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PWG Update Report By Ernie Podraza of Reliant Energy ERCOT PWG Chair for RMS Meeting

PWG Update Report By Ernie Podraza of Reliant Energy ERCOT PWG Chair for RMS Meeting November 9, 2005. DRAFT. Annual Validation 2005 Status - Business. ERCOT Validation for all but one TDSP is complete.

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PWG Update Report By Ernie Podraza of Reliant Energy ERCOT PWG Chair for RMS Meeting

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  1. PWG Update Report By Ernie Podraza of Reliant Energy ERCOT PWG Chair for RMS Meeting November 9, 2005 DRAFT

  2. Annual Validation 2005 Status - Business • ERCOT Validation for all but one TDSP is complete. • Transactions per ERCOT Board were to be sent on or after Oct. 31, 2005 so as not to influence channel 0 initial 10 day settlement analysis for PRR568. • Transactions should be completed on November 7th. Please refer to schedule published on October 27, 2005 for more details. DRAFT

  3. Annual Validation 2005 Status – Residential 1 of 5 8/10/2005 – RMS voted to suspend transaction flow pending ERCOT analysis. 9/30/2005 – Survey response cutoff day. 10/20/2005 - ERCOT Load Profiling Staff completed detailed analysis of this issue. 10/26 & 10/27 – PWG held a two day meeting to review the data and develop a recommendation for RMS. 11/9/2005 – RMS to decide if transactions should flow. The Market would like to thank and acknowledge ERCOT Load Profiling Staff and TDSPs for their “Herculean” efforts. DRAFT

  4. Annual Validation 2005 Status – Residential • After reviewing the ERCOT analysis, PWG unanimously agrees with the following points: • ERCOT’s new regression algorithm developed using the residential survey results and multi-year usage history is a good tool to evaluate our current residential assignment algorithm and is a candidate to replace our current mechanism. • ERCOT’s conclusion that of the 578,572 residential AV transactions that are currently delayed, 62.3% of these changes agree with the new tool and would move to a more representative profile and 37.7% of these changes do not agree with the new tool and would move to a less representative profile if these transactions flow. • ERCOT’s conclusion, developed using this new tool, that of the current entire population of residential ESI ID’s approximately 78.7% are currently assigned to the most representative profile and this number would climb to 81.4% (+2.7%) after these transactions flow. • ERCOT’s analysis indicates that UFE is reduced on cold weather days. DRAFT

  5. Annual Validation 2005 Status – Residential • PWG agrees with ERCOT’s original suggestion that the ideal alternative would be to ONLY send the 62.3% of the transactions that have been validated by the ERCOT analysis as moving to a more representative profile. • Unfortunately, this in not an option because: • Current market guides and/or Protocols would have to be changed to allow the use of the new tool and to avoid confusion, disputes, etc. • System changes to segregate the lists would require significant time to implement. • The ERCOT Board directive states that transactions must begin to flow by the end of 2005. • Longer delays will increase the backlog of ESI IDs defaulted to RESLOWRsince October 2002. DRAFT

  6. Annual Validation 2005 Status – Residential After much debate, PWG came to the consensus that flowing these transactions would do no harm and would generate some improvement. Therefore, we recommend that the residential Annual Validation transactions be sent. PWG is continuing to develop a new process that strives for the ideal goal of sending only those transactions that move an ESI ID to a more representative profile and maintains a stable population that has an assignment accuracy above 90%. If we don’t make changes to 2006 Annual Validation, similar volumes of transactions would be expected next year. The residential Annual Validation is not fixed yet and future delays may be appropriate in order to implement a fix. If the new tool developed by ERCOT was adopted as our assignment mechanism, the market could expect an increase in transactions in the first year of implementation. DRAFT

  7. VOTING ITEM Request approval of the following recommendation by the PWG, as sent to the RMS exploder list on 10/27/2005: “The PWG has a consensus recommendation to move forward with sending 2005 Residential Annual Validation transactions.” DRAFT

  8. VOTING ITEM Request approval of the LPGRR008 submitted by the PWG entitled, “Profile ID Assignment Effective Date” as submitted to the RMS exploder on 10/27/05 in file named, “LPGRR008.doc”. DRAFT

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