1. http://nodal.ercot.com 1 COMS/Settlements/Credit Weekly Update August 6, 2010

2. http://nodal.ercot.com 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. http://nodal.ercot.com 3 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

4. http://nodal.ercot.com 4 DAM Settlement Overview for July 28 Statement and Invoice Overview 167 Statements/Invoices posted to QSEs 58 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

5. http://nodal.ercot.com 5 DAM Settlement Overview for July 29 Statement and Invoice Overview 170 Statements/Invoices posted to QSEs 58 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

6. http://nodal.ercot.com 6 DAM Settlement Overview for July 30 Statement and Invoice Overview 156 Statements/Invoices posted to QSEs 58 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 July 31 Statement and Invoice Overview 145 Statements/Invoices posted to QSEs 50 Statements/Invoices posted to CRRAHs 0 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

8. http://nodal.ercot.com 8 DAM Settlement Overview for August 4 Statement and Invoice Overview 166 Statements/Invoices posted to QSEs 62 Statements/Invoices posted to CRRAHs 5 QSEs received Statements/Invoices for $0 CRR Overview CRRs were not derated There were 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 July 21 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

10. http://nodal.ercot.com 10 RTM Settlement Overview for July 22 Statement Overview 158 Statements posted to QSEs 58 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

11. http://nodal.ercot.com 11 RTM Settlement Overview for July 23 Statement Overview 154 Statements posted to QSEs 58 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 July 24 Statement Overview 151 Statements posted to QSEs 50 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

13. http://nodal.ercot.com 13 RTM Settlement Overview for July 27 Statement Overview 188 Statements posted to QSEs 2 Statements posted to CRRAHs 5 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 (Posted 8-5) –No Unsupported Operating Dates –Initials Included 7/16, 7/17, 7/20, 7/21, 7/22 –Finals Included 7/6, 7/7,7/8, 7/9, 7/10 –True-Ups Included 6/8, 6/9, 6/10, 6/11 http://nodal.ercot.com 16

17. http://nodal.ercot.com 17 Next Week’s Activities Operating Days for next week that will be settled –We’ll be settling a full week of operating days –HRUC will be executed every hour (COPS should reflect Nodal) –8-10 though 8-16 (DAM and RTM) DAM and RTM Late Fee Invoices (post on 8-10) CRR Annual Auction Invoices (post on 8-10) July CARD Initial and Balancing Account Invoices (post on 8-11) Effective August 9, actual verifiable cost submissions will replace test data in the Market Trials Environment New Operational Scenarios in August – De-commitments, RUC VDIs, EILS, Miscellaneous Debit Credit, RUC Simulation, any others??

18. Environment Report-Known Issues COMS New Known Issues SFT Results have not been sent to S&B from MMS. This means there have been no CRR derations on days that there should have been (Issue will be resolved on 8-13 release to Nodal Production) RTMG has been incorrect on some operating dates. This is due to the precision of the GSSPLITSCA bill determinant from EMS. In some instances we’re receiving too much precision which is causing issues loading it into Lodestar. (Issue will be resolved for 8-13 release) http://nodal.ercot.com 18

19. COMS Closed Issues No new closed issues 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. Settlements FAQs http://nodal.ercot.com 20 Q: I could not shadow ERCOT’s Capacity Short calculations for some RUC processes. Can you explain? A: If a particular RUC process does not commit a resource that receives a RUC Make-Whole Payment, ERCOT will not perform Capacity Short calculations for the RUC process. The driver is RUCMWAMTRUCTOT. If that bill determinant does not exist for a particular RUC process, the Capacity Short Charge will not be calculated for that RUC process. Q: What caused the very low negative resource node DASPPs on 7-13 A: A bad dynamic rating and bad contingency data caused the low LMPs. The contingency definition has been resolved and a NOMCR has been submitted to change the dynamic rating for the constrained line. This was not a valid post go-live solution.

21. Open Forum Any Questions??? http://nodal.ercot.com 21

22. Market Trials - Friday call Credit and Treasury Weekly Update August 6, 2010

23. Week in Review Posted Credit Reports and sent ACLs each business day Credit exposures –Credit exposures reflect market participant activity in Market Trials There remain a few exceptions, which are listed on the Known Issues list The ADTE component of the EAL continues to be adjusted to reflect recent Zonal activity –While this establishes a more moderate level of exposure, it may not be predictive and will not alleviate the impact of unusual RT activity on the AIL Component –For a CP to get a solid idea of how credit will work in Nodal, they should try to operate (as much as possible) as they intend to in Nodal (including using Energy Trades along with DAM, etc) –ERCOT will work with CPs to further adjust their ADTE to reflect projected activity as needed Market Trials - Friday call

24. Week in Review Bi-weekly “e” factor update –ERCOT reviewed “e” factors and Sent notices of change on Wednesday, August 4 th to be effective beginning with the Monday, August 9 th DAM run for operating day August 10 th To CP’s authorized rep and credit contacts by e-mail –Some returned e-mails are still being researched –“e” factor calculation is based on 30 days of data (which includes DAM activity for operating days July 5 th through August 3 rd ) CMM is still populating data and did not have DAM data prior to July 10 th If data was missing (e.g. DAM not run, CP not in market, etc), ERCOT “filled in” missing day’s data (see example next page) –To the extent possible, data from the most recent prior day with DAM activity was used »If a prior day’s data was not available, data from the closest forward day was used Market Trials - Friday call

25. Week in Review Example of data used for “e” factors if a CP participated in each DAM executed between July 10 th and August 3 rd http://nodal.ercot.com 25

26. Week in Review In conjunction with “e” factors being set on August 9, other NPRR 206 parameters were set consistent with how parameters will be set after the initial 60 days of the market. That is: d = 0.85 z = 0.50 a = 0.50u = 0.95 b = 0.45 t = 0.50 y = 0.45 DAM runs next week should reflect each CP’s “e” factors. Of the 171 CPs evaluated, – 161 CPs activity did not warrant a change – 10 CPs activity did receive a change in either e1 or e2 factors. – 8 CPs requested favorable treatment. – No CPs requested specific “e” factors. – Notices were sent to all CPs to test ERCOT’s notification system. Market Trials - Friday call

27. Week in Review A significant number of “e” factors remained at 1/0/1 due to –Level of data that was “back filled” for the calculation and/or –Activity or lack of activity in DAM Special offer – reset “e” factors next week Given the need for CPs to test how DAM runs with “e” factors, the short amount of time available for testing and the fact that DAM is running 7 days next week, ERCOT will allow CPs one opportunity to select specific “e” factors next week. (see Other Topics) http://nodal.ercot.com 27

28. Week in Review Market Trials - Friday call

29. Next Week 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 Market Trials - Friday call

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

31. 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 circulates second draft to CPs. –August 17, 2010 – ERCOT reviews document with F&A. –September 21, 2010 – Final review and possible approval by F&A and ERCOT Board. NPRR 206 and “e” factors –Training on NPRR 206 and “e” factors – August August 10 @ Austin Met Center 9am – 12 noon Web-ex available Market Trials - Friday call

32. Other topics Special offer – reset “e” factors next week Given the need for CPs to test how DAM runs with “e” factors, the short amount of time available for testing and the fact that DAM is running 7 days next week, ERCOT will allow CPs one opportunity to select specific “e” factors next week as follows: –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 ERCOT is not recalculating “e” factors but will allow “override” resets for “e1” and/or “e2” factors –Request must be received (and ERCOT must have confirmed receipt via e-mail) by noon Tuesday –Notices will be sent (without 2 days notice) –Change will be effective for DAM runs beginning Wednesday am –The next biweekly reset will be based on CP data http://nodal.ercot.com 32

33. Other topics – “e” factors –Next biweekly “e” factor reset is planned for the DAM run on Friday, August 20 th for operating day Saturday, August 21 st with notices sent by 9:00 am on Wednesday, August 18 th –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) Market Trials - Friday call

34. For “Go Live” transition Approach for establishing the initial exposure in CMM Overview –Utilize Zonal data to the extent possible to establish initial TPE –CRR Obligations from December 2010 auction will be collateralized at the greater of the ACPE component of the FCE calculation or the Auction Clearing Price (ACP) –CRR Options will not have value initially (until DAM values are available) Market Trials - Friday call

35. Approach for establishing the initial exposure in CMM Market Trials - Friday call

36. Preliminary Cutover Timeline Thursday, November 18 th –Zonal invoice published –last Zonal EAL credit calculation from which a collateral call will be made (system will be maintained through Go Live and will be available for a period beyond Go Live) Friday, November 19 th –Nodal CRR auction invoice payments due Tuesday, November 23rd –Post first Nodal Credit Reports and send ACL to CRR and DAM No collateral calls sent based on these reports Wednesday, November 24 nd –Last Zonal NLRI credit calculation from which a collateral call will be made (system will be maintained through Go Live and will be available for a period beyond Go Live) Thursday / Friday, November 25 th / 26 th – Thanksgiving holiday Market Trials - Friday call

37. Preliminary Cutover Timeline Monday, November 29 th – –Zonal invoice published –First Nodal credit calculation from which a collateral call will be made For example, collateral may be required based on AIL activity (e.g. Zonal NLRI data) Will exclude Zonal invoice from November 29 th from the calculation –send ACL for initial DAM (afternoon) Tuesday, November 30 th –initial DAM “e” factors set at 1/0/1 –Second Nodal credit calculation Will include Zonal invoice from November 29 th in the calculation Wednesday, December 1 st – “Go Live” Market Trials - Friday call

38. New Known Issues Invoices paid with multiple partial payments are being displayed in OIA section. –Root cause being investigated –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 38

39. Closed Known Issues http://nodal.ercot.com 39 –Some of the Real Time and DAM Invoices, Statements are not being transferred from S&B to CMM. –Real time estimates for Aggregate Incremental Liability (AIL) are delayed by up to five days. –DALE - Resettlement Statements are also being shown in the EAL Details Report. –UDAA subsection should not be displaying settled days.