TCR to CRR Transition PlanRefresher on Part 1Part 2 – discussion

Beth Garza

WMSMay 21, 2008

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Agenda

• Background information

• Decisions made/needed– Includes pros-cons matrix for item 5

• Next steps

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Background information (refresher)

• The TCR to CRR Transition Plan describes the plan(s) for transitioning from the TCR to CRR market.

• Part 1: plan for 12/1/08 go-live, including refund methodologyPart 2: contingency plans for post 12/1/08 go-live

• Part 1 was approved by WMS, TPTF and TAC end of last year (2007). WMS recommended postponing discussion/approval of Part 2 till late Q1 2008.

• Approval of Part 1 fulfilled Market Readiness Criteria CRR2: Develop TCR to CRR Transition Plan

• PRR 743 was drafted to document decisions made in Part 1 (it only includes language addressing 12/1/08 go-live). It was recommended that the PRR language be revisited to incorporate Part 2 discussion/decisions.

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Decisions made or needed

Question Decision/choices Approved/no1 Should we run the 2008 Annual TCR Auction? Yes Approved

(Q4 07)

2 How do we refund TCRs from 2008 Annual TCR Auction for the month of December 2008?

According to PCR/TCR purchase allocation

Approved (Q4 07)

3 Should we run Dec 08 Monthly TCR Auction, and continue running monthly TCR Auctions until Nodal go-live is fully implemented?

Yes/no? Need approval

4 How do we refund TCRs if mid-month go-live occurs, or a reversal to Zonal occurs?

Refund monthly the fraction of monthly auction revenues equal to the ratio of (# non-Nodal days) / (total # days in month)?

Need approval

5 Should we run a 2009 Annual TCR Auction? See next slide Need approval

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Item 5: pros and cons

Yes (Run the 2009 Annual TCR Auction) No (Run monthly PCR/TCR auctions only)Pros• Flexible go-live date• No change to today’s auction activities• Minimal protocol change

Pros• Flexible go-live date• Lower collateral requirements/tie-up• Minimize need to refund MPs*• Smaller refund quantity*

*only if mid-month go-live occurs

Cons• Higher collateral requirements/tie-up• Additional effort required to refund MPs• Larger refund quantity

Cons• Modification to today’s business** • More protocol change

** Suggested modification: 100% available capacity in monthly

auctions; PCRs allocated monthly and tied to monthly auction clearing price

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Next steps

• Today: Distribute information to WMS

• June 18, 2008: Request decision by WMS; update PRR 743 language

• June / July 2008: Present Plan/PRR to TPTF; seek approval

• June 26, 2008 or August 7, 2008: Present Plan/PRR to TAC; seek approval