1. Lead from the front Texas Nodal http://nodal.ercot.com 1 Texas Nodal Startup Eligibility Day-Ahead and RUC Make-Whole Settlements ERCOT Settlements & Billing 08/08/2006

2. Lead from the front Texas Nodal http://nodal.ercot.com 2 Day-Ahead vs. RUC Eligibility (PR 4.6.2.3) Day-Ahead Considers…(PR 5.6.2) RUC Considers… Breaker Status in the Adjustment Period Breaker Status in Commitment PeriodBreaker Status in the Commitment Period Previous Operating Day RUC and DAM Commitments that exist in the Adjustment Period RUC and QSE Commitment Periods immediately before or after the Commitment Period and the time at which each Commitment occurred. An Adjustment Period that starts at 1800 in DA and ends one hour before the start of the Commitment Period. An Adjustment Period that starts 6 hours before the start of the Commitment Period and ends one hour before the start of the Commitment Period.

3. Lead from the front Texas Nodal http://nodal.ercot.com 3  What is the basic intention of the eligibility test? Suggestion: The intention of the eligibility test is to determine the commitment that initiated the startup.  DAM Commitments When/why do awarded Three Part Supply Energy Offers become DAM Commitments? For purposes of RUC settlement, is a DAM Commitment a “QSE Commitment”?  QSE Commitments How can RUC identify a QSE Commitment if it can be based on both a DAM Commitment or a QSE just choosing to keep the Resource online? Determine Eligibility

4. Lead from the front Texas Nodal http://nodal.ercot.com 4  DAM: Apply eligibility to the entire DA Make-Whole Payment (the Protocols appear to say this), Apply eligibility to just the startup portion of the guaranteed cost, or Determine eligibility separately for startup and minimum energy and apply both to the guaranteed cost?  RUC: Apply eligibility to the startup portion of the guaranteed cost. The Resource must generate in order to get minimum energy. Apply Eligibility

5. Lead from the front Texas Nodal http://nodal.ercot.com 5 Approaches to Eligibility  Approach 1: Consider breaker status (resource status) Was the Resource offline for the required time in the Adjustment Period? Was the Resource online for the required time in the Commitment Period?  Approach 2: Consider all of the Resource’s commitments and the timing of each commitment If the intention is to determine the commitment that initiated the startup, this approach satisfies this by considering all of the commitments and determining which commitment actually “initiated” the startup. RUC eligibility criteria currently require consideration of all of the commitments, and the timing of each commitment. Determines eligibility for both DAM and RUC at the same time Consider breaker status (offline and online requirements)

6. Lead from the front Texas Nodal http://nodal.ercot.com 6 Example Scenarios Approach 1: Approach 2: Eligible Not eligible (if in fact it is considered a DAM Commitment and is subject to this eligibility test) Not eligible for startup cost, or not eligible for startup and minimum energy cost? Eligible

7. Lead from the front Texas Nodal http://nodal.ercot.com 7 Example Scenarios Approach 1: Approach 2: Eligible Not eligible (if in fact it is considered a DAM Commitment and is subject to this eligibility test) Not eligible for startup cost, or not eligible for startup and minimum energy cost? Eligible

8. Lead from the front Texas Nodal http://nodal.ercot.com 8 Example Scenarios Example 1 Example 2 Example 3 Example 4

9. Lead from the front Texas Nodal http://nodal.ercot.com 9 PR 4.6.2.3 – Day-Ahead Make-Whole Eligibility (1) A QSE that has a Three-Part Supply Offer cleared in the DAM is eligible for a Day-Ahead Make- Whole Payment, if, for the Resource associated with the offer: (a)The generator’s breakers were open for at least five minutes during the Adjustment Period for the beginning of the DAM commitment; (b)The generator’s breakers were closed for at least one minute during the DAM commitment period; and (c)The breaker open-close sequence for which the QSE is eligible for startup cost compensation in the DAM or RUC for the previous Operating Day does not qualify in meeting the criteria in (a) and (b) above.

10. Lead from the front Texas Nodal http://nodal.ercot.com 10 PR 4.6.2.3 – Day-Ahead Make-Whole Eligibility (1)For purposes of this Section 5.6.2, all contiguous RUC-Committed Hours are considered as one RUC instruction. For each Resource, only one Startup Cost is eligible per block of contiguous RUC-Committed Hours. (2)For a Resource’s Startup Costs in the Operating Day, per RUC instruction, to be included in the calculation of the RUC Guarantee for that Operating Day, all the criteria below must be met: (a)When the RUC instruction is given, the Resource must not be QSE-committed in the Settlement Interval immediately before the designated start hour or after the last hour of the RUC instruction; (b)A later RUC instruction or QSE commitment must not connect the designated start hour or last hour of the RUC instruction to a block of QSE-Committed Intervals that was QSE- committed before the RUC instruction was given; (c)The generation breakers must have been open for at least five minutes during the six hours preceding the first RUC-Committed Hour; and (d)The generation breakers must have been closed for at least one minute during the RUC commitment period or after the determined five-minute open breaker in the six hours preceding the first RUC-Committed Hour.