NOTICE DATE: December 16, 2010

NOTICE TYPE: M-A121610-01 Settlements

SHORT DESCRIPTION: Some RTM SPPs affected due to incorrect FIP/FOP

INTENDED AUDIENCE: ERCOT Market Participants

DAYS AFFECTED: Operating Days December 1, 8 and 10, 2010

LONG DESCRIPTION: ERCOT had a system issue causing the ERCOT Market Management System (MMS) to use the Fuel Index Price (FIP) and Fuel Oil Price (FOP) from the previous day instead of the current day for December 1, December 8 and December 10, 2010. The issue was fixed on December 13. The largest difference in FIP was on December 8, which was $0.04, while it was -$0.01 for December 1 and $0.035 for December 10. The differences in FIP/FOP for these three days had the effect of making the Mitigated Offer Cap higher or lower than the correct value.

Based on the sample data analyzed, Base Points did not change, and the changes in the System Lambda and LMPs were not significant. For December 8, when the FIP difference was the largest, of the ten SCED intervals studied, only two were affected. The increase in System Lambda was only $0.05, which was 0.16% of the load weighted average price of $30.80. The maximum change in LMP was $0.60 for a single Resource node, while the average change was only $0.013.

ERCOT does not plan to recommend price corrections to the ERCOT Board of Directors per Protocol Section 6.3(4), because the preliminary analysis did not show any significant impact to the prices.

CONTACT: If you have any questions, please contact your ERCOT Account Manager. You may also call the general ERCOT Client Services phone number at (512) 248-3900 or contact ERCOT Client Services via email at [log in to unmask].

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