1. 1 Texas Regional Entity Compliance Update July 2007

2. 2 Control Performance Highlights  NERC CPS1 Performance May Performance  May performance comparison May 2007: 125.99 May 2006: 146.11  12 month rolling average comparison June 2006  May 2007: 136.55 June 2005  May 2006: 132.50  PRR 525 Performance Scores for May indicate 32 QSEs passed / 3 non- wind-only QSEs failed the measure Scores posted on the ERCOT Compliance Website  SCE Performance Scores SCE Performance Scores

3. 3 ERCOT CPS1 Performance Comparison

4. 4 ERCOT’s CPS1 Monthly Performance

5. 5 ERCOT CPS1 by Interval

6. 6 QSE PRR525 10-Minute Interval Scoring

7. 7 525 Passing 10-Min Interval Percentage Trends

8. 8 May 2007 Resource Plan Performance Metrics

9. 9 ERO / RE Activities  Entity Registration Continues to be a work-in-progress ERCOT Compliance Staff working with entities to resolve registration questions Any entity can challenge its listing and function with NERC Appeals heard by the NERC Board Compliance Committee  Texas Regional Entity Delegation Agreement ERCOT Board approved Texas RE Delegation Agreement on May 16 th Executed Texas RE Delegation Agreement re-filed at FERC on May 18 th FERC approved re-filed executed Delegation Agreement on June 5 th, subject to a limited 30-day comment period restricted to minor revisions FERC directives must be addressed and modifications filed within 180 days of the date of the order (mid-October)  NERC Reliability Standards Mandatory compliance began on June 18 th Upon initial review, received 228 self-reported violations prior to June 18 th Regional Entities to focus on most serious Reliability Standard violations until January 1, 2008  ERCOT Bylaws ERCOT Board approved changes to the ERCOT Bylaws incorporating the Texas RE on May 16 th ERCOT Membership voted to approve changes

10. 10 2008 Texas RE Budget Stats  Texas RE Budget and Business Plan was approved by the ERCOT Board on June 19 th 2008  $4.1 million  Statutory requirement – $3.3 million  Non-statutory requirement – $0.8 million 2007  $5.5 million  Statutory requirement – $4.9 million  Non-statutory requirement – $0.6 million

11. 11 2008 Statutory Funding & Fee Collection  Texas RE Fee funds Texas RE and NERC regulatory compliance activities  Texas RE Fee revenue exceeds Texas RE expenditures in 2007 2007 Texas RE Fee is $0.016 per MWh Excess of Texas RE Fee income over expenditures is projected to be $2.6 Million in 2007  Over collections from 2007 are netted against 2008 requirements Estimated 2008 net funding requirement for statutory is $0.7 Million ($3.3 Million less $2.6 Million) Estimated Texas RE fee is $0.0022 per MWh ($0.7 Million divided by 318 Million MWhs) Estimated NERC funding fee is $0.005 per MWh ($1.6 Million divided by 318 Million MWhs)  PRR 720 – Texas Regional Entity Fee Methodology Revision Outstanding proposal to modify the basis for assessing and collecting the Texas RE Fee