COMS/Settlements/Credit

COMS/Settlements/Credit Weekly Update June 11, 2010 http://nodal.ercot.com 1

Antitrust Admonition ANTITRUST ADMONITION ERCOT strictly prohibits Market Participants and their employees who are participating in ERCOT activities from using their participation in ERCOT activities as a forum for engaging in practices or communications that violate the antitrust laws. The ERCOT Board has approved guidelines for members of ERCOT Committees, Subcommittees and Working Groups to be reviewed and followed by each Market Participant attending ERCOT meetings. If you have not received a copy of these Guidelines, copies are available at the Client Relations desk. Please remember your ongoing obligation to comply with all applicable laws, including the antitrust laws. DISCLAIMER All presentations and materials submitted by Market Participants or any other Entity to ERCOT staff for this meeting are received and posted with the acknowledgement that the information will be considered public in accordance with the ERCOT Websites Content Management Operating Procedure. http://nodal.ercot.com 2

Agenda • Anti-trust Admonition • Standing Reports and Updates • Operating Day Settlement Reports • Week in Review/General Reminders • Next Week’s Activities • Environment Report • Known Issues • Credit • Question and Answers / General Discussion ERCOT asks that Market Participants log into the WebEx session using their company name and then their name. This will allow ERCOT to take roll-call offline http://nodal.ercot.com 3

DAM Settlement Overview for June 2 Statement and Invoice Overview • 157 Statements/Invoices posted to QSEs • 49 Statements/Invoices posted to CRRAHs • 0 QSEs received Statements/Invoices for $0 CRR Overview • CRRs were not derated • CRR Owners were fully funded (i.e. there were no Short Fall Charges) General Reminders/Updates • Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.com http://nodal.ercot.com 4

DAM Settlement Overview for June 3 Statement and Invoice Overview • 161 Statements/Invoices posted to QSEs • 53 Statements/Invoices posted to CRRAHs • 0 QSEs received Statements/Invoices for $0 CRR Overview • CRRs were derated • CRR Owners were fully funded (i.e. there were no Short Fall Charges) General Reminders/Updates • Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.com http://nodal.ercot.com 5

RTM Settlement Overview for May 25 Statement Overview • 204 Statements posted to QSEs • 4 Statements posted to CRRAHs • 30 QSEs received Statements for $0 General Reminders • Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.com http://nodal.ercot.com 8

Charge Type Tracker • Below are the Day Ahead Market charge types that have been executed at least once during Market Trials (17 of 19 executed) http://nodal.ercot.com 13

Charge Type Tracker • Below are the Real-Time Market charge types that have been executed at least once during Market Trials (30 of 45 executed) http://nodal.ercot.com 14

Week in Review • 6/9 – No DAM day due to simulated Day Ahead Market failure. Supplemental AS Markets (SASM) successfully competed. 6/8 and 6/9 will reflect additional procured AS. • 6/10 – Two Supplemental AS Markets (SASM) successfully competed • 6/10 – RTM Invoice posted for following Statements : • RTM Initials 5/21, 5/25, 5/26, 5/27 • RTM Finals 5/12, 5/13, 5/14 • 246 QSEs (33 for $0) • 49 CRRAs (45 for $0) • 6/11 -- Balancing Account (82 QSEs) and CARD (82 QSEs) invoices will be posted for May activity. Extracts will be available within 48 hours. • 6/12 – No DAM due to NODAL Prod release http://nodal.ercot.com 15

Next Week’s Activities • Operating Days for next week that will be settled • 6-15 SASM only if needed • 6-16 AS Insufficiency; commit Resources for AS in DRUC • SASM only if needed • 6-17 SASM only if needed • 6-18 SASM only if needed • 6/19 SASM only if needed http://nodal.ercot.com 16

Environment Report-Known Issues COMS New Known Issues • No New Known Issues COMS Closed Issues • No New Closed Issues Reminder: ERCOT will post known issues every Friday to the readiness center at: http://nodal.ercot.com/readiness/markettrials/coms/index.html http://nodal.ercot.com 17

Credit and Treasury Weekly Update June 11, 2010 http://nodal.ercot.com 18

Antitrust Admonition ANTITRUST ADMONITION ERCOT strictly prohibits Market Participants and their employees who are participating in ERCOT activities from using their participation in ERCOT activities as a forum for engaging in practices or communications that violate the antitrust laws. The ERCOT Board has approved guidelines for members of ERCOT Committees, Subcommittees and Working Groups to be reviewed and followed by each Market Participant attending ERCOT meetings. If you have not received a copy of these Guidelines, copies are available at the Client Relations desk. Please remember your ongoing obligation to comply with all applicable laws, including the antitrust laws. DISCLAIMER All presentations and materials submitted by Market Participants or any other Entity to ERCOT staff for this meeting are received and posted with the acknowledgement that the information will be considered public in accordance with the ERCOT Websites Content Management Operating Procedure. http://nodal.ercot.com 19

Week in Review • Resolved generation volume issue identified last week • Root cause has been identified and fix expected by early next week • High historical estimates will roll off as settlement data is available. New estimates will reflect the fix • Prior reports will not be rerun • Continue to post Credit Reports • ACL and TPE Summary Reports early (by 9:30) • Remainder by 11am (after review) • Continue to send ACLs each business day • ERCOT continues to adjust ACLs or credit limits as needed to ensure adequate credit limits while the market gets familiar with the Credit Reports • Encountered an issue with ACLs on Thursday AM due to delay in Calculation Engine run. http://nodal.ercot.com 20

Week in Review • Large credit exposures • While the load volume estimation issue has been fixed and the generation volume estimation issue is being fixed soon, estimates with erroneous data have not fully rolled off. • Expect “completed not settled” estimates used in AIL component of TPE calculation to improve daily and reflect all corrections within the next two weeks • Credit and Debit invoices continue to appear in the OIA (Outstanding Invoice Amount) of the EAL (Estimated Aggregated Liability) calculation after payment due date • ERCOT staff researching the root cause of this issue • Extrapolation of high historical activity forward continue to impact exposure calculations for some CPs • Will roll off or CPs may work with ERCOT staff to adjust the ADTE component of the Total Potential Exposure (TPE) for the “old” historical activity http://nodal.ercot.com 21

Week in Review • Large credit exposures • Continue to see some CPs utilize the Real Time market significantly, resulting in high exposures • To obtain more realistic exposure calculations, CPs should begin functioning in MT5 as you might after Go-Live • For QSEs representing Load, use Energy Trades or DAM rather than RT to meet your load requirements. • For all, use more realistic estimates in your market activity (bids / offers in DAM, etc) http://nodal.ercot.com 22

Next Week • ERCOT • Will continue to analyze exposure calculations for reasonableness • Will continue to override ACL as needed • Once data stabilizes and AIL report is available, will discontinue override (tentatively the week of June 21st) • Will not send collateral calls next week • Will do credit approvals of CRR Bilateral Trades as needed • Have not received any bilateral trades to approve to date • Counter-Parties • Continue to Review the Credit Report calculations to confirm they reflect their MT5 activity to the extent possible • Ensure your ACL is adequate for the upcoming CRR auction, LFC test and normal DAM activity • If CPs wish to have a higher limit, they should send “e-collateral” http://nodal.ercot.com 23

Next Week - Schedule of activity Meeting Title (optional)

Other topics • Tentative timeline for First Priority Security Interest document • July 1, 2010 – ERCOT circulates initial draft to CPs. • July 19, 2010 – Comments back from CPs. • August 2, 2010 – ERCOT circulates second draft to CPs. • August 17, 2010 – ERCOT reviews document with F&A. • September 21, 2010 – Final review and possible approval by F&A and ERCOT Board. http://nodal.ercot.com 25

Known Issues Reports not available at this time • FCE detail reports are not being posted due to large volume of data (several hundreds of pages per report) • AIL detail report is not being posted due to data issue on report Load Volume used in AIL Calculation – FIXED; however historical data still being corrected • Issue with Load Estimation has been fixed and high estimates are rolling off AIL. Generation Volume used in AIL Calculation – FIXED; however historical data still being corrected • Issue with Generation Estimation has been fixed and high estimates are rolling off AIL. http://nodal.ercot.com 26

Known Issues OIA(Outstanding Invoice Amount) of the EAL (Estimated Aggregated Liability) calculation • Credit and Debit invoices appear in OIA calculation after payment due date • Issue being researched ADTE field of the EAL Details Report has a display issue; calculation is correct Note: ERCOT will post known issues on the website and beginning next week will only report new known issues and resolution of issues on the weekly call. http://nodal.ercot.com 27

COMS/Settlements/Credit