Market Operations Presentation Board of Director’s Meeting April 15, 2003

1. Market Operations Presentation Board of Director’s Meeting April 15, 2003

2. Agenda • Texas SET v1.5 • MIMO – Stacking Problem Schedule • 2002 UFE Report

3. Texas SET v1.5 Conversion April 11-13 Were We Successful?

4. Texas SET v1.5 Conversion April 11-13 We Were Successful!

5. MIMO - Stacking Problem Schedule • Considered a number of solutions • including an ERCOT only technology/database solution • Converged on draft solution • requiring work at all companies – ERCOT, TDSPs and REPs • March 27 Published Proposed Solution Draft • April 17 End of Three Week Comment Period • May 7 Seminar to Rollout Final Draft Solution • May 15 RMS to Vote • May 20-21 Task Force to Formulate PRR(s) For RMS and TAC Approval

6. 2002 UFE Report • ERCOT Protocol Requirement • 11.5 Unaccounted For Energy (UFE) Analysis • 11.5.1 Overview • ERCOT will establish a UFE Analysis Team chaired by ERCOT and consisting of Market Participants and ERCOT personnel who report to the Technical Advisory Committee: • The UFE Analysis Team will: • Analyze UFE data from January 01, 2002 to December 31, 2002 • Post findings to the MIS on a monthly basis • Provide a recommendation by April 2003 to the ERCOT Board

7. UFE (unaccounted for energy) is computed as follows: UFE = Generation – (Load + Losses) Sources of UFE include: ■ Generation Measurement Errors ■ Load – Missing/Erroneous Usage Data – Model Error ■ Losses – Model Error Determining Factors • Negative UFE generally indicates load/loss overestimated

8. Statistical Results • UFE has a significant negative bias. • Mean and Median UFE values are similar … the distributions are not skewed. • UFE gets closer to 0 with each settlement run. • Thus, usage data loading improves UFE.

9. Generation Differences BetweenInitial & Final Settlement • Only 8.5% of the intervals had differences greater than 100MW between initial & final settlement. • Differences greater than 300 MW occurred for only 3.9% of the intervals.

10. 2002 Median UFE by Settlement Run • The median UFE value improves with each settlement run across all days of the week. For all runs there is evidence of a cyclical component of UFE across day-types. • UFE is generally better during the middle of the day than during morning and evening hours.

11. 2003 Median UFE by Settlement Run • UFE improves slightly between Initial and Final Settlement.

12. Recommendations • Generation Measurement Errors are not a significant contributor to UFE – no further analysis needed on Generation • Improve usage data loading accuracy/timeliness (SCR 727) • Update load research samples (PUCT Project 25516 & ERCOT PR-30014) • Load Profiling Models • Evaluate lagged-dynamic samples • Evaluate algorithms for missing IDR data estimation (ERCOT PR-30130) • Evaluate TDSP loss factors with substation IDR data (ERCOT PR-30022) • Evaluate the need for additional substation metering • Compare data aggregated to substation level with substation metering • Explore alternative methods for UFE allocation (ERCOT PR-30022) • UFE Zones • By Substation • Weather • Re-convene UFE Group