1. Item 9: Provisions for Financial Statements CWG/MCWG Meeting ERCOT February 20, 2014

2. Item 9 ERCOT Public/Confidential/Restricted 2 Clarifications to Section 16.11.5 Monitoring of a Counter-Party’s Creditworthiness and Credit Exposure by ERCOT as related to the financial statement requirement Financial statements must be prepared in accordance with: –Generally Accepted Accounting Principles (GAAP) or –International Accounting Standards (IAS) Audited and unaudited financial statement requirements for new Counter- Parties entering the ERCOT markets –Financial statements may be waived if a Counter-Party operations: (1) begin after the financial year or (2) begin prior to the financial year end but the Counter-Party was not active in the ERCOT market until after financial year end –All new Counter-Parties entering the ERCOT markets must provide unaudited financial statements for their most recent quarter or financial year end Provision for Financial Statements

3. Item 9 ERCOT Public/Confidential/Restricted 3 Unaudited financial statements must include a sworn statement from an executive officer of the Counter-Party attesting to the accuracy of the information provided in the unaudited financial statements Audited financial statements must include the accompanying notes and the independent auditor’s report Next Steps –ERCOT to draft NPRR Provision for Financial Statements