1. http://nodal.ercot.com 1 COMS/Settlements/Credit Weekly Update September 3, 2010

2. http://nodal.ercot.com 2 Agenda Anti-trust Admonition Settlements Standing Reports and Updates –Operating Day Settlement Reports –Week in Review/General Reminders –Next Week’s Activities Settlements Environment Report –Known Issues Credit Question and Answers / General Discussion ERCOT asks that Market Participants log into the WebEx session using their company name and then their name. This will allow ERCOT to take roll-call offline

3. http://nodal.ercot.com 3 DAM Settlement Overview for August 25 Statement and Invoice Overview 165 Statements/Invoices posted to QSEs 62 Statements/Invoices posted to CRRAHs 0 QSEs received Statements/Invoices for $0 CRR Overview CRRs were derated There were no CRR Shortfall Charges General Reminders/Updates Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.commarkettrials@ercot.com

4. http://nodal.ercot.com 4 DAM Settlement Overview for August 26 Statement and Invoice Overview 166 Statements/Invoices posted to QSEs 62 Statements/Invoices posted to CRRAHs 0 QSEs received Statements/Invoices for $0 CRR Overview CRRs were derated There were no CRR Shortfall Charges General Reminders/Updates Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.commarkettrials@ercot.com

5. http://nodal.ercot.com 5 DAM Settlement Overview for August 27 Statement and Invoice Overview 168 Statements/Invoices posted to QSEs 62 Statements/Invoices posted to CRRAHs 0 QSEs received Statements/Invoices for $0 CRR Overview CRRs were derated There were no CRR Shortfall Charges General Reminders/Updates Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.commarkettrials@ercot.com

6. http://nodal.ercot.com 6 DAM Settlement Overview for August 28 Statement and Invoice Overview 151 Statements/Invoices posted to QSEs 43 Statements/Invoices posted to CRRAHs 1 QSEs received Statements/Invoices for $0 CRR Overview CRRs were not derated There were no CRR Shortfall Charges General Reminders/Updates Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.commarkettrials@ercot.com

7. http://nodal.ercot.com 7 DAM Settlement Overview for August 30 Statement and Invoice Overview 123 Statements/Invoices posted to QSEs 62 Statements/Invoices posted to CRRAHs 0 QSEs received Statements/Invoices for $0 CRR Overview CRRs were derated There were no CRR Shortfall Charges General Reminders/Updates Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.commarkettrials@ercot.com

8. http://nodal.ercot.com 8 DAM Settlement Overview for August 31 Statement and Invoice Overview 165 Statements/Invoices posted to QSEs 62 Statements/Invoices posted to CRRAHs 2 QSEs received Statements/Invoices for $0 CRR Overview CRRs were derated There were no CRR Shortfall Charges General Reminders/Updates Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.commarkettrials@ercot.com

9. http://nodal.ercot.com 9 RTM Settlement Overview for August 17 Statement Overview 194 Statements posted to QSEs 1 Statements posted to CRRAHs 1 QSEs received Statements for $0 General Reminders Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.commarkettrials@ercot.com

10. http://nodal.ercot.com 10 RTM Settlement Overview for August 18 Statement Overview 193 Statements posted to QSEs 3 Statements posted to CRRAHs 4 QSEs received Statements for $0 General Reminders Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.commarkettrials@ercot.com

11. http://nodal.ercot.com 11 RTM Settlement Overview for August 19 Statement Overview 203 Statements posted to QSEs 2 Statements posted to CRRAHs 2 QSEs received Statements for $0 General Reminders Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.commarkettrials@ercot.com

12. http://nodal.ercot.com 12 RTM Settlement Overview for August 20 Statement Overview 199 Statements posted to QSEs 3 Statements posted to CRRAHs 2 QSEs received Statements for $0 General Reminders Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.commarkettrials@ercot.com

13. http://nodal.ercot.com 13 RTM Settlement Overview for August 21 Statement Overview 166 Statements posted to QSEs 0 Statements posted to CRRAHs 1 QSEs received Statements for $0 General Reminders Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.commarkettrials@ercot.com

14. Charge Type Tracker Below are the Day Ahead Market charge types that have been executed at least once during Market Trials (18 of 19 executed) http://nodal.ercot.com 14

15. Charge Type Tracker http://nodal.ercot.com 15 All Real-Time Market charge types have been executed at least once during Market Trials (45 of 45 executed)

16. Week in Review RTM Invoices –Initials: 8/13, 8/14, 8/15, 8/16, 8/17, 8/18, 8/19 –Final: 8/3, 8/4, 8/5, 8/6, 8/7 –True-up: 7/6, 7/7, 7/8, 7/9, 7/10 We did not settle the 8-29 DAM as planned September CRR Auction Invoices (Posted 8-30) July CARD Final Invoice (Posted 8-31) DA PTP Obligations with Refunds executed for 9-1 DAM Settlement –Since no NOIEs have purchased this type of CRR during Market Trials, we manually entered these bill determinants to prove that the settlements calculations work http://nodal.ercot.com 16

17. http://nodal.ercot.com 17 Next Week’s Activities – 168 Hour Test Operating Days for next week that will be settled –9-8 (DAM and RTM) – Not part of 168 hour test –9-9 through 9-15(DAM and RTM) These are the 168 hour test operating days

18. http://nodal.ercot.com 18 Disputes API Update The Disputes API will be available for testing starting 9-7 through 9- 28 There will specific operating dates that will be “disputable” (see below) QSEs wanting to test the disputes API should notify ERCOT at ercotregistration@ercot.com with their intent to test ercotregistration@ercot.com A market notice with additional details will be released tomorrow

19. Environment Report-Known Issues COMS New Known Issues The RUC VDI logic is not yet available to test during Market Trials AIEC EOCPRCAP is not calculated correctly when RTPERFIP is missing Day Ahead Start Up Eligibility is not working correctly with a DAM commitment that does not start in HE 1 is contiguous to a RUC Commitment that started in HE 1. TELHSLFLAG – flag not working as designed. DCIMPSNAP - Needs to sum all records for an Interval per QSE, SP, RUC combination. DCIMPADJ - Incorrectly sums up ALL purchases & sales for a QSE, instead of just summing up Purchases COMS Closed Issues AABP is not calculating correctly for the first 5 intervals of an operating day in certain instances If a QSE self-commits more than one combined cycle configuration for the same hour and then a later RUC process runs to commit the configuration with the lower HSL, the self commit flag will not be generated correctly Reminder: ERCOT will post known issues every Friday to the readiness center at: http://nodal.ercot.com/readiness/markettrials/coms/index.html http://nodal.ercot.com/readiness/markettrials/coms/index.html http://nodal.ercot.com 19

20. Open Forum Any Questions??? http://nodal.ercot.com 20

21. Market Trials - Friday call Credit and Treasury Weekly Update September 3, 2010

22. Week in Review Core credit – CMM –Posted Credit Reports and sent ACLs each business day DAM Credit Constraint “e” Factors –“e” Factor changes will be effective on Friday, September 3rd for the DAM run for operating day Saturday, September 4 th Email notification sent on September 1 There were no “specific” ‘e1’ and ‘e2’ set The biweekly reset was based on CP data –NPRR 206 and “e” factors training materials are posted @ http://nodal.ercot.com/training/courses/nprr206_workshop.html http://nodal.ercot.com/training/courses/nprr206_workshop.html http://nodal.ercot.com 22

23. Week in Review Market Trials - Friday call

24. Next Week - Schedule of activity Market Trials - Friday call

25. Next week – Credit for 168 hour test Core Credit – CMM ERCOT’s Goal –Meet the requirements of the 168- hour test –Provide CPs an opportunity to see what their exposure (TPE) might be after go live by “cleaning up” initial exposure going into the 168- hour test CP’s Responsibility If CPs want to gain an understanding of what their exposure might be after go-live, they should operate in the 168-hour test as they would post go live Utilize Energy Trades and DAM, exercise bids and offers that are realistic, etc http://nodal.ercot.com 25

26. Next week – Credit for 168 hour test Key assumptions re: Exposure calculation going into the 168 – hour test Nodal RT activity is similar to Zonal BES activity –Zonal ADTE is a reasonable proxy for risk in the Nodal RT AIL (similar to Zonal NLRI) acts as a “reasonableness test” for RT activity captured in the ADTE –The AIL is assumed to be less than the ADTE (e.g. the ADTE adequately represents RT exposure) at the start of the 168-hour test »AIL data prior to operating day Sept 9 th will be deleted »RT activity will be captured in the AIL component as it occurs in the 168-hour test http://nodal.ercot.com 26

27. Next week – Credit for 168 hour test Key assumptions re: Exposure calculation going into the 168 – hour test DAM – treated same as it will be at “go live” at Dec 1 – no DAM activity prior to operating day September 9 th will be included –The only DAM runs included in the calculation will be the ones run during the 168 – hour test –Impact will accumulate and build over the 7 days –DALE will “kick in” on the Credit Report dated Tuesday, September 14 th with first invoice generated on 168-hour test data (for operating day September 9 th ) »September 14 th and 15 th should be the days most likely to reflect “normal” activity http://nodal.ercot.com 27

28. Next week – Credit for 168 – hour test http://nodal.ercot.com 28

29. Next week – 168-hour test http://nodal.ercot.com 29

30. Next week – Credit for 168-hour test http://nodal.ercot.com 30

31. Next week – 168-hour test Summary –Credit Reports available on Tuesday (morning and evening), September 7 th will be “cleaned” up as described on previous pages and should reflect something like what might be expected at November 29 th just prior to “go live” –To the extent DAM activity exists, TPE will build over the 168-hours until it reaches something like “steady state” when the DALE calculation begins on September 14 th If CPs utilize the DAM, they should plan for daily increases in their TPE exposure until the DALE calculation kicks in. http://nodal.ercot.com 31

32. Next Week – 168 hour test ERCOT –Will send ACLs for DAM and CRR Auction –Will not override ACLs Will send collateral calls if exposure exceeds credit limit If ERCOT sends a collateral call, the CP will likely not be able to bid in DAM until additional e-collateral is received Counter-Parties –Since ERCOT no longer overrides ACLs, CPs should review Credit Reports and consider a) their exposure and b) upcoming DAM, CRR Auction and any LFC test c) that the ACL report indicates the total ACL and does not reflect any credit limit held for the CRR auction –ERCOT has not seen many bilateral trades for CRRs. CPs are requested to initiate a few trades to test this functionality. Market Trials - Friday call

33. Next week – 168-hour test DAM Credit –“e” factors – If CPs wish to set a “specific” “e” factor for the 168- hour test, they can notify ERCOT at markettrials@ercot.com no later than Tuesday, September 8 th at 3:00 pmmarkettrials@ercot.com –The 95ile difference between RT and DA prices used during the DAM run and in the non-business day DAM exposure calculation will be capped at $20. http://nodal.ercot.com 33

34. Other topics Tentative timeline for First Priority Security Interest document –July 1, 2010 – ERCOT circulated initial draft to CPs. –July 19, 2010 – Comments back from CPs. –August 6, 2010 – ERCOT circulated second draft to CPs. –August 17, 2010 – ERCOT reviewed document with F&A. –August 23, 2010 – Final comments due back from CPs. –September 21, 2010 – Final review and possible approval by F&A and ERCOT Board. Market Trials - Friday call

35. Other topics – “e” factors –Alternative or Favorable treatment CPs should notify ERCOT of their desire to receive the “alternative” or “favorable” treatment in Market Trials –by sending an e-mail to markettrials@ercot.com with “Credit – “e” factors – favorable treatment requested” in the subject linemarkettrials@ercot.com –Finally, if CPs do not believe their DAM activity in Market Trials in July and August is indicative of their projected activity after “Go Live”, they may request ERCOT to set their “e” - factors to reflect their anticipated activity »By sending an e-mail to markettrials@ercot.com with “Credit – “e” factor – specific “e” factors requested” in the subject line and the e factors requested in the body of the e-mailmarkettrials@ercot.com »Any “override” will be effective until the next bi-weekly reset (e.g. must be requested again or factors will be reset based on data) Note: Request for favorable or specific treatment should be sent by Monday, September 13 th for the Wednesday, September 15 st reset. Market Trials - Friday call

36. “e” Factors – Bi-weekly Process - Market Trials

37. New Known Issues No new known issue Migration of fixes for most outstanding known issues is planned for today - Friday, September 3 rd –Note: Known Issues can be reviewed at : http://nodal.ercot.com/readiness/markettrials/coms/index.html, http://nodal.ercot.com/readiness/markettrials/coms/index.html http://nodal.ercot.com 37