ERCOT Financial Summary June 2004

Preliminary - Unaudited ERCOT Financial Snapshot

Year-to-Date Results of Operations ($ Millions) Notes: Revenues – include interest income Total expenses – include interest expense Preliminary - Unaudited

Year-to-Date Cash Flow Summary ($ Millions) Note: Cash balance includes TCR auction receipts but does not include QSE or TCR security deposits. Preliminary - Unaudited

Revenue $60.3 million year-to-date 98% from System Administrative Fee 70+% from top 5 QSE’s 85+% from top 10 QSE’s 90+% from top 15 QSE’s $1.0 million (1.7%) unfavorable year-to-date MWH volume 1.9% below expectation Preliminary - Unaudited

MWH by Month Preliminary - Unaudited

Operating Expenses $55.2 million year-to-date, including depreciation $34.1 million year-to-date, excluding depreciation $8.5 million (13.4%) favorable over the year Consultants ($2.9 million) Labor ($2.7 million) SW/HW license and support ($1.4 million) Employee expenses and other ($1.5 million) Preliminary - Unaudited

FY 2004 Operating Expense Year-to-Date 2004 Budget versus Actual Preliminary - Unaudited 33% 14% 6% 7% 34% 38% 35% 10% 5% 6%

Headcount 409 of 530 on staff 29 FTE increase (net) in new hires during terminations during 2004 Preliminary - Unaudited

Capital Expenditures $18.5 million of $55 million annual budget spent 43 projects active in year- to-date 2004 Major projects underway TCC Phase 2 Building EMMS Release 4.0 Commercial System Upgrade Preliminary - Unaudited

Current Events  Internal Audit of Consultants & Contractors  IA findings presented to management  Management responses in process  Significant internal control enhancements  Temporary organizational changes  Cyber security reporting through Legal  CIO function shared by COO and CMO  Strengthening of ethics agreements (pre-hire and re-affirmations) for all employees  Strengthening of confidentiality and conflict of interest language in ERCOT contracts  Recently hired Contract Administrator coordinates initiation of contracts (w/ legal & HR) and monitors vendor qualifications and compliance

Current Events (cont.)  2005 Budget Process  Directors/managers initial requests submitted  Operations fine-tuning Mwh projections  Executive review by early August  F&A Review mid-August  Public meeting September 1  TCE Plan – Received 1 st Payment  $496 thousand distributed to MPs on July 8 th* * Will be accounted for in July results.

Preliminary - Unaudited ERCOT QSE Short Payments

2005 Budget Timeline

2005 Budget Key Dates July 20 – Budget status at regular F&A meeting August 16 – Budget review at special F&A meeting September 1 – Public meeting on proposed budget September 9 – Budget review at special F&A meeting September 16 - Budget review at special F&A meeting September 21 – Budget recommendation at regular board meeting October 19 – Budget approval at regular board meeting October 29 – Budget filed at PUCT

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