1 Market Operations Presentation Board of Director’s Meeting August 19, 2003

2 Agenda 2002 Resettlements Status SCR 727 Data Extract Variance Process Q2 Retail Transaction Performance PRR 440 Implementation Market Redesign Support Activities

Resettlement Status Complete through August 31, 2002 On track to be caught up by year end

4 SCR 727 Data Extract Variance Process Variances between ERCOT, REP and TDSP data –Continue to reconcile communication gaps –Process for ultimate resolution of valid variances is in review Identified error in ERCOT data extracts –Error in ERCOT data archive, not in ERCOT production data –SCR 727 Task Force is looking into revised schedule for variance cut offs –No current impact on 2002 resettlements and 2003 true up activities

5 Traced to error in ERCOT data archive process Resulted in approximately.5% missing records in ERCOT data archive SCR 727 data extracts are generated from our archive and are missing data from those missing records REPs and TDSPs have requested a re-issue of complete SCR 727 data extracts, rather than a re-issue of incremental corrections ERCOT believes correction of this error will resolve a significant portion of variances already recorded Error in ERCOT Data Extracts

6 Q2 Performance Measures submitted to PUCT

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8 PRR 440 Implementation Implemented suspension of market solution for local congestion Effective August 1, 2003 Suspended until earlier of new PRR for revised market solution rules or January 1, 2004

9 Market Redesign Support Activities 2004 staffing, including consultants, to be ≤ 50 Reviewing technology options to enhance the process Creating a reference file of skill sets of experts and consultants Budget to be presented as a separate item in ERCOT’s overall 2004 budget