 or Severity 2 defects in Nodal applications  All functionality supporting Nodal protocols has been deployed to the EDS environment*  Completion of all EDS exit criteria  Completion of all EDS 1, 2, 3 and 4 Readiness Metrics  MPs have verified data in ERCOT systems * A few non-shadow settlement extracts may be delivered after Sept 1

6. 6 6 TPTF1/21/2008 PRR 727 governs the time available for completing the 168 Hour Test  No part of the nodal market design may start operation until all the Market Readiness Criteria for that part of the nodal market design have been met  Certification that all Market Readiness Criteria have been met must be made at least by each of the following: the TPTF, TAC, ERCOT Staff and the ERCOT Board.  Upon such certification, ERCOT shall issue two Notices…the first Notice no less than thirty days prior to the effective date or retirement date...and the second Notice no less than ten days prior... TACOct 2, 2008This implies that we have only 32 days to succesfully complete 168 hour test ERCOT BODOct 21, 2008 TPTFTBD CommitteeLast meeting prior to 10/31Comments SeptOctNov Start 168 Hour Test 10/31 First Market Notice 11/21 Second Market Notice 10/2 TAC Meeting 10/21 ERCOT BoD meeting 12/1: RTM Go-Live

7. 7 7 TPTF1/21/2008 DRAFT 168 Hour Test timeline – shows we need more than 168 hours for completing the test Real Time Market Timeline Operating Day 1 Operating Day 2 Operating Day 3 Operating Day 4 Operating Day 5 Operating Day 6 Operatin g Day 7 Operatin g Day 8 DAM Timeline DAM for Day 1 DAM for Day 2 DAM for Day 3 DAM for Day 4 DAM for Day 5 DAM for Day 6 DAM for Day 7 DAM for Day 8 DAM for Day 9 RTM Settlement Stmt Stmt for Day 1 Stmt for Day 2 Stmt for Days 3, 4, 5 Stmt for Day 6, 7 DAM Settlement Stmt Stmt for Day 1 Stmt for Day 2 Stmt for Days 3, 4, 5 Stmt for Day 6, 7 Sep 1, 2008Sep 2, 2008Sep 3, 2008 Sep 4, 2008 Sep 5, 2008 Sep 6, 2008 Sep 7, 2008 Sep 8, 2008 Sep 9, 2008  Best case (assuming no critical errors occur) the 168 Hour Test commences on September 1 st and complete September 8 th at Midnight.  Control of the ERCOT grid during the 168 hour test?  ERCOT prefers the grid to be controlled by Nodal throughout the duration of the test  Between completion of the Test and Nodal Go-live Zonal and Nodal will operate in parallel  Critical functions such as LFC and SCED would be regression tested between the 168 hour test completion and Nodal Go-Live as part of Go-Live Sequence 168 Hour test complete EDS 4 Complete Settlement timeline to be confirmed

8. 8 8 TPTF1/21/2008 Test Nodal Settlements Statements during the 168 hour test (non-binding)  For each successful operating day, RTM Initial Statement shall be published as soon as practical  Snapshot of metering data shall be used for generating test settlement statements during the 168 hour test  For each successful operating day, ERCOT shall publish DAM Statements and Invoices on the 2 nd business day after the operating day  Statements and Invoices will be available for download on the MIS Certified area  QSEs should respond within 48 hours of invoice or statement posting with errors or feedback

9. 9 9 TPTF1/21/2008 CRR Auction will be excluded from 168 hour test  CRR ownership information for DAM can be stubbed using the results from CRR EDS  Alternately, a test CRR auction would be run at least seven days prior to the start of 168 hour test for generating data needed for DAM

10. 10 TPTF1/21/2008 ERCOT involvement  Staff from ERCOT operations (business and IT) will execute the test  Staffing will be sufficient to meet business operations and the IT production service level agreement  Management of daily activities will occur through the ERCOT chain of command  All defined daily tasks for Nodal will be executed  The Nodal Program will setup a daily conference call with all MPs to go through issues  The Nodal Program will only coordinate issue resolution if significant errors occur

11. 11 TPTF1/21/2008 Market Participant involvement  Staff from the MPs operations (business and IT) will execute the test  Staffing will be sufficient to meet business operations and the production service level agreement  Management of daily activities will occur through the MP’s chain of command  All protocol defined interactions between MPs and ERCOT will be performed according to the timeline  Data submissions will reasonably resemble post Go-live submissions  ICCP must be continually updated by the MPs  The 168 hour test is the final Qualification test and all MPs are required to participate during the entire test

12. 12 TPTF1/21/2008 Interpretation of the term “significant error”  Severity 1 defects (Data loss / Critical error)  Severity 2 defects (Loss of functionality without workaround)  ERCOT will nominate a Test Director, with support from business and IT, who is responsible for deciding the severity of an error and for resetting the 168 hour clock Upon detection of a significant error, ERCOT shall  Halt the 168 hour test  Work with the vendors / internally to fix all issues that have been identified  Provide 2 hour notice to MPs before re-starting the 168 hour clock The EDS environment will continue to be operational with functions not affected, even when the 168 hour clock has been stopped