Nodal Market Workshop for

Retail Electric Providers

October 6th 2010Austin, Texas

LEGAL DISCLAIMERS AND ADMONITIONS

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 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.

Slide 2

AGENDA

INTRODUCTION:MARCIE ZLOTNIK, COO & CHAIRMAN, STARTEX POWER

9:30 A.M.

NODAL MARKET PROGRAM UPDATE ERCOT

9:45 A.M.

PANEL 1: THE BIG PICTUREINTERACTIONS BETWEEN ERCOT AND MARKET PARTICIPANTS

10:15 A.M.

LUNCH 11:15 A.M.

PANEL 2: WHOLESALE MARKET CHANGESINTERACTIONS BETWEEN MARKET PARTICIPANTS

12:00 P.M.

BREAK 1:30 P.M.

PANEL 3: RETAIL MARKET CHANGESINTERACTIONS BETWEEN REP’S AND RETAIL CONSUMERS

1:45 P.M.

OPENING REMARKS

PLEASE WELCOME:

MARCIE ZLOTNIK

COO & CHAIR, STARTEX POWER

ERCOT BOARD MEMBER

MODERATOR

RAJ CHUDGAR

SUNGARD CONSULTING SERVICES

PLEASE WELCOME:

PANEL 1: THE BIG PICTURE

INTERACTIONS BETWEEN ERCOT AND MARKET PARTICIPANTS

THE BIG PICTURE

Slide 7

ERCOT AND MARKET PARTICIPANTS

Slide 8

PANEL 1:THE BIG PICTUREINTERACTIONS BETWEEN ERCOT AND MARKET PARTICIPANTS

CRR Account Holder

QSE

• Maintains Available Credit Limit (ACL) with ERCOT

ERCOT AND MARKET PARTICIPANTS

PANEL 1:THE BIG PICTUREINTERACTIONS BETWEEN ERCOT AND MARKET PARTICIPANTS

MANAGING CREDIT

• CRR Auctions• Day-Ahead Market• Real-Time

PANEL 1: THE BIG PICTURE

INTERACTIONS BETWEEN ERCOT & MARKET PARTICIPANTS

TOPICS• MARKET RELATIONSHIPS• TRANSITION TO NODAL MARKET• CREDIT ISSUES  • ZONAL-NODAL CHANGES

PANEL-1

Slide 10

PANEL-1

PANEL MEMBERS:

GDF SUEZ ENERGY

RESOURCES NA

LUMINANT ENERGY

COMPANY

ERCOT

ANDREW ELLIOT SHERRY LOONEY CHERYL YAGER

DIRECT ENERGY

READ COMSOCK

TRIEAGLEENERGY

MARTY DOWNEY

OVERVIEW

TOWARD A NEW MARKET MODEL

Slide 12

55 Days and counting !!!Nodal Market December 1st, 2010

Slide 12

OVERVIEW

Who are the Players?

QSE

LSE

Resource

CRRAccount Holder

Qualified Scheduling Entities

Load Serving Entities (REP, NOIE)

Resource Entities

Slide 13

TSPTransmission Service ProvidersDistribution Service ProvidersDSP

CRR Account Holders

Counter Party

OVERVIEW

Zonal Market Nodal Market

Slide 14

• Improved price signals • Improved dispatch efficiencies • Direct assignment of local congestion

Hubs

Load Zones

Resource Nodes

OVERVIEW

Slide 15

PANEL 1

DISCUSSION

• SPEAK INTO A MICROPHONE• INTRODUCE YOURSELF• KEEP QUESTIONS BRIEF & CONCISE

16

PANEL 2: WHOLESALE MARKET CHANGES

INTERACTIONS BETWEEN MARKET PARTICIPANTS

RE

PANEL 2: WHOLESALE MARKET CHANGES

Slide 18

PANEL 2:WHOLESALE MARKET CHANGESINTERACTIONS BETWEEN MARKET PARTICIPANTS

PANEL 2: WHOLESALE MARKET CHANGES

INTERACTIONS BETWEEN MARKET PARTICIPANTS

TOPICS• BILATERAL TRADES

(ENERGY, ANCILLARY SERVICES, CAPACITY)• HEDGING INSTRUMENTS

• CRR, DAM PTP OBLIGATIONS• QSE - REP RELATIONSHIP• NODAL MARKET SETTLEMENT

(DAM, RUC, REAL-TIME)

PANEL - 2

Slide 19

RE

PANEL - 2

PANEL MEMBERS:

POWER & GASCONSULTING

STRATUS ENERGY

ERCOT MP2ENERGY

JIM REYNOLDS KIM CASEY STEVE REEDYBRANDON

SCHWERTNER

SHELL ENERGY NORTH

AMERICA

TRAVIS RADTKE

Overview - Serving Load

Energy

Capacity

Ancillary Services

What are the wholesale market costs for serving load?

Slide 21

Overview - Serving Load

Energy and Capacity

Bilateral Trade

Day-Ahead Market

Real-Time Purchase

Energy& Capacity

Energy& Capacity

Energy& Capacity

Energy& Capacity

EnergyEnergy

Slide 22

Overview - Reliability Unit Commitment (RUC)

Capacity Short Charge

Capacity Obligations

Capacity Supply

Capacity Shortfall

Slide 23

QSEs with Capacity Shortfall are assessed Capacity Short ChargesQSEs with Capacity Shortfall are assessed Capacity Short Charges

• Load• Bilateral Sales• DAM Sales

• Resources• Bilateral Purchases• DAM Purchases

Energy Supply

• Generation • DAM Purchase• Bilateral Purchases

Energy Supply

• Generation • DAM Purchase• Bilateral Purchases

Energy Obligations

• Load• DAM Sales• Bilateral Sales

Energy Obligations

• Load• DAM Sales• Bilateral Sales

Overview - Real-Time Operations

Slide 24

ResourceNodes

LoadZones

Hubs

PANEL 2

DISCUSSION

• SPEAK INTO A MICROPHONE• INTRODUCE YOURSELF• KEEP QUESTIONS BRIEF & CONCISE

25

PANEL 3: RETAIL MARKET CHANGES

INTERACTIONS BETWEEN REPS AND

RETAIL CUSTOMERS

PANEL 3: RETAIL MARKET CHANGES

Slide 27

PANEL 3:RETAIL MARKET CHANGESINTERACTIONS BETWEEN RETAIL ELECTRIC PROVIDERS AND CUSTOMERS

PANEL 3: RETAIL MARKET CHANGES

REP’S AND RETAIL CONSUMERS

TOPICS• NODAL MARKET CHARGES• CONTRACTS• PRODUCT AND SERVICE OFFERINGS• CONSUMER PROTECTION

OVERVIEW

Slide 28

Introduction

PANEL 3 MEMBERS:

STARTEX POWER

PUBLIC UTILITIES

COMMISSION OF TEXAS

TEXAS OFFICE OF

PUBLIC UTILITY

COUNSEL

FOX, SMOLEN, AND

ASSOCIATES

STEVE MADDENSHAWNEE

CLAIBORNE-PINTO DANNY BIVENS PAUL SMOLEN

PRIORITY POWER

MANAGEMENT

JOHN BICK

PANEL 3

DISCUSSION

• SPEAK INTO A MICROPHONE• INTRODUCE YOURSELF• KEEP QUESTIONS BRIEF & CONCISE

30

THANK YOU FOR YOUR PARTICIPATION