1. 1 Market Operations Presentation Board of Director’s Meeting January 17, 2006

2. 2 Agenda Overall Activity Migration From Native AREPs Performance Measures (Quarter Only) Capacity Services Energy Services including Summary Hub Price Data Congestion Services REPs and QSEs Added/Deleted Retail Activity Wholesale Activity Other Items

3. 3 Overall Activity Transaction Type Switches2,244,820 Move - Ins7,882,830 Move Out4,531,377 CSA1,312,633 Drop to POLR308,071 Total16,279,731 Compared to Last Month 361,631 Retail Transactions Summary As of Wednesday, November 30, 2005 since June 1, 2001

4. 4 Residential Small Non-Residential Large Non-Residential Migration from Native AREP % of ESI IDs 20% 24% 64% 28% 31% 73% 35% 81% 73% % of Load * at 11-30-05 at 11-30-05 at 11-30-04 * % of Peak Demand on 08-03-04

5. 5 Capacity Services 11/30/0511/30/0420052004 Market Perspective: Approximate Retail Market (at $.10/kWh PTB) $27,554.126,607.82,132.42,007.1 Volume (GWh)275,541266,07821,32420,071 % Increase3.6%6.2% Natural Gas Price Index ($/MMBTU)7.75.77.65.7 % Increase35.1%33.3% Other Capacity Services: Replacement Reserve0.0 Reg Up and Down156.459.418.111.5 Responsive (Spinning) Reserve147.955.712.18.9 Non-Spinning Reserve38.45.80.70.0 Black Start6.46.7 0.6 TOTAL CAPACITY SERVICES$437.9236.237.026.7 YTD ($'s in millions) November ($'s in millions)

6. 6 Capacity Services – Reg Up and Down and Responsive Reserve

7. 7 Energy Services 11/30/0511/30/0420052004 Market Perspective: Approximate Retail Market (at $.10/kWh PTB) $27,554.126,607.82,132.42,007.1 Volume (GWh)275,541266,07821,32420,071 % Increase3.6%6.2% Natural Gas Price Index ($/MMBTU)7.75.77.65.7 % Increase35.1%33.3% Balancing Energy: Balancing Energy - Up$1,004.9$433.5$68.5$39.5 % Increase 131.8%73.4% Up (GWh)11,095.28,749.8839.0670.0 % Increase 26.8%25.2% % of Market 4.0%3.3%3.9%3.3% Balancing Energy - Down-$256.2-281.9-21.2-15.7 % Increase -9.1%35.0% Down (GWh)-4,795.5-6,152.0-353.5-324.9 % Increase -22.0%8.8% % of Market1.7%2.3%1.7%1.6% YTD ($'s in millions) November ($'s in millions)

8. 8 Hub Summary Data ERCOT Hubs July 2005 HUB South$77.03 North$81.62 Houston$87.38 West$92.23 ERCOT Hub$83.24 ERCOT Bus$83.26 Weighted Average Price ($/MWH) June 2005 May 2005 NGPI % Change3.9% % Change - Bus11.8% $58.27 $60.77 $67.43 $68.90 $62.80 $62.69 $62.27 $75.23 $80.92 $80.11 $73.43 $74.46 12.6% 18.8% August 2005 $84.76 $106.76 $121.16 $103.10 $105.09 21.3% 26.2% $115.75 September 2005 $104.55 $121.40 $130.39 $117.74 $119.27 18.7% 13.5% $125.73 October 2005 $114.96 $117.39 $128.08 $121.75 $123.09 5.5% 3.2% $143.31 November 2005 $69.65 $72.01 $67.41 $70.64 $70.65 (33.0%) (42.6%) $72.48

9. 9 Congestion Services

10. 10 REPs and QSEs Added/Deleted Added RepsAdded QSEs First Choice Power LP Pre Buy Electric LLC Westar Energy, Inc. BVista Energy LP Himalaya Power, Inc. Deleted RepsDeleted QSEs Ampro Energy None

11. 11 Summary of 2005 Market Operations Successes: Met or Exceeded Wholesale Access, Settlement & Billing Goals (Corp Goal #3); Met or Exceeded Retail Transaction Processing Goals (Corp Goal #2); SAS 70 Audit – clean opinion on all 13 Business Control Areas; Conducted Studies and Prepared Transition Plan to Reduce Settlement & Billing Cycle Time beginning January 2006; Completed Residential Survey for electric heating to improve annual validation of Load Profile Assignments; Texas Nodal Market Protocols Filed and Synchronization Process In Place; Implemented Processes & Procedures to Improve Market Participant Meeting Productivity; Implemented Major Enhancements to Current Systems – Managed through transitional issues related to new CIO, CFO, General Counsel, VP of HR, Director of HR, Director of Security and various new managers reporting to those new officers and directors; Led Project for Market Operations, System Operations and Information Technology Process Documentation and Improvement Work Plan; and, Supported Independent Workforce and ABC Analysis and ICMP, PRT and Risk Management initiatives. ­ LODESTAR Upgrade & SIRs ­ MV90 Upgrade (purchase) ­ REC & TCRs Phase 1 Upgrade ­ Disclosure of Local Congestion ­ Potential Load Loss Enhancements ­ RMR Automation ­ SIEBEL Upgrade & SIRs ­ ERCOT.com Full Replacement ­ Texas SET 2.1 ­ Retail Testing Website Upgrade ­ SOA kickoff and MID project completion ­ MCS Automation Other Items

12. 12 Business Impacts of December 26 disk failures: Business Process Delay Wholesale Settlements & Billings Major Extract Projects Certain Reports & Extracts Retail Processing: Worst Case Impacts: NONE 1 - 3 mos 0 - 2 wks 0 - 3 days Other Items 98 Switches will miss the first available switch date in January and are scheduled for February 26,835 Move Ins did not execute on proper day (mitigated by “safety-net” process to keep them on the proper day) 14,144 Move Outs did not execute on proper day

13. 12/26/05, 9:26am – Second Disk Failure, NAESB, TCH DA, Extracts go down. 12/26 Market Notice – 12/26/05 9:30pm Unplanned Outage for NEASB and TCH 12/2712/2812/29 Market Notice – 12/27/05 3:43pm 867s Forwarded, TML not available Market Notice – 12/27/05 4:25pm Data Archive and Extracts affected Market Notice – 12/27/05 8:30am NAESB back up, holding all transactions Market Notice – 12/27/05 5:08pm TCH Processing Normally Market Notice – 12/28/05 9:31am TCH Down Market Notice – 12/28/05 12:25pm TCH Update, Next update on 2 PM Market Call Standing 2 PM Retail Market Call Market Notice – 12/28/05 4:51pm TCH Update

14. 12/29 Market Notice – 12/29/05 10:12am TCH Update Notice on Conference Call for 1100 12/3012/311/1 1100 Conference Call Market Notice – 12/29/05 4:53pm Restoration Update, Notice of Conference call for 12/30 at 0830 0830 Conference Call Market Notice – 12/30/05 1035am Conference Call Follow-up *RMS chair copies notice to RMS List Market Notice – 12/31/05 10:00am TCH Update Market Notice –12/30/05 4:39pm Extracts Update Market Notice – 12/30/05 5:07pm Update an Conference call notes Market Notice – 12/31/05 6:06pm TCH Update Market Notice – 12/31/05 1150pm Paperfree, TCH Normal Operation

15. 1/1 Market Notice – 1/3/06 4:52pm Extract Update BES Prices for 12/22-12/25 gap RMS Update 1/21/3 Market Notice – 1/3/06 6:25pm Extract Update 1/41/5 Market Notice – 1/3/06 5:35pm Extract Update Market Notice – 1/6/06 4:53pm Extract Update 1/61/71/81/9 Market Notice – 1/9/06 2:30pm Extract Update 1/101/111/12 Market Notice – 1/12/06 1:15pm Extract Update 1/13 Market Notice – 1/13/06 5:01pm Extract Update TAC Update PUC Update