Market Readiness Seminar #5 July 28, 2010 Market Readiness Seminar #5 Remaining Market Trials Activities July 28, 2010 Market Readiness Seminar #5 3 Agenda NATF Update Discussion on Remaining Market Trials Activities High Level Review of Changes Recap of 24-Hour Full System Market Kick Off August Market Trials Activities September Market Trials Activities 7/28/2010Market Readiness Seminar #5 NATF Update Discussion on Remaining Market Trials Activities July 28, 2010 Market Readiness Seminar #5 5 Review of NATF Feedback ERCOT reviewed the 168-Hour test Handbook at the 7/8/2010 NATF Discussion turned toward the origins of the test and what value ERCOT and the Market could glean from such a test The main theme of the discussion was that more focus needed to be on closed loop testing and reviewing DAM solutions more deeply Key notes of interest ERCOT nor NATF agreed to cancel the 168-Hour test just re-visit it The goal is to remain flexible and adaptive to ensure we are getting the most value from the Market Trials activities Action from NATF was for ERCOT to re-visit activities planned for September Objective for today Review the result of the previously mentioned action item from NATF Field internal questions / concerns about the remainder of Market Trials 7/28/2010Market Readiness Seminar #5 6 High Level Review of Changes Scope of todays discussion will cover the remainder of Market Trials Following is a high level review of what to expect for the remainder of Market Trials (specifics to be detailed in later slides). CRR and Outage Scheduler CRR will be running a monthly auction and an annual auction in August Outage Scheduler will continue to receive realistic submissions / edits from the market Note that after 8/16 the Outage Scheduler transition plan goes into effect Settlements and CMM will run daily based on MT Activities August High Level Description of Changes Increased Full System Market and Reliability test (formally Full System Market and Reliability or Closed Loop) Renamed this test to be a more inclusive description of all components that are exercised Day Ahead Market tests will focus on the quality of solution Including ERCOT analysis of focused DAM solutions (1-2 per week) Decreasing quantity of DAM tests to support further analysis Including one 7 day period of consecutive DAM tests Exercise weekend processes and procedures Provide a more representative performance test for settlements by including 24x7 HRUC Provide more representative exposures from credit as well as provide the Market an opportunity to observe exposure levels after a weekend September High Level Description of Changes Will include a multi-day Full System Market and Reliability test The remainder of the month will include place holders for additional Day Ahead Market tests as well as at least 1 Full System Market and Reliability test 7/28/2010Market Readiness Seminar #5 7 High Level Review of Changes: Options to be Reviewed with the Market for Multi Day Test Multi Day (less than 7) Closed Loop RTM / LFC; DAM/RUC Open Loop 168-Hour Closed Loop DAM/RUC Open Loop 168-Hour Closed Loop DAM/RUC Closed Loop Multi-Day Full System Market and Reliability Test (less than 7 days) DAM/RUC executed, but open loop Use established Zonal protocols for settlements during closed loop test 7 day Full System Market and Reliability Test DAM/RUC executed, but open loop Use established zonal protocols for settlements during closed loop test 7 day Full System Market and Reliability Test DAM / RUC executed, and closed loop Work with the Market to define a settlement process to reflect Benefits / Costs Benefits Minimal financial exposure to MPs Distributes MP's team members more evenly for support of additional testing in September Employs established Protocol language for settlements Cost Does not exercise systems over a full week Does not exercise the DAM and RUC commitments in full closed loop Benefits Exercises Systems over a full week Moderate financial exposure to MPs Employs established Protocol language for settlements Cost Does not exercise the DAM and RUC commitments in full closed loop Concentrates MP's testing activities into an elongated testing period Managing dual systems over an extended period Benefits Exercises Systems over a full week Exercises the DAM / RUC commitment processes Cost Unknown financial impact to MPs Concentrates MP's testing activities into an elongated testing period Requires protocol change and development of a settlements process Managing dual systems over an extended period Selection of resources based on test data, whereas payment will not be based on same data 7/28/2010Market Readiness Seminar #5 24-Hour Full-System Market and Reliability Test Update July 28, 2010 Market Readiness Seminar #5 9 24-Hour LFC Update 24- Hour Full-System Market and Reliability Test Timeline The 24-Hour Test will begin on Aug 3 rd, 4 th or 5 th (proposing a start time of 12pm on the day of the test) Market Notices A Market Notice will be sent July 26 to confirm the upcoming 24-Hour test scheduled to start August 3 rd, 4 th or 5 th A follow-up Market Notice will be sent two days prior to the actual test to confirm the specific date A final Market Notice will be sent on the day of the test to confirm that the test will be conducted that day On the day of the test, a hotline call will be made to communicate the start time of the test (approximately 2-3 hours prior to start) A WebEx conference will be provided to allow Market Participants to monitor the Testanwith WebEx details will be sent to Nodal Transition Project Managers the week of the test ERCOT and Market Participant staff should be available and ready to field troubleshooting calls at 8am on the first day of the test A System Wide VDI will be issued immediately prior to the start of the test 7/28/2010Market Readiness Seminar #5 10 24-Hour LFC Update 24- Hour Full-System Market and Reliability Test (continued) Proposed Tuning Windows ERCOT system-tuning windows: Window One: 4 6 PM (on the starting day of the test) Window Two: 6 8 AM (on the ending day of the test) Note: Any adjustments to the timing of these tuning windows will be communicated as the windows draw near Market Participant system-tuning windows: Proposing that MPs who wish to perform system tuning do so during times that do not overlap with the following test activities: Zonal Nodal /Nodal Zonal switchover activities Operational scenarios ERCOT system tuning windows 7/28/2010Market Readiness Seminar #5 11 August Market Trials Activities Week of Aug 2, Hr Full System Market and Reliability test (operational scenarios and tuning to be defined) DAM run only for operational days of the Full System Market and Reliability tests RUC run for operational days of the Full System Market and Reliability tests (HRUC run as frequently as possible goal is hourly) Week of Aug 9, 2010 DAM will run continuously for 7 consecutive days starting on 8/9/2010 through 8/16/2010 DRUC and WRUC will run per protocols for all 7 days. HRUC will run 24x7 for all 7 days Operational scenarios as defined by MT and Training team Week of Aug 16, 2010 Full System Market and Reliability Test will be conducted with the duration based on the results of the 24-Hour test (operational scenarios and tuning to be defined) DAM run only for operational days of the Full System Market and Reliability tests RUC run for operational days of the Full System Market and Reliability tests (HRUC run hourly) QSEs and TSPs begin maintaining outages for September and post Go-Live Week of Aug 23, 2010 DAM run up to 5 times RUC run w/ DAM (HRUC run at least once daily and more based on operator training needs) Operational scenarios as defined by MT and Training team QSEs and TSPs continue maintaining outages for September and post Go-Live 7/28/2010Market Readiness Seminar #5 12 August / September Market Trials Activities Week of Aug 30, 2010 Multi-day Full System Market and Reliability Test (Go-Live rehearsal) DAM run for each operational day of the test Generation cut over to Nodal 2pm the day prior to first operational day DRUC / WRUC run per protocols HRUC start at 1800 the day before the first operational day and continues hourly throughout test Generation returns to Zonal at 2pm the last operational day of the test Will exercise change of month, change of day Other operational scenarios to be defined If test spans 9/1/2010, the model load scheduled for that date will be delayed until after the test Week of Sept 6, 2010 DAM run up to 5 times RUC run w/ DAM (HRUC run at least once daily and more based on operator training needs) Settlements and Credit run daily Operational scenarios as defined by MT and Training team QSEs and TSPs continue maintaining outages for September and post Go-Live Week of Sept 13, 2010 through Week of Sept 27 Placeholder for additional LFC testing as deemed necessary There will be at least one more test that will test ERCOTs ability to perform a fail-over and model load while controlling the grid DAM run for operational days of the LFC tests If no LFC test in either week, DAM will run up to 5 times containing operational scenarios deemed necessary to repeat QSEs and TSPs continue maintaining outages for September and post Go-Live 7/28/2010Market Readiness Seminar #5 13 Whats Next Whats next in Market Facing Testing Activities Post September? Although Market Trials officially ends on Sept 30, 2010, ERCOT will be conducting Market facing tests Verification of late system patches that occur on both the ERCOT and Market Participant systems Ensure that systems are ready prior to the Go-Live sequence Will include a combination of closed and opened loop tests October and November will be focused on Cutover activities which will supersede any planned Market Facing tests If this occurs ERCOT will reschedule those Market Facing tests as appropriate Details of these activities will be shared at the 8/31/2010 NATF and the subsequent Friday Market Call 7/28/2010Market Readiness Seminar #5 Market Readiness Seminar Update Nodal Cutover Update July 28, 2010 Market Readiness Seminar #5 15 Nodal Cutover and Market Transition Agenda Key Cutover Milestones Major Cutover Activities 4 Month Lookout Cutover Communications Method Discussion 7/28/2010Market Readiness Seminar #5 16 Nodal Cut-Over and Market Transition Topics That Will Be Covered Today Key Cutover Dates - 4 Month Look Out (NMMS, CRR, OS, Credit, S&B, MMS) High-Level Timeline Cutover Communication Method Upcoming Events Topics That Will Not Be Covered Today Beyond 4 Month Look Out (details) Post Go-Live Activities Contingency Plans System Decommissioning/Retirement Plans 7/28/2010Market Readiness Seminar #5 17 2/24/2016 Cut-Over Milestones 7/28/2010Market Readiness Seminar #5 18 Nodal Cutover and Market Transition Key Cut-Over Milestones Key Cut-Over Milestones Network Model Nodal Protocol Section 3.10 goes into effect (Sept. 1) TAC Approval July 1 (July 20) Board Approval July 20 Market Notice July 30 Congestion Revenue Rights Nodal Protocol Section 7 goes into effect (Oct. 13) TAC Approval August 5 Board Approval August 17 Market Notice September 13 Outage Scheduler Nodal Protocol Section 3.1 goes into effect (Nov. 1) TAC Approval August 5 Board Approval August 17 Market Notice October 1 Full Nodal Operations Nodal Protocol Sections 3, 4, 5 and 6 go into effect as well as all other unimplemented Protocol Sections (Nov. 23) TAC Approval October 7 th Board Approval October 19 th Market Notice October 23 rd 7/28/2010Market Readiness Seminar #5 19 2/24/2016 Key Cutover Activities 4 Month Look Out 7/28/2010Market Readiness Seminar #5 20 Cut-Over Timeline 4 Month Look Out 7/28/2010Market Readiness Seminar #5 4 Month Lookout 21 Functional Area Task Plan Data Prep Decommission/Retirement Template Contingency/Back-out Template MayJuneJulyAugSeptOctNovDec Cut-Over Monthly Outlook August Key Cut-Over Activities for August 2010 (08/01) Model: Begin network modeling timelines (08/13) OS: Outage Scheduler Zonal to Nodal Import process run (08/13) CRR: Last day to register for CRR December monthly auction (08/16) OS: ERCOT releases Outage Scheduler to Market (08/16-09/17) OS: Market Participants synchronize / verify outages in the Nodal Outage Scheduler to the Zonal Outage Scheduler for Outages effective during and after December 2010 Network Model Outage Scheduler Congestion Revenue Rights Entities Involved ERCOT TSP REs CRRAH QSE Impacts TSPs/REs submit Transmission and Resource data for December model (05_Nodal_Load_transition_1_0.doc posted on 06/01 NATF Materials) Resource outages will NOT be imported during Zonal to Nodal import into Outage Scheduler CRRAH must register by deadline to be eligible to participate in the December Auction (Protocol ) TSPs/QSEs can begin entering outages in Outage Scheduler via Web Service or UI TSPs/QSEs are responsible for verifying outages imported to Nodal Systems and correcting any missed outages or incorrect outages by 09/17/2010 Functional Area 7/28/2010Market Readiness Seminar #5 22 Key Cut-Over Activities for September 2010 (09/01) Model: Network Model Go-Live (09/01) Model: Deadline to submit Model changes for Month of December (09/02) Model: Begin interim update process (09/13) CRR: ERCOT publishes CRR Activity Calendar to MIS (09/17-12/01) OS: Outages are synched. Market Participants maintain outages in both the Zonal and Nodal Outage Scheduler for outages effective December and beyond. Network Model Outage Scheduler Congestion Revenue Rights Functional Area MayJuneJulyAugSeptOctNovDec Cut-Over Monthly Outlook September Entities Involved ERCOT TSP REs CRRAH QSE Impacts TSPs / REs that submit Model changes to ERCOT by 09/01 will be applied prior to Go-Live From 09/02 forward until Go-Live any Model changes submitted to ERCOT for application prior to Go-Live will leverage the interim update process. MPs can retrieve the CRR Activity Calendar from MIS public with a valid Digital Certificate 7/28/2010Market Readiness Seminar #5 23 Impacts MIS unavailable from 10/03-10/11 for production reconfiguration** CRRAH able to retrieve ACLs from CRR system each business day. MPs can post additional collateral until 11/08/2010 for Dec 2010 CRR Auction MPs able to start retrieving Go-Live postings on MIS. Refer to EMIL for dates per posting. More information in August workshop Dec 2010 CRR Model available on MIS Dec 2010 Monthly Auction Notice available on MIS Functional Area Network Model Outage Scheduler Congestion Revenue Rights Credit MayJuneJulyAugSeptOctNovDec Cut-Over Monthly Outlook October Key Cut-Over Activities for October 2010 (10/01) CRR: CRR system data clean up for Go-Live (10/01) Credit: ERCOT assesses each CPs credit worthiness for the Dec CRR Auction (10/02) OS: First pull of December Outages for CRR Network Model (10/02) Model: Network Model built for PCRR Allocation (10/03-10/11) MIS: ERCOT PERFORMS PRODUCTION RECONFIGURATIONS ON MIS** (10/13) OS: December Outages pulled for CRR Auction Model (10/13) Model: Model built for CRR December Auction 7/28/2010Market Readiness Seminar #5 24 Impacts MIS unavailable from 10/03-10/12 for production reconfiguration CRRAH able to retrieve ACLs from CRR system each business day. MPs can post additional collateral until 11/08/2010 for Dec 2010 CRR Auction MPs able to start retrieving Go-Live postings on MIS. Refer to EMIL for dates per posting. More information in August workshop Dec 2010 CRR Model available on MIS Dec 2010 Monthly Auction Notice available on MIS Functional Area Network Model Outage Scheduler Congestion Revenue Rights Credit MayJuneJulyAugSeptOctNovDec Cut-Over Monthly Outlook October Key Cut-Over Activities for October 2010 (10/13-10/18) CRR: ERCOT begins accepting PCRR Nominations for December Monthly Auction (10/15-11/15) Model: Model posted to MIS and Market Participant begin validation process (10/26) CRR: ERCOT shall allocate PCRRs to NOIEs for the 2010 December Monthly Auction and publish to MIS (10/26) CRR: ERCOT shall post CRR Network Model for the 2010 December Monthly Auction to MIS (10/28-11/08) Credit: ERCOT posts ACLs daily for CRR December monthly auction to CRR (10/29) CRR: ERCOT to post December 2010 Monthly Auction Notice to MIS 7/28/2010Market Readiness Seminar #5 25 Cut-Over Monthly Outlook High-Level Remaining Outlook to Go-Live **Tentative dates that will be firmed up with details in the next month October 10/12MIS Portal will be presenting production data postings and applications (refer to MIS ERCOT Market Information List v8.20 posted on Nodal.ercot.com for specific dates) November 11/04/10ERCOT sends notification to NOIE's regarding Open Date for Nominations for Jan 2011 Allocation 11/05/10January 2011 Monthly PCRR Allocation nomination window opens 11/08/10ERCOT to Lock CRR Credit and Send First Non-Zero ACL Data to CMM 11/08/10December 2010 CRR Auction Lock Date 11/08/10Deadline for Market Participants to post additional collateral for December 2010 Monthly Auction 11/09/1000:00:01 CPT December 2010 Monthly CRR Auction Bid window opens 11/11/1023:59:59 CPT December 2010 Monthly CRR Auction Bid window closes 11/12/10December 2010 Monthly CRR Auction begins execution 11/12/10January 2011 Monthly PCRR Allocation nomination window closes 11/15/10December 2010 Monthly CRR Auction Results published to Market 11/16/10December Monthly 2010 CRR Auction Invoice published to Market 11/19/1017:00 CPT Payment Due for December 2010 Monthly CRR Auction Invoices 11/19/10ERCOT allocates PCRR to NOIEs for the January 2011 Monthly Auction 11/19/10January 2011 CRR Network Model published to Market 11/22/10ERCOT pay CRRAH owed from December 2010 Monthly CRR Auction 11/23/10ERCOT to Release ACL (TPE and ACL Reports Available on MIS) 11/23/10 ERCOT to publish ACL to CRR system for January Auction 11/23/10Day-Ahead Market Submission Opens 11/24/10January 2011 Monthly Auction Notice published to Market 7/28/2010Market Readiness Seminar #5 26 Starting October 1, 2010, the ERCOT Nodal Production Environment will be undergoing a series of preparation activities required for Go-Live. Planned Market Facing test will remain flexible during this period to accommodate Cutover activities. Additionally, while ERCOT is not performing a Market Facing test, environment availability will remain flexible as well. Exceptions to this are as follows: Any system that has entered into a production mode. If these systems must be taken offline, ERCOT will notify MPs via a Market Notice. Examples are Nodal Outage Scheduler, CRR Application or Network Model Management System (NMMS ). Telemetry will remain in place and online from both ERCOT and MPs. During Market facing tests, the Nodal Production environment will remain available unless otherwise communicated by ERCOT. Cut-Over Production Environment Availability 7/28/2010Market Readiness Seminar #5 27 2/24/2016 Cut-Over Communication Plan 7/28/2010Market Readiness Seminar #5 28 Nodal Cutover and Market Transition Communication Plan Friday Market Calls Starting 08/27/2010 at 9AM-12noon these calls will be combined, without breaks, into a single Market Trials and Cut-over Activities call Market Participants should plan on attending the full duration of this call as it will provide the primary means of communication between ERCOT and the Market. Information and materials covered in this call will continue to be posted to the ERCOT calendar website every Friday at the following URL: Monday Kick-Off Calls As needed to review the cutover activities for the week Market Notices and Market Participant Contact Lists ERCOT will continue to leverage Market Notices to communicate pertinent information that is required to be consumed by the Market as a whole. Market Participants employees can subscribe to the Market Notices on the ERCOT Lists website at the following URL:Market Participants may verify their contact information on file with ERCOT through their assigned Whole Client Services Representative. 7/28/2010Market Readiness Seminar #5 29 Nodal Cutover and Market Transition Communication Plan (Cont.) Market Participants Contacting ERCOT Market Trialsinbox: This inbox will continue to be maintained throughout Nodal Cutover. This will serve as a catch-all forum for questions if there is any doubt as to where a question should be Friday Market Calls: In line with the previously mentioned schedule, these Market Calls not only serve as the primary means for ERCOT to communicate to the Market, but also for MPs to field general questions concerning the Nodal Cutover plan. ICCPinbox: for specific MP questions regarding their Nodal ICCP / Telemetry, thisaddress should be leveraged for the fastest ERCOT Wholesale Client Services Account Manager: Whenever possible MPs should leverage the Market Trialsinbox, however, MPs Wholesale Client Services Account Manager will also be equipped to either answer your questions or route you to the correct support personnel. Nodal Advisory Task Force (NATF): NATF will serve as a forum for initially reviewing changes in activities during the ERCOT Nodal Cutover, NPRRs and any concerns from the Market that would impact the overall Cutover plan. To that end, NATF will be meeting more frequently to ensure expedient coverage of these types of issues. Details regarding meeting agendas and materials from past meetings will continue to be maintained at the following URL:7/28/2010Market Readiness Seminar #5 30 Nodal Cutover and Market Transition Communication Plan (Cont.) Go-Live Communication Strategy Purpose and Objectives Maintain reliable grid operations during the Go-Live period Maintain constant interaction to respond quickly and effectively to issues that arise during the go-live period Respond and report any observed anomalies in market performance or behavior Go-Live Period Communication Market Calls Daily and at times hourly conference calls between ERCOT and Market Participants will start, at a minimum, two days prior to Go-Live. ERCOT will set up the logistics of the calls and communicate via a Market Notice and the Cutover Handbook Stabilization Period Communication Market Calls Post DAM Daily Market Calls Daily Issue / Inquiry Wholesale Client Service Reps ERCOT Helpdesk **More details and updates on the Go-Live Communication plan to be presented in the coming months 7/28/2010Market Readiness Seminar #5 31 Nodal Cutover and Market Transition Upcoming Events EventAgendaDateLocation Nodal Market Call Combined Market Trials and Cutover call between ERCOT and Market Participants begins Aug. 27 9am-12pm Conf. Call/Web Ex NATF - Nodal Cutover Update Remaining and updated Go-Live Activities for October, November, December (Credit, Settlements, Extract/Postings, Registration, MMS, MIS, etc.) Aug. 31 9:30am-3:30pm ERCOT Austin Room 206B NATF Nodal Cutover Update Post Go-Live Activities for January, February, March, and Reversion Plan Sep. 28 9:30am-3:30pm ERCOT Austin Room 206A 7/28/2010Market Readiness Seminar #5 32 Next 60-days of Nodal Classes/Workshops Course Start DateLocation Day-Ahead Workshop Follow UpJuly 29ERCOT (Taylor) Transmission 101August 3ERCOT Met Center (Austin) Basic Training ProgramAugust 10Calpine (Houston) NPRR206 E-Factors WorkshopAugust 10Hilton Austin Airport (Austin) ERCOT Nodal 101August 10ERCOT Met Center (Austin) Basic Training ProgramAugust 10Calpine (Houston) Network Model/Outage Scheduler Workshop (new) August 10ERCOT (Taylor) Load Serving Entity 201August 16Reliant Energy (Houston) Market Settlements 301August 17City of Garland Fire Administration Building (Dallas) Network Model/Outage Scheduler Workshop (new) August 18ERCOT (Taylor) GCPA Retail WorkshopAugust 19Centerpoint (Houston) 28 July 2010 Enrollment at:Market Readiness Seminar #5 33 Next 60-days of Nodal Classes/Workshops - continued Course Start DateLocation NOIE QSE OperationsAugust 20City of Garland Fire Administration Building (Dallas) Congestion Revenue RightsAugust 24University of Delaware (Newark, DE) Generation 201August 25University of Delaware (Newark, DE) Congestion Revenue RightsAugust 31ERCOT Met Center (Austin) Generation 201September 1Hilton Austin Airport (Austin) Economics of LMPSeptember 13ERCOT Met Center (Austin) ERCOT 101 for Wind GenerationSeptember 13Optim Energy (Dallas) ERCOT Nodal 101September 14StarTex Power (Houston) Generation 101September 15Hilton Austin Airport (Austin) Basic Training ProgramSeptember 20LCRA (Austin) Load Serving Entity 201September 27ERCOT Met Center (Austin) Enrollment at:28 July 2010Market Readiness Seminar #5 34 7/28/2010Market Readiness Seminar #5 Credit Transition to Nodal (Preliminary) July 28, 2010 Market Readiness Seminar #5 36 Topics Credit Cutover Overview December 2010 CRR Auction held in November January 2011 CRR Auction held in December Approach for estimating initial exposure in CMM Preliminary Credit Cutover Timeline Market Readiness SeminarJuly 28, 2010 37 Credit Cutover Overview Nodal Protocol Section on Credit will light up for the December 1 operating day ( Credit Requirements for CRR Auction Participation will light up beginning with the December 2010 CRR Auction) Prior to that, credit requirements need to be established for the December 2010 CRR Auction held in November Plan to handle similarly to the current Zonal TCR Auctions Separate collateral posted Available Credit Limits (ACL) viewable in CRR, not MIS Credit Reports will begin being posted on Tuesday, November 23 rd To support the January 2010 CRR Auction held in December In preparation for the first DAM run on November 30th Market Readiness SeminarJuly 28, 2010 38 Establish ACLs for December 2010 CRR Auction ERCOT Credit will verify creditworthiness of CRRAHs by October 1, 2010 CRRAHs that meet Creditworthiness Standards and are assigned unsecured credit will notify Credit staff of how much unsecured credit (other than that used for QSE activity) to assign to the December 2010 CRR Auction (if any) between October 28 and November 8 CRRAHs that do not meet the Creditworthiness Standards but wish to participate in the December 2010 CRR Auction will: Send collateral specifically earmarked for the December 2010 CRR Auction to ERCOT via wire transfer between October 28 and November 8 The combination of posted collateral and unsecured credit allocated by the CRRAH will be the ACL provided for the CRR Auction Market Readiness SeminarJuly 28, 2010 December 2010 CRR Auction held in November 39 December 2010 CRR Auction held in November View ACLs prior to December 2010 CRR Auction ACLs will be viewable in the CRR Application beginning October 29, 2010 ACLs will be viewable only by CRR Account Holders and Counter-Parties and only in the CRR Application leading up to the December CRR Auction (e.g. not on MIS). December 2010 CRR Auction bid submission window opens on November 9, closes on November 11, and the CRR Auction begins execution on November 12 After the CRR Auction has executed Auction results posted in CRR Application and on MIS on November 15 PCRR and CRR Auction invoices are posted on MIS by November 16 (before midnight) CRR Auction invoice payments are due by November 19 by 5:00 PM (CST) ERCOT to pay CRR amounts on November 22 Market Readiness SeminarJuly 28, 2010 40 December 2010 CRR Auction held in November Release of CRR collateral / Ongoing collateral requirement for CRR obligations Once invoices are paid, CRR collateral or unsecured credit is released and may be refunded, with the following consideration CRR Obligations - An amount equal to the greater of the ACPE component of the FCE calculation and the Auction Clearing Price (ACP) will be held as collateral for FCE until ACLs are produced by CMM CRR Options - No collateral will be retained Market Readiness SeminarJuly 28, 2010 41 January 2011 CRR Auction held in December Establish ACLs for January 2011 CRR Auction ERCOT Credit will verify creditworthiness of CRRAHs prior to the auction ACLs will be set in CMM Initial exposures will be calculated using available Zonal data until Nodal data becomes available (see next page) View ACLs prior to January 2011 CRR Auction ACLs will be viewable from CMM Credit Reports posted to MIS beginning November 23, 2010 and in the CRR Application beginning November 24, 2010 January 2011 CRR Auction bid submission window opens on December 7, closes on December 9, and the CRR Auction begins execution on December 10 After the CRR Auction has run Timelines for posting Auction results and CRR Auction invoices are per Nodal Protocols CRR Auction invoice payment requirements are per Nodal Protocols Release of CRR collateral / Ongoing collateral requirement for CRR obligations Release of CRR collateral and ongoing collateral requirements for CRR obligations are per Nodal Protocols Market Readiness SeminarJuly 28, 2010 42 Approach for establishing the initial exposure in CMM Overview Utilize Zonal data to the extent possible to establish initial TPE CRR Obligations from December 2010 auction will be collateralized at the greater of the ACPE component of the FCE calculation and the Auction Clearing Price (ACP) CRR Options will not have value initially (until DAM values are available) Market Readiness SeminarJuly 28, 2010 43 Approach for establishing the initial exposure in CMM Market Readiness SeminarJuly 28, 2010 44 Preliminary Credit Cutover timeline Thursday, November 18 th Zonal invoice published last Zonal EAL credit calculation from which a collateral call will be made (system will be maintained through Go Live and will be available for a period beyond Go Live) Friday, November 19 th Nodal CRR auction invoice payments due Tuesday, November 23rd Post first Nodal Credit Reports and send ACL to CRR and DAM No collateral calls sent based on these reports Wednesday, November 24 nd Last Zonal NLRI credit calculation from which a collateral call will be made (system will be maintained through Go Live and will be available for a period beyond Go Live) Thursday / Friday, November 25 th / 26 th Thanksgiving holiday Market Readiness SeminarJuly 28, 2010 45 Preliminary Credit Cutover timeline Monday, November 29 th Zonal invoice published First Nodal credit calculation from which a collateral call will be made For example, collateral may be required based on AIL activity (e.g. Zonal NLRI data) Will exclude Zonal invoice from November 29 th from the calculation send ACL for initial DAM (afternoon) Tuesday, November 30 th initial DAM e factors set at 1/0/1 Second Nodal credit calculation Will include Zonal invoice from November 29 th in the calculation Wednesday, December 1 st Go Live Market Readiness SeminarJuly 28, 2010 46 7/28/2010Market Readiness Seminar #5