Review of NPRR586

1. Review of NPRR586 CMWG 1/7/2014

2. Existing Credit Lock Process • ERCOT calculates a “preliminary allocated CRR transaction limit” based on “eligible” CRRAHs and publishes the preliminary limit in the CRR Auction Notice. • The preliminary transaction limit is only informative. • “Eligible” CRRAHs = qualified CRRAHs satisfying Registration and Qualification criteria in section 16.8. • CP locks credit for CRRAH(s) no later than 3 business days prior to close of CRR transaction submission window. • ERCOT determines “Participating CRRAHs” for the auction by using previously owned CRRs and credit locked. ERCOT calculates a “final allocated CRR transaction limit” based on the number of “Participating CRRAHs” and posts it to the MIS prior to the closure of the transaction submission window. • The final transaction limit is not used unless CRRAHs submit more than 200k (to be 300k) transactions to the auction. • CRRAHs submit CRR transactions prior to transaction submission deadline and are limited by the TAC approved transaction submission limit. • ERCOT posts the total number of transactions submitted to the CRR auction. If more than 200k (to be 300k) transactions were submitted by all “Participating CRRAHs”, ERCOT will open a “transaction adjustment period” and reject all transactions submitted by CRRAHs which exceeded the final transaction limit. CRRAHs must resubmit below that limit.

3. Credit Lock Process With NPRR586 • ERCOT calculates a “preliminary allocated CRR transaction limit” based on “eligible” CRRAHs and publishes the preliminary limit in the CRR Auction Notice. • The preliminary transaction limit is only informative. • “Eligible” CRRAHs = qualified CRRAHs satisfying Registration and Qualification criteria in section 16.8. • CP locks credit for CRRAH(s) prior to close of CRR transaction submission window. • ERCOT determines “Participating CRRAHs” for the auction by using previously owned CRRs and credit locked. ERCOT calculates a “final allocated CRR transaction limit” based on the number of “Participating CRRAHs” and posts it to the MIS after closure of the transaction submission window. • The final transaction limit is not used unless CRRAHs submit more than 200k (to be 300k) transactions to the auction. • CRRAHs submit CRR transactions and lock credit prior to transaction submission deadline and are limited by the TAC approved transaction submission limit. • ERCOT posts the total number of transactions submitted to the CRR auction. If more than 200k (to be 300k) transactions were submitted by all “Participating CRRAHs”, ERCOT will open a “transaction adjustment period” and reject all transactions submitted by CRRAHs which exceeded the final transaction limit. CRRAHs must resubmit below that limit.

4. Main Difference Between Existing Process and NPRR586 • Existing Credit Lock Process • If you don’t lock credit for the auction or don’t already own CRRs in the period covered by the auction, you cannot submit bids. • In other words, you must be a “Participating CRRAH” to submit bids. • With NPRR586 • You can submit bids to the auction but they will be rejected if you don’t lock credit for the auction or don’t already own CRRs in the period covered by the auction. • In other words, your bids won’t be considered in the auction if you aren’t a “Participating CRRAH”. • The final allocated CRR transaction limit is only based on Participating CRRAHs.