Negative Generation Discussion

1. Negative Generation Discussion AFC Stakeholder Meeting June 20, 2006

2. Background • Order No. 888 • Network Resources Not Limited to Network Load • Algebraic Decrementing vs. Model Dispatch • GOL Dispatch Methodology • Base Load Units • OATT Reservations • Oil and Gas Units • Algebraic Decrementing

3. Transition to AFC Process • GOL Dispatch Methodology Used • Differences Under AFCs vs. GOLs • Increase in Volume of Reservations Submitted • Increase in Volume of Reservations Modeled • Daily and Weekly • Imports • Accepted-Unconfirmed • Increase in Number of Hours Modeled • Off-Peak Hours

4. Negative Generation Issue • Where reservations/resources exceed load and that taking all oil and gas units off-line does not eliminate the mismatch. • Mostly off-peak hours where the load is decreased and/or where OATT reservation levels are particularly high, although some on-peak hour instances • Primary cause is increased impact of OATT reservations (including imports) on internal dispatch, largely during off-peak hours

5. General Approach • Focus on Types of Reservations • network reservations, off-peak hours and imports • PTP, Accepted-Unconfirmed • Focus on Network Customers

6. Excluded Options • Existing Software Functionality • Exclude File • Dispatch Pool • Hourly Firm Product • PTP, not Network • Hourly Firm only available on week-ahead basis • Would not address monthly or weekly reservations or daily reservations submitted earlier than week-ahead • Would not address peak hours • Separate software modifications

7. Proposed Resolution • “Dispatching” Reservations to Prevent Negative Generation • Software Changes • Network Customer Input ? • Default Dispatch Methodology • Preliminary Estimate of Implementation Time: 3-6 Months

8. Software Changes • Modeling of all OATT reservations at specified levels (including levels below the reservation amount) for each hour of the next 168 hours. • Reductions to net interchange (imports) and internal-source network service reservations on an hourly, pro rata basis, i.e., scaling reservations • Decrementing the PMax flowgate (for internal resources) and the Contract Path flowgate (for internal and external resources) based on the level of service reserved, not the dispatch level in the models.

9. Customer Input and Default Dispatch Methodology • Considering two related options • Pro Rata Default Method – in the absence of customer input, AFC software reduces OATT reservations after “oil and gas” on a pro rata basis to prevent negative generation • Network Customer Input – customers submit week ahead hourly dispatch which is the basis for AFC dispatch; perhaps month-ahead also • Would be applied to all network service reservations and could potentially be applied to PTP if need arose • Would address unconfirmed-accepted and may address transition to schedules

10. Impact on Reservations Not Modeled in Base Case • Decremented against the PMax flowgate and the Contract Path flowgate. Considering whether top-15 should also be decremented. • Decremented impacts associated with unscheduled service would be released day-ahead • The customer would retain the right to schedule all reservations (subject to real-time limits) regardless of whether the reservation was “dispatched” in the base case.

11. Next-Steps • Comments from Stakeholders • Discussions with Network Customers • Final Software Discussions with AREVA • Summary of Final Proposal to Stakeholders • Entergy Management Approval