1 Overview ERCOT Investment Corporate Standard – Summary of Key Elements Quarterly Investment Report as of September 30, 2010 –Overview –Concentration by Bank Monthly Investment Summary as of November 30, 2010 Summary Questions? CWG / MCWG MeetingJanuary 7, 2011

2 ERCOT Investment Corporate Standard – Summary of Key Elements CWG / MCWG MeetingJanuary 7, 2011 TopicCurrent StandardPrior Standard Authorized Instruments 1.Obligations of or guaranteed by the US government. 2.Repurchase agreements in which the collateral is obligations of or guaranteed by the US government. 3.Money market mutual funds subject to Rule 2a-7 invested only in obligations of or guaranteed by the US government or repurchase agreements in which the collateral is obligations of or guaranteed by the US government. 1.Obligations of or guaranteed by the US government. 2.Obligations of or guaranteed by other US governmental entities (e.g. federal agencies, state or municipal, etc). 3.Certificates of deposit and share certificates. 4.Repurchase agreements in which the collateral is government or agency securities. 5.Commercial paper. 6.Banker’s acceptances. 7.Money market mutual funds. Restrictions 1.ERCOT must diversify investments held in money market accounts across at least four different fund families. 2.No more than 30% of investable funds will be maintained in any one fund. 3.No more than $50 (temporarily up to $100) million will be maintained in any one fund. No restrictions Credit Review Credit – To manage credit risk arising from investments, at least monthly ERCOT reviews underlying securities held as investments, including investments held through money market funds. Any credit related concerns not satisfactorily resolved with fund managers will result in movement of the investment to an alternative fund. ERCOT staff will not duplicate credit analysis performed by fund managers and are not expected to provide assurance that all holdings are creditworthy. No Credit Review Required

3 Quarterly Investment Report CWG / MCWG MeetingJanuary 7, 2011

4 Quarterly Investment Report CWG / MCWG MeetingJanuary 7, 2011

5 Monthly Investment Report CWG / MCWG MeetingJanuary 7, 2011

6 Summary To seek to ensure the safety of funds –ERCOT Invests only in money market funds that invest in Treasury or Treasury-backed securities (repurchase agreements) Reviews underlying fund investments monthly –The SEC Strengthened its requirements for money market funds –Money market funds invest in repurchase (repo) agreements that are Backed by Treasuries (102% of repo) Held by third parties Short tenor (at June 30, 2010 – predominantly 1-7 days) Collateral is trued up daily CWG / MCWG MeetingJanuary 7, 2011

7 Questions? CWG / MCWG MeetingJanuary 7, 2011