1. Market Credit Working Group update to the Wholesale Market Subcommittee 03/04/2015 1

2. MCWG update to WMS Joint meeting of MCWG and CWG on Wednesday, February 18 th 3 NPRRs reviewed for credit impacts – All NPRRs were operational and had no credit impact Update on changes to Available Credit Limit calculation – 90% buffer applied to ACL which penalizes entities that ‘overcollateralize’ – Agreement to apply the 90% to gross up TPE instead of decreasing ACL; – NPRR683 submitted by Luminant 2

3. MCWG update to WMS Consolidation of Other Binding Documents related to credit – Creditworthiness Standards (NPRR pending) – Credit Application (NPRR pending) – Procedures for Setting Nodal Day Ahead Market (DAM) Credit Requirement Parameters and Credit Formulas (NPRR671) Draft NPRR formalizing prepay account procedures – Targeting April PRS Capacity forecast report – Daily posting commenced week of February 23 rd – http://www.ercot.com/services/rq/credit/index.html 3

4. MCWG update to WMS Seasonal Adjustment Factor for summer of 2015 – ERCOT has proposed a methodology to calculate SAFs using the ratio of historical prices to the previous month – Additional analysis requested for consideration at March MCWG/CWG meeting; Vote expected Review of MCWG charter – F&A reporting requirement – No changes recommended to the charter Goal to explore market risk tolerance Mitigation of credit tail risk exposure – Formation of the Credit Risk Impacts and Modeling (CRIM) sub group to develop tail risk scenarios and assist ERCOT modeling – “Upon the request of WMS, the MCWG may form temporary or ad hoc subgroups in order to discharge its responsibilities.” 4

5. Update on NPRR638 NPRR638 is currently tabled at PRS Technical issues under consideration – Gas price adjustment using a FIP ratio (gas price normalization) To be considered at PRS (estimated April PRS) – Apply a minimum and maximum heat rate to limit application of gas price adjustment To be considered at PRS (estimated April PRS) – Lookback parameters To be considered at March CWG/MCWG 5

6. Update on NPRR638 Policy issues under consideration – Process to update the Market Adjustment Factor (MAF) To be considered at PRS (estimated April PRS) Process to update the MAF – F&A discussed the topic at Feb 9 th meeting and requested stakeholder feedback – Option 1: ERCOT staff discretion to update the MAF without stakeholder approval upon 45 day notice ERCOT supports – Option 2: Revisions to MAF will be recommended by TAC and approved by the ERCOT Board CWG/MCWG endorsed, Reliant comments 6