January 21, 2008

TPTF

168 Hour Test

Initial Approach Discussion

2TPTF1/21/2008 2

Agenda

• Review applicable Nodal Transition Plan section

• Review Entry criteria

• Review 168 Hour Test timeline

• Review ERCOT and MP involvement

• Approach to handle Significant

3TPTF1/21/2008 3

ERCOT Nodal Transition Plan

• 5.4.9 168-Hour Test and Trial Real Time Settlement

(1)ERCOT shall develop real time dispatch market readiness criteria that will include a systems stability test. The systems stability test generally will require the real time systems performing SCADA, Network Security Analysis, Transmission Constraint Management, SCED, RUC and LFC to operate without significant error for at least 168 continuous hours. On detection of any significant error of the operations systems (non-settlement), ERCOT and the Vendor will correct the problem and re-start the 168-Hour Test.

(2) ERCOT shall provide QSEs with test settlement statements for each Operating Day of the 168 Hour Test as defined in the detailed test plan. The test settlement statements for each Operating Day will use calculated dispatches and LMPs from SCED and actual meter data simulating actual settlement statements for real-time operations. QSEs shall review the test settlement statements for errors and provide feedback to ERCOT for resolution. ERCOT will work with Market Participants to resolve any settlements issues identified during the 168-Hour Test prior to beginning Real-Time Operations.

4TPTF1/21/2008 4

EDS 1,2, 3 and 4 will be completed before starting the 168 Hour Test

All sections under the “System Testing and Nodal Market Implementation Track” of the ERCOT Nodal Transition Plan will be completed before starting the 168 hour test, with the exception of

5.4.9 168-Hour Test and Trial Real Time Settlement 5.4.10 Transmission Element Outages 5.4.11 Real Time Operation and Settlement

NM Verification

SCED & LMP Posting for 6 months

ICCP / P2P

SE Tuning

E1 R2

E2 R3E2 R4

E3 R5

E3 R6 LFC Testing

E3 R7 CRR Testing

E4 R9CMM, DAM & RT Settlements, Ver Costs & Disputes

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

DAM, SASM & RUC execution, DAM Stability Test, EECP, DST, Compliance

E4 R8

168 H. T.

EDS 1

EDS 2

EDS 3

EDS 4

Today

5TPTF1/21/2008 5

Entry Criteria for the 168 hour test

No Severity 1 or Severity 2 defects in Nodal applications

All functionality supporting Nodal protocols has been deployed to the EDS environment*

Completion of all EDS exit criteria

Completion of all EDS 1, 2, 3 and 4 Readiness Metrics

MPs have verified data in ERCOT systems

* A few non-shadow settlement extracts may be delivered after Sept 1

6TPTF1/21/2008 6

PRR 727 governs the time available for completing the 168 Hour Test

No part of the nodal market design may start operation until all the Market Readiness Criteria for that part of the nodal market design have been met

Certification that all Market Readiness Criteria have been met must be made at least by each of the following: the TPTF, TAC, ERCOT Staff and the ERCOT Board.

Upon such certification, ERCOT shall issue two Notices…the first Notice no less than thirty days prior to the effective date or retirement date...and the second Notice no less than ten days prior...

TAC Oct 2, 2008 This implies that we have only 32 days to succesfully complete 168 hour test

ERCOT BOD Oct 21, 2008

TPTF TBD

Committee Last meeting prior to 10/31 Comments

Sept Oct Nov

Start 168 Hour Test

10/31 First Market Notice

11/21 Second Market Notice

10/2 TAC Meeting

10/21 ERCOT BoD meeting

12/1: RTM Go-Live

7TPTF1/21/2008 7

DRAFT 168 Hour Test timeline – shows we need more than 168 hours for completing the test

Real Time Market

Timeline

Operating

Day 1

Operating

Day 2

Operating

Day 3

Operating

Day 4

Operating

Day 5

Operating

Day 6

Operating

Day 7

Operating

Day 8

DAM Timeline

DAM for Day 1

DAM for Day 2

DAM for Day 3

DAM for Day 4

DAM for Day 5

DAM for Day 6

DAM for Day 7

DAM for Day 8

DAM for Day 9

RTM Settlement

Stmt

Stmt for Day 1

Stmt for Day 2

Stmt for Days 3,

4, 5

Stmt for Day 6, 7

DAM Settlement

Stmt

Stmt for Day 1

Stmt for Day 2

Stmt for Days 3,

4, 5

Stmt for Day 6, 7

Sep 1, 2008 Sep 2, 2008 Sep 3, 2008 Sep 4, 2008 Sep 5, 2008 Sep 6, 2008 Sep 7, 2008 Sep 8, 2008 Sep 9, 2008

Best case (assuming no critical errors occur) the 168 Hour Test commences on September 1st and complete September 8th at Midnight.

Control of the ERCOT grid during the 168 hour test?ERCOT prefers the grid to be controlled by Nodal throughout the duration of the test

Between completion of the Test and Nodal Go-live Zonal and Nodal will operate in parallel

Critical functions such as LFC and SCED would be regression tested between the 168 hour test completion and Nodal Go-Live as part of Go-Live Sequence

168 Hour test completeEDS 4 Complete

Settlement timeline to be confirmed

8TPTF1/21/2008 8

Test Nodal Settlements Statements during the 168 hour test (non-binding)

For each successful operating day, RTM Initial Statement shall be published as soon as practical Snapshot of metering data shall be used for generating test

settlement statements during the 168 hour test

For each successful operating day, ERCOT shall publish DAM Statements and Invoices on the 2nd business day after the operating day

Statements and Invoices will be available for download on the MIS Certified area

QSEs should respond within 48 hours of invoice or statement posting with errors or feedback

9TPTF1/21/2008 9

CRR Auction will be excluded from 168 hour test

CRR ownership information for DAM can be stubbed using the results from CRR EDS

Alternately, a test CRR auction would be run at least seven days prior to the start of 168 hour test for generating data needed for DAM

10TPTF1/21/2008 10

ERCOT involvement

Staff from ERCOT operations (business and IT) will execute the test

Staffing will be sufficient to meet business operations and the IT production service level agreement

Management of daily activities will occur through the ERCOT chain of command

All defined daily tasks for Nodal will be executed

The Nodal Program will setup a daily conference call with all MPs to go through issues

The Nodal Program will only coordinate issue resolution if significant errors occur

11TPTF1/21/2008 11

Market Participant involvement

Staff from the MPs operations (business and IT) will execute the test

Staffing will be sufficient to meet business operations and the production service level agreement

Management of daily activities will occur through the MP’s chain of command

All protocol defined interactions between MPs and ERCOT will be performed according to the timeline

Data submissions will reasonably resemble post Go-live submissions

ICCP must be continually updated by the MPs

The 168 hour test is the final Qualification test and all MPs are required to participate during the entire test

12TPTF1/21/2008 12

Interpretation of the term “significant error”

Severity 1 defects (Data loss / Critical error)

Severity 2 defects (Loss of functionality without workaround)

ERCOT will nominate a Test Director, with support from business and IT, who is responsible for deciding the severity of an error and for resetting the 168 hour clock

Upon detection of a significant error, ERCOT shall Halt the 168 hour test Work with the vendors / internally to fix all issues that have been

identified Provide 2 hour notice to MPs before re-starting the 168 hour clock

The EDS environment will continue to be operational with functions not affected, even when the 168 hour clock has been stopped