Market True-Up Discussion

1. Market True-Up Discussion RMS Meeting 04/02/02 Draft Only for Discussion Purposes

2. Points for Discussion • Definition of issue • Risks of Not Performing True-Up • Other Markets’ Actions • Prep Activities • Ground Rules • Risks of Performing True-Up • Next Steps

3. Definition of Issue • Currently, the market as a whole has a large number of discrepancies in retail statuses • These discrepancies include: • Which CR is responsible for an ESI ID • What the status of an ESI ID is • What date did that status or ownership change • These discrepancies are a result of market gaps, general system errors and manual interventions

4. Risks of Not Performing True-Up • ESI ID statuses may be incorrect • ESI ID may be considered de-energized when it is not (resulting in UFE) • ESI ID may be considered active – but under a different CR (resulting in incorrect CR and market level settlements) • CRs may be prevented from submitting certain transactions • For example, CR will not be able to submit a MVO or DTP if they are not the CR of record • CRs may not receive certain transactions • For example, 814_20s may not be forwarded to a CR if that CR is not the CR of record at ERCOT • This may prevent a CR from receiving meter modifications or retires • A CR may stop receiving transactions for an ESI ID he believes he is responsible for • CR may stop receiving usage for an ESI ID • CR cannot bill customer without manual intervention and inquiry

5. Risks of Not Performing True-Up (cont) • Customers may end up being double billed by multiple CRs (who both think they are responsible for an ESI ID) • Alternately, a customer may not be billed for usage he is receiving • Market level settlements may result in billing to an incorrect QSE • Transactions submitted later in the market may result in notification to the incorrect CR • For example, in a situation where the MVI Safety Net was performed by CR1 but this transaction was not reflected at ERCOT • CR3 submits a switch • ERCOT will either • Reject the transaction – if it believes the ESI ID is de-energized • Accept the transaction – but notify the TDSP that the dropping CR is the old CR (not CR1) • CR1 gets no notification of a drop due to a switch • The TDSP may or may not correctly change the relationship leaving one CR without information

6. Other Markets’ Actions • Most markets have performed some sort of reconciliation • Pennsylvania performed a true-up for the first 6 months of market open (spending an additional 4 months closing market and system issues) • New Jersey performed a true-up for the first 8 months • New York has performed a reconciliation from market open to current • Illinois performed a true-up for the first 4 months then as requested • These true-ups were mostly initiated by the CR working with a TDSP to resolve differences in data • Other markets have only had to reconcile with two parties (the TDSP and CR) • Other markets have not been constrained by the fact that the TDSP could not provide energy in situations differences appeared • Pennsylvania did not separate energy services until after market open

7. Prep Activities • Market buy-in and support will be required prior to beginning any true-up process • TDSPs need to provide a list to each CR of all ESI IDs that CR owned or does own. This list should include begin date and end date (if applicable) for that CR. These dates are the energy start and stop flow dates • ERCOT needs to provide the same list for each CR by TDSP • CR needs to take both lists and identify accounts that are not in synch • This list can be divided by ESI ID Type (with the market deciding to prioritize by type) or effective date by month

8. Ground Rules • Ahead of an actual true-up meeting, the CR must send the list of discrepancies to ERCOT • ERCOT must then perform analysis to determine whether or not there is a pending order for that ESI ID or if another CR already owns the ESI ID • The CR must also send the list to the TDSP and ERCOT • All Market Participants (CR, TSDP and ERCOT) must have available what the read dates for those ESI IDs are within their respective systems • As disputes are resolved, read dates will be used to determine effective dates of switches • No manual updates will be performed without a matching read • All read dates should be based on actual accepted usage

9. Risks of Performing True-Up • Potential discrepancies could be due to timing issues of when Market Participants run their list and perform the true up • QSEs may be out of the true-up loop due to manual processing • CR needs to ensure that the QSE is notified of any manual updates • There will be market contention for ESIIDs that multiple CRs claim ownership over • This will require resolution on a case by case basis • The resolution may require contact with the customer • There will need to be a predefined set of rules the market agrees on to work through resolution of disputes. Every market participant needs to agree and adhere to these rules • Corrections may involve resending of multiple retail transactions. This may be a significant quantity • Example: 814_20s (Create/Maintain ESIID) or initial/final usage may need to be resent as part of the reconciliation. Currently there is no prioritization of transaction being re-processed as part of the reconciliation

10. Risks of Performing True-Up (cont) • Not all Market Participants have to or will participate or prioritize the reconciliation process • The Market Participants will resolve the issues for the ESIIDs but will not address the overall market issues • The reconciliation will affect customer billing. The TDSP and the CR will need to have procedures in place to deal with billing discrepancies • The reconciliation may occur after the settlement process has completed. The market will need to determine how to re-settle for periods already completed • Reconciliation will need to occur multiple times until market stabilizes and potentially even long term • Reconciliation may be too large. May have to divide reconciliation up into all pilot first to gather and apply lessons learned • This reconciliation only covers current and past relationships. Another may need to be performed for pending transactions

11. Next Steps • Get market buy-in • Review Possible Discrepancy Scenarios (see attached word document) • Determine set of rules to begin to resolve discrepancies • Determine timeline for true-up • Determine schedule for true-up