NOTICE DATE: June 10, 2011

NOTICE TYPE: M-C061011-01 Settlements

SHORT DESCRIPTION: Day-Ahead energized Settlement Points with incorrect SPPs and LMPs due to a software error

INTENDED AUDIENCE: QSE and CRRAH Settlement Personnel

DAYS AFFECTED: Certain Operating Days covering December 3, 2010 – April 5, 2011

LONG DESCRIPTION: Certain Day-Ahead energized Settlement Points impacting some Operating Days from December 3, 2010, through April 5, 2011, may have an incorrect Settlement Point Price (SPP) and Locational Marginal Price (LMP) due to a software error. The software error was related to the Day-Ahead Market (DAM) price calculation for a specific scenario where a single Point-to-Point (PTP) Obligation bid was placed between an energized Settlement Point and a de-energized Settlement Point and no PTP Obligation bids were placed on the energized Settlement Point and another energized Settlement Point. This software error caused the price for the energized Settlement Point to be set to system lambda. See attached list of Settlement Points that were impacted by the software issue. The estimated settlement impact for the 29 affected Operating Days is approximately $330,000.

On April 8, 2011, ERCOT implemented a workaround that was in place until April 20, 2011, when ERCOT permanently corrected this software error for all future Operating Days.

Pursuant to paragraph 4 of Protocol Section 4.5.3, Communicating DAM Results, the DAM LMPs and SPPs for these Settlement Intervals are final. However, ERCOT has determined that the prices are in need of correction and therefore will recommend that the ERCOT Board of Directors approve price corrections for Settlement Points for the Settlement Intervals covering the above referenced period.

ADDITIONAL INFORMATION: ERCOT will place this price correction request as an agenda item on the June 2011 ERCOT Board of Directors meeting. Board materials on the price correction request will be distributed in accordance with the Board Policies and Procedures. If the ERCOT Board of Directors approves the price correction, then a follow-up Notice will be sent regarding the schedule for resettlements.

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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