1 ERCOT Financial Summary For the Period Ending August 31, 2004 Board of Directors Meeting September 21, 2004

2 Preliminary - Unaudited ERCOT Financial Snapshot

3 Year-to-Date Results of Operations ($ Millions) Notes: Revenues – include interest income Total expenses – include interest expense Preliminary - Unaudited

4 Year-to-Date Cash Flow Summary ($ Millions) Note: Cash balance includes TCR auction receipts but does not include QSE or TCR security deposits. Preliminary - Unaudited

5 Revenue $87 million year-to-date 98% from System Administrative Fee 70+% from top 5 QSE’s 85+% from top 10 QSE’s 90+% from top 15 QSE’s $2.1 million (2.5%) unfavorable year-to-date MWH volume 2.7% below expectation Preliminary - Unaudited $13.9 M$13.5 M $89.1 M$87.0 M

6 Operating Expenses $73.5 million year-to-date, including depreciation $46.6 million year-to-date, excluding depreciation $11.5 million (13.6%) favorable over the year Labor ($3.6 million) Consultants ($3.0 million) SW/HW license and support ($1.8 million) Employee expenses and other ($3.1 million) Preliminary - Unaudited

7 FY 2004 Results (Income Statement)

8 Headcount 421 of 530 on staff 41 FTE increase (net) in 2004 Preliminary - Unaudited

9 Capital Expenditures $23 million of $55 million annual budget spent 58 projects (many projects have one or more subprojects) active in year-to-date 2004 Major projects underway TCC Phase 2 Building EMMS Release 4.0 Enterprise Data Warehouse Phase 2 Preliminary - Unaudited

Forecast

Forecast

12 Forecast Revenue $87 million year-to-date $2.1 million (2.5%) unfavorable year-to-date Forecast $2.1 million revenue shortfall in 2004 MWH for remainder of year assumed at budget Other revenue sources continue actual trend over first eight months of 2004 Preliminary - Unaudited

13 Forecast Operating Expenses $11.5 million favorable variance year-to-date August 31, 2004 Projected $7.2 million favorable variance in 2004 Consultants ($3.7 million) PUC-mandated audits ( ) Labor ($2.9 million) SW/HW license and support ($1.5 million) Employee expenses and other ($0.6 million) Preliminary - Unaudited

14 Forecast Capital Expenditures $ million of $55 million annual budget spent at August 31, 2004 $23 million of $55 million annual budget spent at August 31, 2004 $45 million projected capital investment in 2004 Major projects underway TCC Phase 2 Building EMMS Release 4.0 Enterprise Data Warehouse Phase 2 Preliminary - Unaudited

15 Reasons for Lower Capital Spend in 2004 Reduced Scope by Market on Competitive Metering, Texas Set 2.1 and Direct Load Control Projects - $4M Delay in Implementing Recommendations from the Commercial Applications Systems Upgrade Project (CASUP) due to cross impacts with high priority market projects - $2.5M Delay in Completing Requirements for EMMS Release 4 and other EMMS system deliveries - $2M

16 Supplemental

17 Preliminary - Unaudited ERCOT QSE Short Payments

18 Budget Schedule September 1 - Public meeting on 2005 budget - input from public September 20 - Finance & Audit Committee meeting to review preliminary budget September 23 - Financial briefing with PUCT staff October 8 - Finance & Audit Committee meeting to review draft budget (special meeting) October 12 - Public meeting on proposed 2005 budget October 14 - Meeting with PUCT staff on proposed 2005 budget (tentative) October 19 - Finance & Audit Committee recommendation to board at monthly meeting November 16 - Board approval of 2005 budget November 23 - Preliminary PUCT filing review (if needed) November 30 - PUCT filing

19 End