http://nodal.ercot.com 1 nodal market readiness cut-over activities kick-off meeting may 25, 2010

http://nodal.ercot.com 1

Nodal Market ReadinessCut-Over Activities Kick-Off Meeting

May 25, 2010


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.

Agenda

• Introduction Kenneth Ragsdale

• Cut-Over and Market Transition Lisa Hoover/Kenneth Ragsdale

– Background

– Scope of Cutover Project

– Assumptions for Cutover Approach

– Key Cutover Activities

– Cutover Timeline

– Market Participant Roles & Responsibilities

• Cut-Over Communication Kenneth Ragsdale

• Next Steps Lisa Hoover

• 120 Day Outlook – What’s on the Horizon? Scott Middleton



Nodal Cut-Over and Market Transition

• Topics That Will Be Covered Today- ERCOT’s Cut-Over Scope- Cut-Over Assumptions, Decisions and Implications- Key Cut-Over Dates- High-Level Timeline

• Topics That Will Not Be Covered Today- Post Go-Live Activities- 2008 Go-Live Procedure Document- Contingency Plans- System Decommissioning/Retirement Plans


Nodal Cut-Over and Market Transition - Background

ERCOT’s Cut-Over Structure

04/20/23


Background

• What Does “Cut-Over” Mean?- Essentially to migrate or in some cases, to “cut-over” to a new application or system


Nodal Cut-Over and Market Transition - Background

• What Type Of Cut-Over Approach is ERCOT Choosing for Go-Live?- Big-bang- Incremental- Parallel

04/20/23


Scope of Cut-Over Project

• How Time Frame Was Defined– First triggering event necessary to support Cut-Over; includes both business and

technical aspectso Pre Go-Live Activities currently ~120 days out (August)o Post Go-Live Activities related to Nodal currently ~180 days after go-live (June 2011)

• Scope of Cut-Over for ERCOT– Cut-Over Planning Activities– Training on System and Business Processes– Security and Compliance– Data Preparation, Migration and Reconciliation– Contingency / Fall-Back Plans– Organization and Support Structure– Communication


ScopeNodal Market Readiness


Timeline DevelopmentNodal Market Readiness

• How We Worked Through the Development Process:- Started with Timeline of Business Applications with Earliest Go-Live Dates - Looked at Predecessors and Successors Applications- Incorporated Mid-Stream Dependency Applications- Captured Outstanding Questions

o Developed List of Decisions, Proposed Assumptions and Implications

• Example of Artifacts Taken into Account:– Texas Nodal Market Go-Live Procedure– Texas Nodal Market 168-Hour Test Procedure– Market Trials Real-Time Market Testing Market Participant Handbook

04/20/23


Cut-Over Decisions


DecisionsNodal Market Readiness

Key Decisions in Developing Nodal Cut-Over Sequence Timeline

No. Decision Benefits Risks

1

The 168-Hour Test is considered the end of Market Trials. After that time, there will be no commitment to have the Nodal systems available to Market Participants for testing

Market Participants and ERCOT may focus on preparing for go- live

Market Participants are still not ready after Market Trials (MOTE/ Submission Testing will be available)

2

No additional Nodal tests are currently scheduled past the 168-Hour Test for Market Participants. It will be at ERCOT’s determination to have additional testing.

Market Participants and ERCOT may focus on preparing systems for go- live

ERCOT would still have the option to call for additional test if deemed necessary

If Market Participants are still not ready after Market Trials (MOTE will be available)

3 ERCOT has no plans of making test data available to Market Participants after Market Trials

Will allow the transition into the go-live sequence to begin right after Market Trials end

Will not have old history available


DecisionsNodal Market Readiness

Key Decisions in Developing Nodal Cut-Over Sequence Timeline

No. Decision Benefits Risks

4

Zonal invoices and statements will be included in the Nodal Exposure Calculation. As a result the credit limit (collateral) will be a shared pool between Zonal and Nodal

A single pool of collateral for zonal and nodal activity

Reconciliation issues

04/20/23


Proposed Assumptions for Cut-Over


Proposed AssumptionsNodal Market Readiness

Proposed Assumptions in Developing Nodal Cut-Over Sequence Timeline

No. Proposed Assumption Benefits Risks

5

Grid operations will switch to Nodal control beginning at 14:00 on 11/30/10 to stabilize on the Real-time systems. From a financial standpoint, the switch will occur at mid-night

Can treat 14:00 to mid-night as LFC test

More staff available during the day

Similar to all LFC tests, Zonal congestion costs are lost for 10 hours

6

The Nodal Go-Live Plan originally included that the DAM would not be run until 7-days after nodal go-live. Note that ERCOT has the system flexibility to consider executing the Day-Ahead Market as part of the go-live sequence. All systems, including DAM, will be running, the question is whether to procure energy along with the Ancillary Services on Nov 30th for December 1

Nov30/Dec1-DAM

QSE ability to voluntarily procure energy in the DAM and hedge real-time energy costs on Dec 1 along with co-optimizing ancillary services

If there is a need to fail-over during the first seven days back to the Zonal Balancing Market, there are significant re-settlement implications

If there is a need in first 7-days of real-time to fail-over back to the Zonal Balancing Market, there are minimal financial implications (no unwinding of a Day-Ahead Market)

Dec7/Dec8-DAM

QSEs subject to real-time prices and no AS co-optimization (note that CRRs will carry into Real-time)


Proposed AssumptionsNodal Market Readiness

Proposed Assumptions in Developing Nodal Cut-Over Sequence Timeline

No. Proposed Assumption Benefits Risks

7

Production outages occurring in the month of December will require dual entry/management in both Nodal and Zonal systems.

Additionally, Outages applicable to October and November are only required to be entered in Zonal unless they cross into December. In this case, outages will require dual entry.

Can begin approving outages ahead of go- live day

Manpower necessary to maintain both Zonal Nodal

8 Once ERCOT begins posting the ACL and TPE details on Nodal, the Zonal reports will be discontinued

Single source of reporting

Reconciliation issues

04/20/23


Nodal Market ReadinessKey Cut-Over Activities


Key Cut-Over ActivitiesNodal Market Readiness

October NovemberSeptember2010 December

04/20/23


Cut-Over Timeline


Cut-Over TimelineNodal Market Readiness

04/20/23


Market Participant Role and Responsibilities


Roles and ResponsibilitiesNodal Market Readiness

A Glance at Market Participant Roles and Responsibilities

Network ModelNetwork Model

Nodal Protocol Section 3.10 goes into effect (Sept. 1)• TAC Approval – July 1st • Board Approval – July 20th

• Market Notice – July 30th

September 1st Deadline to Submit Changes for the December Network Model

October 15th Market Validation of the December Network Model

December 1st December Network Model in Effect*

* load date tbd




Outage SchedulerOutage Scheduler

Nodal Protocol Section 3.1 goes into effect (Sept. 1)• TAC Approval – July 1st • Board Approval – July 20th

• Market Notice – July 30th

September 1st Market Participants to Enter Production Outages for December and Beyond

September 15th Market Participants Having Outages Occurring in December and Beyond Should Be Synchronized Between Zonal and Nodal

September 15th ERCOT to Begin Approving/Rejecting Outages in Production using Both Zonal and Nodal Systems




Credit, CRR and SettlementsCredit, CRR and Settlements

Nodal Protocol Section 7 goes into effect (Oct. 13)• TAC Approval – August 5th • Board Approval – August 17th • Market Notice – September 13th

October 2nd ERCOT to Pull Network Model and Outage Data

October 12th – 20th

ERCOT to Determine Creditworthiness

October 13th ERCOT to Begin Accepting PCRR Nominations for the December 2010 Monthly CRR Auction

October 20th ERCOT to allocate PCRRs for NOIEs for the December 2010 Monthly CRR AuctionNetwork Model for the December 2010 Monthly CRR Auction Posted

October 20th Model Posted for December 2010 Monthly CRR per Nodal Protocol 3.10.1

October 21st ERCOT to Post ACLs

October 24th ERCOT to Post the December 2010 Monthly CRR Auction Notice

November 3rd ACLs Posted via MIS




Credit, CRR and Settlements (continued)Credit, CRR and Settlements (continued)

November 4th – 10th

Start of the Bid/Offer Submission Window for December 2010 Monthly CRR Auction

November 7th CRR Locks Credit

November 9th Can Post Additional Collateral for December 2010 Monthly Auction

November 11th Run the December 2010 Monthly CRR Auction

November 16th Publication of the December 2010 Monthly CRR Auction Results

November 17th Publication of the December 2010 Monthly CRR Invoice

November 22nd Payment Due for December 2010 Monthly CRR Auction

November 23rd ERCOT to Pay CRR Account Holders Owed from December 2010 Monthly CRR Auction




Markets, Operations and Remaining Protocol SectionsMarkets, Operations and Remaining Protocol Sections

November 23rd

Nodal Protocol Sections 3, 4, 5 and 6 go into effect as well as all other unimplemented Protocol Sections (Nov. 23)

•TAC Approval – October 7th • Board Approval – October 19th • Market Notice – October 23rd

November 23rd Market Submission Opens (7 Day Operational Window)

November 30th

ERCOT Grid Operations to Switch to Nodal Control and Execute a Binding DA Market--

o 10:00 Run DAM for Dec.1o 14:00 Initiate LFC Control of Systemo 14:30 Run DRUCo 18:00 Adjustment Period for Dec. 1, and run HRUC hourlyo 24:00 Settle Market on Nodal Real-Time Prices and Dispatch

04/20/23


Cut-Over Communication


Cut-Over CommunicationNodal Market Readiness

Methods of Communication

• Continued Market Calls

- Cut-Over Communication and Announcements

- Upcoming Market Participant Dates and Events

• Market Notices

- Upcoming Protocol Dates

- Major Cut-Over Events

• Monthly Nodal Update Meeting

- Updates at Board of Directors, SNPC, TAC

• ERCOT.com

- Cut-Over Planning Activities Reference Presentation

04/20/23


Nodal Market ReadinessNext Steps

Market Readiness Next Steps

Assess Your Readiness

Continue to Actively Engage in Market Trials

ERCOT to Communicate Network Model Transition Plan (June)

Update on Cut-Over to be released on a market call or seminar (July)- Additional Cut-Over Details

Update on Cut-Over and Retirement to be released on a market call or seminar (September)- End Dates of Parallel Support- Decommissioning of Systems

Market Launch Plan (September)


Next StepsNodal Market Readiness

Market Readiness Next Steps

Update on Cut-Over and Contingency Plans to be released on a market call or seminar (October)o What Do We Do If xyz fails? o How Long Would It Take To Fail Back to Zonal if We Had to?

Be Aware of Nodal Protocol Dates and Actions Requested

Cut-Over 60-Day Outlook Updates Through Board of Directors, NATF, and TAC


Next StepsNodal Market Readiness

04/20/23


120 Day OutlookWhat’s On The Horizon?

May 25, 2010

120 Day Outlook : May Market Activities

Functional Area Real-Time Market

Congestion Revenue Rights

Day-Ahead Market

Reliability Unit Commitment

Outage Scheduler

COMS/Settlements

Network Modeling

Nodal Reports

Credit

Full Integration

Targeted Activities for May 2010• ERCOT ramps to DAM / DRUC 5x /

weekly• 2hr LFC closed loop test executed• ERCOT completes Balance of Year

auction• ERCOT executes June Monthly CRR

Auction• ERCOT releases credit integration• SASM executed as needed• ERCOT executes limited HRUC• ERCOT ramps to reflect protocol

timelines on a best effort basis

Jan Feb Mar Apr May June July Aug


120 Day Outlook : June Market Activities



Day-Ahead Market


Outage Scheduler

COMS/Settlements

Network Modeling

Nodal Reports

Credit

Full Integration

Targeted Activities for June 2010• Operational scenarios executed• 8hr LFC closed loop test executed• ERCOT executes July Monthly CRR

Auction• DAM / DRUC Continues 5x / weekly• SASM executed as needed• ERCOT executes limited HRUC• Protocol timelines on a best effort basis



120 Day Outlook : July Market Activities



Day-Ahead Market


Outage Scheduler

COMS/Settlements

Network Modeling

Nodal Reports

Credit

Full Integration

Targeted Activities for July 2010• Exercise ‘Normal State’ processes

and procedures, including weekends• 48hr LFC closed loop test executed• DAM / DRUC executes 7x / weekly for

two weeks• ERCOT executes HRUC 7x24 during 7

day weeks• Protocol timelines during 7 day

weeks• ERCOT executes August Monthly CRR

Auction• SASM executed as needed



120 Day Outlook : August Market Activities



Day-Ahead Market


Outage Scheduler

COMS/Settlements

Network Modeling

Nodal Reports

Credit

Full Integration

Targeted Activities for August 2010• August is reserved for focusing on

any issues or scenarios encountered in the first 3 months of Phase 5

• Real time submission continue• ERCOT executes August Monthly CRR

Auction• SASM executed as needed



04/20/23


http://nodal.ercot.com 1 nodal market readiness cut-over activities kick-off meeting may 25, 2010

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