COMS/Settlements/Credit

1. COMS/Settlements/Credit Weekly Update July 9, 2010 http://nodal.ercot.com 1

2. 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

3. 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

4. DAM Settlement Overview for June 30 Statement and Invoice Overview • 185 Statements/Invoices posted to QSEs • 54 Statements/Invoices posted to CRRAHs • 0 QSEs received Statements/Invoices for $0 (Not due to earlier closed issue) 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

5. DAM Settlement Overview for July 1 Statement and Invoice Overview • 182 Statements/Invoices posted to QSEs • 58 Statements/Invoices posted to CRRAHs • 0 QSEs received Statements/Invoices for $0 CRR Overview • CRRs were not derated • CRR Short Fall Charges were calculated General Reminders/Updates • Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.com http://nodal.ercot.com 5

6. DAM Settlement Overview for July 2 Statement and Invoice Overview • 181 Statements/Invoices posted to QSEs • 58 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 6

7. DAM Settlement Overview for July 3 Statement and Invoice Overview • 174 Statements/Invoices posted to QSEs • 50 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 7

8. RTM Settlement Overview for June 23 Statement Overview • 195 Statements posted to QSEs • 3 Statements posted to CRRAHs • 2 QSEs received Statements for $0 (This is not due to the closed issue. There were drivers for calculations, but the outputs were zero) Charge Type Overview • RUC Decommitments were issued, but none of them met the eligibility requirements for payment. General Reminders • Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.com http://nodal.ercot.com 8

9. RTM Settlement Overview for June 24 Statement Overview • 200 Statements posted to QSEs • 3 Statements posted to CRRAHs • 3 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 9

10. RTM Settlement Overview for June 25 Statement Overview • 195 Statements posted to QSEs • 2 Statements posted to CRRAHs • 3 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 10

11. RTM Settlement Overview for June 26 Statement Overview • 196 Statements posted to QSEs • 1 Statements posted to CRRAHs • 1 QSE received Statements for $0 Charge Type Overview • RTM CRR Shortfall Charges executed General Reminders • Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.com http://nodal.ercot.com 11

12. RTM Settlement Overview for June 29 Statement Overview • 205 Statements posted to QSEs • 3 Statements posted to CRRAHs • 4 CRRAHs and QSEs received Statements for $0 Charge Type Overview • AS Non-Performance Charge Types Executed General Reminders • Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.com http://nodal.ercot.com 12

13. Charge Type Tracker • Below are the Day Ahead Market charge types that have been executed at least once during Market Trials (18 of 19 executed) http://nodal.ercot.com 13

14. Charge Type Tracker • Below are the Real-Time Market charge types that have been executed at least once during Market Trials (44 of 45 executed) ** We are currently planning to have all charge types executed by the end of July** http://nodal.ercot.com 14

15. Update to Settlement Charge Type Tracker Planned Settlement dates for charge types not yet executed in Market Trials **Any updates to these dates will be communicated at the Friday Settlements Market Trials Call http://nodal.ercot.com 15

16. Week in Review • RTM Invoice (Posted 7-8) • No Unsupported Operating Dates included • Initials Included 6-18, 6-19, 6-22, 6-23, 6-24, • Finals Included 6-8, 6-9, 6-10, 6-11, • True-Ups Included 5-12, 5-13, 5-14 • Miscellaneous Invoice (Posted on 7-8) • All Active QSEs should have received an Invoice • RTM Re-Settlement for OD 6-22 (Posted on 7-6) • The 6-10 Final did contain Voltage Support Settlements http://nodal.ercot.com 16

17. Next Week’s Activities • Operating Days for next week that will be settled • 7-13 SASM only if needed • 7-14 SASM only if needed • 7-15 SASM only if needed • 7-16 SASM only if needed • 7-17 SASM only if needed • DAM and RTM Late Fee Invoices will post on Monday, 7-12 • CARD Initial for June Monthly Auction and Balancing Account Invoices for June will post on Tuesday, 7-13 http://nodal.ercot.com 17

18. LFC Test Totals • RTM Market Totals During the LFC Test • Totals exclude those charge types that are evenly distributed across all hours http://nodal.ercot.com 18

19. Environment Report-Known Issues COMS New Known Issues • RTM MODE for 5-13 True-Up should have posted on Saturday, 7-3 by midnight. It did not post until Tuesday, 7-6 • The SID Extract that should have posted on 7-6 did not post until early on the morning of 7-7 • Some physical resource nodes for Combined Cycles do not have a resource type mapped for them. This is causing the MINRESPR used in CRR Calculations to default to -$35 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 19

20. Settlements FAQs • Q: In Protocol Section 6.6.3.1(2) there are two formulas for the calculation of Real Time Energy Imbalance at a Resource Node. Which one should I use? • A: Everyone with a generator behind a resource node should use the first formula; the one noted for Generation Resources involved in a net-metering scheme. ERCOT will net the energy flows on all meters that are part of an approved EPS Metering Design Proposal. • RTEIAMT q, p= (-1) * { ( (GSPLITPER q, r, gsc, p * NMSAMTTOT gsc ) + RTSPP p * [(SSSK q, p * ¼) + (DAEP q, p * ¼) + (RTQQEP q, p * ¼) – (SSSR q, p * ¼) – (DAES q, p * ¼) – (RTQQES q, p * ¼)]} http://nodal.ercot.com 20

21. Questions • Open Forum / Q&A http://nodal.ercot.com 21

22. Credit and Treasury Weekly Update July 9, 2010 http://nodal.ercot.com 22

23. Week in Review • Posted Credit Reports and sent ACLs each business day • ACL and TPE Summary Reports were posted around 8:30 am • Reports for Friday July 9th are delayed and root cause is being investigated • ACL Reports posted on July 9th morning contains the ACLs from July 8th • Reports are being regenerated and will be reposted as soon as possible • Remaining Credit Reports were posted around 9:30 am • Aggregate Incremental Liability (AIL) report was posted starting on July 6th. However, CMM continues to experience a significant delay in data population of this report . • A fix is expected to be migrated over the weekend • ERCOT expects the delay to be reduced by Monday. • As discussed on last weeks call, on Wednesday, July 7 (reflected on Thursday am reports) ERCOT reduced credit limits to 30% above TPE for entities that have not given instructions in the past week • Collateral calls were sent, if needed • 90% warnings were sent, if needed • ERCOT is no longer overriding ACLs http://nodal.ercot.com 23

24. Week in Review • Credit exposures • Credit exposures reflect market participant activity • There remain a few exceptions, which are listed on the Known Issues list • Extrapolation of high historical activity forward continue to impact exposure calculations for CPs with ongoing activity in Real Time and to lesser extent in Day Ahead. http://nodal.ercot.com 24

25. Volume by Counter-Party by Day http://nodal.ercot.com 25

26. Next Week • ERCOT • Will send ACLs for CRR Auction (lockdown on July 12) • Will not override ACLs • Will send collateral calls if exposure exceeds credit limit • If ERCOT sends a collateral call, the CP will likely not be able to bid in DAM until additional e-collateral is received http://nodal.ercot.com 26

27. Next week • Counter-Parties • Since ERCOT no longer overrides ACLs and adjusts credit limits to 30% over TPE, CPs should review Credit Reports and consider • a) their exposure and • b) upcoming DAM activity and CRR auction (lockdown at 5:00 pm on Monday) and send e-collateral as needed • On Monday, July 12th, please consider the following when reviewing your Credit Reports and providing additional e-collateral • Credit limits were adjusted down this past week • CMM fixes rolling in this weekend will likely impact your TPE • The credit limit for CRR Auction locks down at 5:00 pm Note: ERCOT expects that many Counter-Parties will need to provide additional e-collateral Friday or Monday to ensure adequate collateral for the upcoming CRR Auction http://nodal.ercot.com 27

28. Next Week - Schedule of activity Meeting Title (optional)

29. Other topics • Tentative timeline for First Priority Security Interest document • July 1, 2010 – ERCOT circulated 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. • NPRR 206 and “e” factors • NPRR 206 with 1/0/1 - last week • “e” factors implementation – planned - August 1 • Training on NPRR 206 and “e” factors – August • August 10 @ Airport Hilton Austin • 9am – 1pm • Web-ex available http://nodal.ercot.com 29

30. New Known Issues • For CP’s without CRRAHs – the ACL received from CRR was zero • The root cause has been identified and a fix is in place http://nodal.ercot.com 30

31. Closed Known Issues Note: Known Issues can be reviewed at : http://nodal.ercot.com/readiness/markettrials/coms/index.html, http://nodal.ercot.com 31