1. http://nodal.ercot.com 1 COMS/Settlements/Credit Weekly Update August 27, 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 August 18 Statement and Invoice Overview 161 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 19 Statement and Invoice Overview 175 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 20 Statement and Invoice Overview 169 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 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 21 Statement and Invoice Overview 126 Statements/Invoices posted to QSEs 43 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 24 Statement and Invoice Overview 169 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

9. http://nodal.ercot.com 9 RTM Settlement Overview for August 11 Statement Overview 186 Statements posted to QSEs 1 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

10. http://nodal.ercot.com 10 RTM Settlement Overview for August 12 Statement Overview 202 Statements posted to QSEs 2 Statements posted to CRRAHs 3 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 13 Statement Overview 196 Statements posted to QSEs 2 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

12. http://nodal.ercot.com 12 RTM Settlement Overview for August 14 Statement Overview 194 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

13. http://nodal.ercot.com 13 RTM Settlement Overview for August 15 Statement Overview 181 Statements posted to QSEs 2 Statements posted to CRRAHs 3 QSEs received Statements for $0 General Reminders Submit any questions/issues about statements, invoices, extracts or calculations to markettrials@ercot.commarkettrials@ercot.com

14. http://nodal.ercot.com 14 RTM Settlement Overview for August 16 Statement Overview 180 Statements posted to QSEs 0 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

15. 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 15

16. Charge Type Tracker http://nodal.ercot.com 16 All Real-Time Market charge types have been executed at least once during Market Trials (45 of 45 executed)

17. Week in Review RTM Invoices –RTM Initials: 8/6, 8/7, 8/10, 8/11, 8/12 –RTM Finals: 7/27, 7/28, 7/29, 7/30, 7/31, 8/1 –RTM Trueups: 6/29, 6/30, 7/1, 7/2, 7/3 DAM Re-Settlement for 8-18, 8-19, 8-20 RTM Re-Settlement for 6-17 http://nodal.ercot.com 17

18. http://nodal.ercot.com 18 Next Week’s Activities Operating Days for next week that will be settled –8-29 (DAM and RTM) –8-30 (DAM and RTM) –8-31 (DAM and RTM) –9-1 (DAM and RTM) –9-2 (RTM Only, there will be a DAM failure Operational Scenario) –8-29 & 8-30 are DAM Stress Test Dates (No need to submit transactions to the DAM) –HOWEVER 9-2 may not be supported because of the final Nodal Production migration before 168 hour test RUC Simulation –If you want to receive a RUC Commitment or Decommitment to coincide with a Zonal self commitment or RPRS commitment, send the request to markettrials@ercot.commarkettrials@ercot.com Voltage Support Operational Scenarios

19. Next Week’s Activities (Cont’d) DA PTP Obligations with Refunds –Since no NOIEs have purchased this type of CRR during Market Trials, we’re going to manually enter some of these bill determinants next week to prove that the settlements calculations work Disputes Update –We’re targeting September 13- 27 to open up the Dispute API for testing –There will specific operating dates that will be “disputable” –Additional details will be released soon http://nodal.ercot.com 19

20. Environment Report-Known Issues COMS New Known Issues No new known issues 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 20

21. Reminders/Updates Market Readiness Seminar #6 –This will take place on September 1, 2010 at 3:00 PM – 5:00 PM –This will be a WebEx only Session –Details are posted at: http://www.ercot.com/calendar/2010/09/20100901-MT1 –The Agenda is as Follows: Remaining Market Trials Activities –168-Hour Test –Post 168-Hour Test September activities –Testing to occur during the Cutover period in October Cutover Update –Monthly Breakdown of Pre Go-Live activities –Post Go-Live Activities in December, 2010 http://nodal.ercot.com 21

22. Open Forum Any Questions??? http://nodal.ercot.com 22

23. Market Trials - Friday call Credit and Treasury Weekly Update August 27, 2010

24. Week in Review Core credit – CMM Posted Credit Reports and sent ACLs each business day –AIL Report Data lags occurred on the following dates –8/23 for operating days 8/21 and 8/22 due to weekend failover (subsequently cleared) –8/24 for operating day 8/23 due to weekend failover (subsequently cleared) –8/27 for operating 8/26 due to network issues Market Trials - Friday call

25. Week in Review Core credit – CMM - Credit exposures –Credit exposures reflect market participant activity in Market Trials There remain a few exceptions, which are listed on the Known Issues list Several adjustments continue to be made for Market Trials as a result of extreme data experienced –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 »The adjustment will remain in effect through September 30 unless a CP requests a different ADTE –AIL exposures continue to be adjusted as follows: »For completed and not settled days, exposure is reduced by 50% »For forward days, exposure was reduced by 80% »The adjustment will remain in effect through September 7th unless a CP requests a different ADTE »ERCOT will reevaluate AIL adjustment approach for 168 hour test and provide details next week http://nodal.ercot.com 25

26. Week in Review –For a CP to get a good 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 http://nodal.ercot.com 26

27. DAM Credit Constraint – Non Business Day DAM was run over non-business days for the first time with credit constraints over the weekend of August 14-16 –A significant amount of credit was consumed, resulting in some CPs being constrained in the Monday DAM. Key drivers include: 1.Primary impact - Data – very high values used for the 95% price differences between RT and DA applied to Energy Only Offers and Three Part Offers –Results from market trials – not expected to be the norm after go live 2.Secondary impact - Exposure elements – ACL is consumed for Three Part Offers over non-business days when it is not consumed in the DAM on business days This topic to be reviewed by the market –Any clarification must be finalized quickly to achieve implementation prior to go live http://nodal.ercot.com 27

28. DAM Credit Constraint – Non Business Day Data Impact – Market Trials Data http://nodal.ercot.com 28

29. DAM Credit Constraint – Non Business Day Proposed review schedule –Thursday, August 26 - Review with MCWG/CWG –Monday, August 30 – Review with MCWG/CWG –Tuesday, August 31 – Potential vote by NATF –Thursday, September 2 – Review by TAC http://nodal.ercot.com 29

30. Week in Review Market Trials - Friday call

31. 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 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

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

33. 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

34. 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, August 30 th for the Wednesday, September 1 st reset. Market Trials - Friday call

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

36. New Known Issues No New known issue –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 36

37. Future Market Calls Friday Market Calls –Starting next week on 9/3/2010, Friday Market Calls will run from 9am – 12pm –These calls will no longer have dedicated time slots for each functional area As each area completes their presentation, the next agenda item will start immediately after The 12pm end time will be extended as needed –Additionally, a new agenda item will be added to the end of the call to cover Cutover activities. As Market Trials winds down, Cutover will become the focus. http://nodal.ercot.com 37