CEO Report Thomas F. Schrader ERCOT Board of Directors May 17, 2005

CEO Report Topics Legislative Update Comptroller’s Review REP Default Management Projects Management Dashboard

Legislative Update House & Senate agree on: A few differences remain: ERCOT Governance Market Monitoring A few differences remain: Details of ERCOT Oversight Open records for ERCOT Renewable energy -- 5,880 total MW by 2015 Texas Nodal – House requires PUC study

Comptroller’s Review Letter to Legislators Recommendations Follow-up PUC oversight Contracting, Security, Sales Tax Task Force Follow-up PwC Debriefing

REP Default ERCOT and Market Participant working to Identifying issues Transition customers to new REP or POLR Minimize impact to the market Identifying issues Timeline for QSE notice of termination of LSE Clarity of responsibility of transition tasks Clarity of timeline, including trigger point Need cooperation of REP for customer data

 

REP Default ERCOT and Market Participant working to Identifying issues Transition customers to the new REP or POLR Minimize the impact to the market Identifying issues Timeline for QSE notice of termination of LSE Clarity of responsibility of transition tasks Clarity of timeline, including the trigger point Need cooperation of losing REP for customer name and billing address

Customer Transition Activity May 16, 2005

Timeline for Customer Transition May 5th – Qualified Scheduling Entity (QSE) gave ERCOT the required 5-day notice to terminate its relationship with the Retail Electric Provider (REP). (Protocol Section 16.2.4.3) REP required to identify new QSE or post collateral with ERCOT to become an Emergency QSE by end of 5-day notice period. (Protocol Section 16.2.13.3) May 11th - Deadline for REP to post collateral with ERCOT to become an Emergency QSE passed.

Timeline for Mass Transition May 12th With permission and participation of affected REP, ERCOT initiated a discussion with all affected Providers of Last Resort (POLRs) and Transmission and/or Distribution Service Providers (TDSPs) about a possible Mass Transition event. As of midnight, affected REP was no longer represented by a QSE. Load becomes Unaccounted for Energy, a cost borne by Loads (NOIE impact is less). REP has less than 30 MWs of load and less than 3,000 ESI IDs. ERCOT requested that the REP provide information regarding the population of ESI IDs to be dropped to the POLR as early as possible on May 16. REP indicated there were discussions with another REP to acquire approximately 60% of their existing ESI IDs.

Timeline for Mass Transition May 13th - ERCOT continued transition discussions with PUCT, REP, all POLRs and TDSPs. May 16th REP will provide ERCOT list of ESI IDs to transition to another REP and to POLR REP will provide information needed by POLRs to submit off-cycle switch transactions. ERCOT will provide each POLR their list of the ESI IDs and information provided from REP in which the POLR will submit off-cycle switches to obtain the Customer. ERCOT will provide a list of ESI IDs to each affected to TDSP for their monitoring/planning purposes.

Timeline for Mass Transition May 17th ERCOT will identify all ESI IDs active with the Terminating REP. ERCOT will identify and cancel all pending transactions transitioning Customers to the Terminating REP based on the effective date. POLRs will begin submitting switch transactions for all affected ESI IDs. All ESI IDs are to be completely transitioned away from the Terminating REP by June 3, given no exceptions encountered.

Timeline REP must post credit to be EQSE Provide list of all affected ESI IDs Transition complete 5/5 5/11 05/12 05/16 05/17 06/03 QSE Notice QSE representation ends Transition of Customers Begins