1 Cutover Market Call November 29, :00 AM

2 Antitrust Admonition ANTITRUST ADMONITION ERCOT strictly prohibits Market Participants and their employees who are participating in ERCOT activities from using their participation in ERCOT activities as a forum for engaging in practices or communications that violate the antitrust laws. The ERCOT Board has approved guidelines for members of ERCOT Committees, Subcommittees and Working Groups to be reviewed and followed by each Market Participant attending ERCOT meetings. If you have not received a copy of these Guidelines, copies are available at the Client Relations desk. Please remember your ongoing obligation to comply with all applicable laws, including the antitrust laws. DISCLAIMER All presentations and materials submitted by Market Participants or any other Entity to ERCOT staff for this meeting are received and posted with the acknowledgement that the information will be considered public in accordance with the ERCOT Websites Content Management Operating Procedure.

3 General Updates / Reminders

4 Full-System Test / Nodal Cutover: Communication Items Call Structure and Agenda from 11/30 – 12/7 –10:30 AM call will cover General Updates / Reminders Open Issues and Updates Previous Operating Day’s DAM and RTM results Market Questions –4:30 PM call will cover General Updates / Reminders Additional Open Issues and Updates Market Questions Update: Generation and Frequency control transitioned to Nodal with no issues Reminder: Tomorrow’s DAM is financially binding for Operating Day 12/1/2010

Cut-Over Update – Go-Live Sequence of Events DateActionComments 11/15/2010 – 11/29/2010 ERCOT Initiates “Soft Launch” to Nodal Market Go-Live ERCOT will run non-binding DAM, RUC daily per Nodal protocol timelines. RTM will remain Open Loop, but continue to publish base points and LMPs. Note that credit will be set high on 11/15 11/15/2010 Credit posts ACLs and TPEs for non- binding DAM For Operating Day 11/15 credit will be manually set to high limits 11/16/2010First Credit Operating Day 11/16Credit reflects actual limits 11/17/2010 Market now able to submit transactions for first Nodal Operating Day (T-14d) 12/01 Operating Day open for Market submissions 11/24/2010 QSEs with Resources required to submit 7 days of rolling COPs 12/01 required on 11/23 11/28/2010 2:00 PM – 11/28/2010 3:00 PM Generation and Frequency Control switched to Nodal systems for final LFC test QSEs will begin following Nodal base points Settlements will continue to be Zonal 11/28/2010 2:00 PM – 11/30/ :59:59 PM QSEs remain on Nodal Control while settling Zonally during the LFC test 11/29/2010 Last Non- Binding DAM for operating day 11/30 5

Cut-Over Update – Go-Live Sequence of Events (11/30/2010) TimeActionComments up to 10:00 Bids and Offer submission QSE submit bids and offers 10:00 Close DAM 10:00 Execute Dam Clearing Process 13:30 Approve DAM resultsDay Ahead results posted to MIS 13:30-14:30 Submit Post DAM COP updates 14:30 Close for RUC 14:30 Begin Execution of DRUC 16:00 Approve DRUC Results 16:00 Post DRUC Results 18:00 HRUC Begins Hourly Runs 6

7 Credit Reminders

Treasury Collateral and invoice payments received are posted same day –Collateral and invoice payments received before 12:00 noon will be included for the ACL available for the next day’s DAM (e.g. received by noon Monday will be reflected in Tuesday’s DAM ACL) –Collateral and invoice payments received after 12:00 noon will be included for the next day’s Credit Reports and the following day’s ACL (e.g. received after noon Monday will be reflected in Wednesday’s DAM ACL) Collateral reimbursement requests will generally be processed the next business day –Beginning December 1, refunds of collateral will be principal only (interest will not be included) –Interest will be paid semi-annually rather than in conjunction with each collateral refund 8

Treasury On a due date, if an invoice payment has not been received, ERCOT plans to send out an reminder to QSE/CRRAH authorized rep and back up CP authorized rep and back up Credit contact and back up Note: Please be sure that ERCOT has updated contact information for your company – notices will be an automated process and will use the information in ERCOT’s Registration System. 9

CMM - Credit Shadow price caps approved for managing transmission congestion The board voted unanimously to approve shadow price caps and power balance penalties as recommended by the stakeholder committee process. As required by nodal protocols, ERCOT staff developed a methodology for setting maximum shadow prices for network constraints and power balance penalties under nodal. The shadow price caps – a market tool for managing transmission congestion on the grid – were used during the nodal market trials and performed as expected, ERCOT staff said.shadow price caps and power balance penaltiesrequired by nodal protocols ERCOT staff also noted that the shadow price methodology could allow prices to go above the current offer cap of $2,250 per megawatt-hour, as established by the PUC. The PUC-established offer price cap is scheduled to go to $3,000 per MWh, approximately two months after the nodal market go-live. Excerpt from press release on the November 16 th Board Meeting For full discussion see

CMM - Credit ERCOT systems require that all load requirements for an entity be met. In Nodal, load requirements can be met through a) Energy Trades –Must be confirmed b) the Day Ahead Market (DAM), c) Generation Resources that your QSE represents or through the d) Real Time (RT) market. Any load requirements not met through Energy Trade purchases, the DAM or your own Resources, will be met out of the RT market. –If an entity is a net buyer in the RT market in a period of high prices, exposure may escalate rapidly. Entities that intend to not be active in the RT market should ensure that their load requirement is met elsewhere Entities that intend to be net purchasers from the RT market, need to ensure that they have adequate liquidity to meet collateral requirements timely as exposure increases. 11

Go Live CMM Go Live – Key Dates –Monday, November 29 th - Send ACL for initial binding DAM (afternoon) (TPE excludes zonal invoice published on November 29 th ) –Tuesday, November 30 th - Initial binding DAM - “e” factors set at 1/0/1 - Credit Report include zonal invoice published on Nov 29 th –Wednesday, December 1 st – “Go Live” CMM Go Live – General –See Appendix for detail of how exposure components will be addressed. December “ramp up" for DALE - multiply the UDAA by a factor of five (5) each day until the first DAM invoice is published. December 4-5 (Sat/Sun) - discount DALE by 25% since the first DALE is calculated on a weekend. DALE will be calculated at 100% beginning with Credit Reports posted Monday, December 6, 2010 and ACLs sent Monday evening for Tuesday, December 7, See slide on expected impact of ACP on FMM in FCE calculation –If a Counter-Party believes that their Zonal ADTE is not representative of their anticipated Nodal RT activity, they can provide an estimate of anticipated RT activity and ERCOT will consider revising their ADTE. 12

13 Questions