1. 1 TAC Report to the ERCOT Board June 21, 2005

2. 2 TAC Summary 8 PRRS 8 PRRS Withdrawal of PRR 552 Withdrawal of PRR 552 Potomac Recommendations Potomac Recommendations REP Default Under LSE Agreement REP Default Under LSE Agreement

3. 3 PRR 552 – Appropriate Use of Relaxed Balanced Schedules Submitted by Coral (IPM) Submitted by Coral (IPM) Remanded by Board to TAC Remanded by Board to TAC Remanded by TAC to PRS Remanded by TAC to PRS Withdrawn by sponsor after remand Withdrawn by sponsor after remand No motion to reject withdrawal raised at PRS No motion to reject withdrawal raised at PRS TAC unanimously approved withdrawal TAC unanimously approved withdrawal

4. 4 PRR 555 – Modify Number of Sub- QSEs a Single Entity Can Partition Removes limit on the number of sub-QSEs an entity may have Removes limit on the number of sub-QSEs an entity may have ERCOT has authority to determine the implementation plan for new sub-QSEs ERCOT has authority to determine the implementation plan for new sub-QSEs Benefit: More granular accounting capability for QSEs Benefit: More granular accounting capability for QSEs Amended by ERCOT, PSEG, Calpine & PRS Amended by ERCOT, PSEG, Calpine & PRS PRS recommended approval with 4 nay votes and 1 abstention- all market segments were present PRS recommended approval with 4 nay votes and 1 abstention- all market segments were present TAC unanimously recommends approval – all market segments present TAC unanimously recommends approval – all market segments present ERCOT Staff to report to TAC if costs of adding sub-QSEs becomes excessive ERCOT Staff to report to TAC if costs of adding sub-QSEs becomes excessive Proposed effective date is July 1, 2005 Proposed effective date is July 1, 2005

5. 5 PRR 555 – Modify Number of Sub- QSEs a Single Entity Can Partition Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Case-by-case impact

6. 6 PRR 564 – OOME Definition PRR submitted by ANP (Independent Generator) PRR submitted by ANP (Independent Generator) Resource owners directly impacted by the actuation of a Special Protection System (SPS) Resource owners directly impacted by the actuation of a Special Protection System (SPS) Benefit: Automates settlement process by eliminating dispute filings by generators Benefit: Automates settlement process by eliminating dispute filings by generators PRS recommended approval with 3 nay votes and 3 abstentions - all market segments present PRS recommended approval with 3 nay votes and 3 abstentions - all market segments present TAC recommends approval with 5 abstentions from consumer segment TAC recommends approval with 5 abstentions from consumer segment Concern expressed that this may expand OOM (down) payments – discussion on record that this would not expand OOM (down) payments Concern expressed that this may expand OOM (down) payments – discussion on record that this would not expand OOM (down) payments Proposed effective date is July 1, 2005 Proposed effective date is July 1, 2005

7. 7 PRR 564 – OOME Definition Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact Increased VDI usage Requires verbal confirmations Increased TSP communication

8. 8 PRR 572 – Weather Sensitivity Classification PRR submitted by Reliant Energy (IPM) for Profile Working GroupPRR submitted by Reliant Energy (IPM) for Profile Working Group Establishes procedures to determine weather sensitivity classifications when an ESI ID is inactive or de-energizedEstablishes procedures to determine weather sensitivity classifications when an ESI ID is inactive or de-energized Benefit: Improves ERCOT settlement accuracyBenefit: Improves ERCOT settlement accuracy PRS recommended approval unanimously -all market segments were presentPRS recommended approval unanimously -all market segments were present TAC unanimously recommends approval – all market segments were presentTAC unanimously recommends approval – all market segments were present Proposed effective date is upon system implementationProposed effective date is upon system implementation

9. 9 PRR 572 – Weather Sensitivity Classification Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

10. 10 PRR 575 – Mandatory Down Balancing Ramp Rate PRR submitted by ERCOT PRR submitted by ERCOT Specifies that the Mandatory DN Balancing amount should be deployable in one hour Specifies that the Mandatory DN Balancing amount should be deployable in one hour Benefit: Increase system reliability Benefit: Increase system reliability PRS recommended approval of PRR as amended by PRS with 2 nay votes from Power Market segment and 6 abstentions from IPP and IOU segment - all market segments were present PRS recommended approval of PRR as amended by PRS with 2 nay votes from Power Market segment and 6 abstentions from IPP and IOU segment - all market segments were present TAC unanimously recommends approval – all market segments were present TAC unanimously recommends approval – all market segments were present Proposed effective date is July 1, 2005 Proposed effective date is July 1, 2005

11. 11 PRR 575 – Mandatory Down Balancing Ramp Rate Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

12. 12 PRR 576 – Disclosure of OOME, OOMC and RMR Service PRR submitted by ERCOT PRR submitted by ERCOT Changes posting from 17 Business Days to the Business Day after the Initial Statement and adds a definition for “Off-Line” Changes posting from 17 Business Days to the Business Day after the Initial Statement and adds a definition for “Off-Line” Benefit: Aligns posting requirement with data availability – enables automation of posting Benefit: Aligns posting requirement with data availability – enables automation of posting PRS recommended approval with one nay vote from PM segment - all market segments were present PRS recommended approval with one nay vote from PM segment - all market segments were present TAC unanimously recommends approval – all market segments were present TAC unanimously recommends approval – all market segments were present Proposed effective date is July 1, 2005 Proposed effective date is July 1, 2005

13. 13 PRR 576 – Disclosure of OOME, OOMC and RMR Service Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

14. 14 PRR 587 – Intra-year Modification of CRE PRR submitted by ERCOT PRR submitted by ERCOT Implements Patton #4 – Allows ERCOT to identify and implement CRE list changes anytime within a year – TAC review of recommendation Implements Patton #4 – Allows ERCOT to identify and implement CRE list changes anytime within a year – TAC review of recommendation Benefit: Provides greater accuracy in managing congestion in ERCOT Benefit: Provides greater accuracy in managing congestion in ERCOT Amended by ERCOT, CMWG & PRS Amended by ERCOT, CMWG & PRS PRS recommended approval unanimously -all market segments were present PRS recommended approval unanimously -all market segments were present TAC unanimously recommends approval – all market segments were present TAC unanimously recommends approval – all market segments were present Proposed effective date is July 1, 2005 Proposed effective date is July 1, 2005

15. 15 PRR 587 – Intra-year Modification of CRE Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

16. 16 PRR 589 – CSC & Zone Determination PRR submitted by ERCOT PRR submitted by ERCOT Implements Patton #1—strengthens ERCOT’s role in CSC & zone determination process – also eliminates BOD approval of NOIE exemptions from CSC determination Implements Patton #1—strengthens ERCOT’s role in CSC & zone determination process – also eliminates BOD approval of NOIE exemptions from CSC determination Benefit: Clarifies ERCOT’s role in process Benefit: Clarifies ERCOT’s role in process PRS recommended approval with 1 nay vote from Consumer segment and 1 abstention from PM segment - all market segments were present PRS recommended approval with 1 nay vote from Consumer segment and 1 abstention from PM segment - all market segments were present TAC unanimously recommends approval – all market segments were present TAC unanimously recommends approval – all market segments were present Proposed effective date is July 1, 2005 Proposed effective date is July 1, 2005

17. 17 PRR 589 – CSC & Zone Determination Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

18. 18 PRR 592 – Modify Shift Factor Calculation to Exclude Fixed Output Generators Submitted by ERCOT Submitted by ERCOT Implements Patton #3 – excludes fixed output generators from monthly shift factor calculations Implements Patton #3 – excludes fixed output generators from monthly shift factor calculations Benefit: Indeterminate – may financially impact some market participants positively and other negatively Benefit: Indeterminate – may financially impact some market participants positively and other negatively PRS recommended approval with 2 abstentions from IPP and PM segment - all market segments were present PRS recommended approval with 2 abstentions from IPP and PM segment - all market segments were present TAC unanimously recommends approval – all market segments were present TAC unanimously recommends approval – all market segments were present Proposed effective date is November 1, 2005 in accordance with the normal CSC/CRE process Proposed effective date is November 1, 2005 in accordance with the normal CSC/CRE process

19. 19 PRR 592 – Modify Shift Factor Calculation to Exclude Fixed Output Generators Impact Analysis Item Reviewed Description NoImpact Credit Monitoring/Liability Budget Staffing Computer Systems Business Functions Grid Operations Impact

20. 20 Recommended TAC Actions Approval Approval PRR 555 – Modify Number of Sub-QSEs/Entity (unanimous)PRR 555 – Modify Number of Sub-QSEs/Entity (unanimous) PRR 564 – OOME DefinitionPRR 564 – OOME Definition PRR 572 – Weather Sensitivity Classification (unanimous)PRR 572 – Weather Sensitivity Classification (unanimous) PRR 575 – Mandatory DN Balancing Ramp Rate (unanimous)PRR 575 – Mandatory DN Balancing Ramp Rate (unanimous) PRR 576 – Disclosure of OOMC, OOME and RMR (unanimous)PRR 576 – Disclosure of OOMC, OOME and RMR (unanimous) Urgent PRR 587 – Intra-year Modification of CREs (unanimous)Urgent PRR 587 – Intra-year Modification of CREs (unanimous) Urgent PRR 589 – CSC & Zone Determination (unanimous)Urgent PRR 589 – CSC & Zone Determination (unanimous) Urgent PRR 592 – Modify Shift Factor Calc to Exclude Fixed Output Generators (unanimous)Urgent PRR 592 – Modify Shift Factor Calc to Exclude Fixed Output Generators (unanimous) Withdrawal Affirmation Withdrawal Affirmation PRR 552 – Clarification of Relaxed Balanced Schedules (unanimous)PRR 552 – Clarification of Relaxed Balanced Schedules (unanimous)

21. 21 REP Default Under LSE Agreement ERCOT provided update regarding REP default under LSE agreement at May BOD meeting TAC created RMS/WMS joint task force to review current procedures and determine whether improvements can be made – objective is to minimize or eliminate uplift exposure Kick-off meeting scheduled on June 24 th Anticipate that any proposed PRRs would be presented to BOD late this year or 1 st quarter next year