1. Congestion Revenue Rights http://nodal.ercot.com 1 Texas Nodal Market Implementation Program CRR Requirements Updates CRR Project Team – Presented by Beth Garza August 28, 2007

2. Congestion Revenue Rights http://nodal.ercot.com 2 Timeline of CRR Document Reviews & Approvals NPRR047 and NPRR059 require TPTF approval and updates to the following: Requirements Conceptual System Design (CSD) 1 Renumber Requirements for traceability purposes and obtain TPTF approval. 2 Business Process Clarification NPRR EDS Handbook requires TPTF review and approval

3. Congestion Revenue Rights http://nodal.ercot.com 3 CRR Documentation Requiring TPTF Approval Due to Baselines 1 & 2 NPRR 047 - Credit Monitoring NPRR059 – Reconfiguring the CRR Annual Auction

4. Congestion Revenue Rights http://nodal.ercot.com 4 Summary of Changes to CRR Requirements & CSD (NPRRs 047 & 059) Summary of CRR Requirements Changes –Added/modified language to accommodate approved NPRR047: Counter-Party Credit Limit –Added/modified language to accommodate approved NPRR059: Annual Auction Configuration –Minor cleanup to FR2 and FR46 –Renumbered to eliminate “sub” references –Updated with comments received from TPTF Review Summary of CRR CSD Changes –Added / Revised traceability in all sections to reflect Requirements v1.9 –Market User Interface - added credit limit management –Market Operator Interface –Data Interface - modified to reflect changed inputs/outputs to CMM –Database –Calculation - Revised to reflect Counterparty budget constraints –APPRENDIX Enterprise use case references - Revised to reflect changes to Credit Limit management –Updated with comments received from TPTF Review Requirements Comments Disposition 50Total Comments Received 1Accepted 1Addressed 7Response Provided 2Rejected 39Deferred to Restructured Version CSD 19Total Comments Received 2Accepted 2Updated/Modified 12Response Provided 1Rejected 2Deferred

5. Congestion Revenue Rights http://nodal.ercot.com 5 Other items addressed – FR3 / Defining Times of Use Proposed revised language in red In the monthly CRR Auction, CRR Account Holders shall be able to submit linked bids (but not linked offers) consisting of 3 time of use blocks to cover the 7x24 concept. In the annual CRR Auction, CRR Account Holders shall be able to submit linked bids and offers consisting of only 1 time of use block.

6. Congestion Revenue Rights http://nodal.ercot.com 6 Other items addressed – SR27 / Interface Subsystem Requirements The CRR System shall meet the following Interface Subsystem Requirements: Data Exchanges with other ERCOT systems shall be facilitated by CRR Data Interface Subsystem and ERCOT Integration Layer. Fully functional CRR data interface subsystem shall provide the following: APIs and/or service enabled interfaces Ability to produce XML and CSV documents Ability to manually upload files (XML and CSV documents) CRR Input/Output staging tables* * - optional

7. Congestion Revenue Rights http://nodal.ercot.com 7 Proposed Motion(s) TPTF approves v1.92 of the CRR Requirements, which will reflect the version distributed last Thursday with the two changes discussed here today (FR3 and SR27) TPTF approves v1.07 of the CRR CSD as distributed last Thursday

8. Congestion Revenue Rights http://nodal.ercot.com 8 CRR Documentation Requiring TPTF Approval Due to Restructuring Requirements Review ONLY – NO VOTE today Comments requested by COB Tuesday, September 4 th

9. Congestion Revenue Rights http://nodal.ercot.com 9 Why did we Restructure Requirements? CRR Requirements as approved do not provide the level of granularity to ensure traceability through test cases and scripts. A finer level of granularity (lower number of tests scripts per requirement) will provide greater visibility to stakeholders, including TPTF and program leadership, into CRR System quality and test execution. CRR Project Team chose to keep as much of original approved language as possible. Approved Requirement Documents Approved Use Cases Approved Test Cases Approved Test Scripts Protocols In Requisite Pro In Quality Center Test Results The initial efforts are focused on Protocol coverage by functional requirements…

10. Congestion Revenue Rights http://nodal.ercot.com 10 Example of Changes to CRR Requirements - Restructured Original Language: –FR1. The CRR System shall do A, B, C, and D. Restructured Language: –FR1.1 The CRR System shall do A. –FR1.2 The CRR System shall do B. –FR1.3 The CRR System shall do C. –FR1.4 The CRR System shall do D.

11. Congestion Revenue Rights http://nodal.ercot.com 11 A Real Example of Changes to CRR Requirements - Restructured Current CRR Requirements Language –FR1. CRR System shall enable ERCOT to process CRR as a financial instrument that entitles the CRR Owner to be charged or to receive compensation for congestion rent. CRRs do not represent a right to receive, or obligation to deliver, physical energy. Most CRRs are tradeable in the CRR Auction, in the DAM, or bilaterally. … Restructured CRR Requirements Language –FR1.1. CRR System shall enable ERCOT to process CRR as a financial instrument that entitles the CRR Owner to be charged or to receive compensation for congestion rent. –(C1.1) CRRs do not represent a right to receive, or obligation to deliver, physical energy. –FR1.2. CRRs shall be tradeable in the CRR Auction. –FR1.3. CRRs shall be tradeable in the DAM. –FR1.4. CRRs shall be tradeable bilaterally. –…

12. Congestion Revenue Rights http://nodal.ercot.com 12 Disposition of Deferred Comments from NPRR Requirements Update Restructured Requirements 50Total Comments Received (subdivided some comments to total 59) 8Accepted/Addressed 15Response Provided 20Rejected 5Deferred 11NA (Addressed in Previous Version)