1 Market Operations Presentation Board of Director’s Meeting February 16, 2005

2 Agenda Overall Activity Migration From Native AREPs Performance Measures (Quarter Only) Reliability Services Balancing Services Congestion Management Services Retail Activity Wholesale Activity Other Items

3 Overall Activity Transaction Type Switches1,646,346 Move - Ins5,731,332 Move Out3,301,425 CSA988,387 Drop to POLR297,957 Total11,965,447 Compared to Last Month 372,275 Retail Transactions Summary As of Friday, December 31, 2004 since June 1, 2001

4 Residential Small Non-Residential Large Non-Residential Migration from Native AREP % of ESI IDs 14% 17% 55% 20% 25% 57% 25% 64% 65% % of Load * at at at * % of Peak Demand on

5 Reliability Services 12/31/0412/31/ Market Perspective: Approximate Retail Market (at $.10/kWh PTB) $28, ,499.22,284.12,159.6 Volume (GWh)288,918284,99222,84121,596 % Increase1.4%5.8% Natural Gas Price Index ($/MMBTU) % Increase5.6%10.3% RMR: RMR Capacity and Start Up RMR Energy BENA Credit Net RMR Other Capacity Services: Replacement Reserve0.0 Reg Up and Down Responsive (Spinning) Reserve Non-Spinning Reserve Black Start TOTAL RELIABILITY SERVICES$ YTD ($'s in millions) December ($'s in millions)

6 Balancing Services 12/31/0412/31/ Market Perspective: Approximate Retail Market (at $.10/kWh PTB) $28, ,499.22,284.12,159.6 Volume (GWh)288,918284,99222,84121,596 % Increase1.4%5.8% Natural Gas Price Index ($/MMBTU) % Increase5.6%10.3% Balancing Energy: Balancing Energy - Up$ % Increase -32.8%90.9% Up (GWh)9, , % Increase -10.5%27.9% % of Market 3.6%4.0%4.1%3.1% Balancing Energy - Down-$ % Increase -15.7%-29.5% Down (GWh)-6, , % Increase -0.4%-32.1% % of Market2.5% 2.4%3.4% YTD ($'s in millions) December ($'s in millions)

7 Congestion Management Services

8 Discussion of $6.6 million BENA charge: Primarily due to congestion on the E-N CSC on Dec 2 and 3. The payment to TCR holders on the E-N CSC was approximately $10.5 million and the CSCBE charge to QSE’s with schedules with an impact on the same CSC was approximately $4.4 million. The difference ($6.1 million) was made up through BENA. The transfer capability of TCR’s sold in the annual (almost 1 year before Dec 2004) and monthly (45 days before Dec 2004) auctions on that CSC was much more than the actual transfer capability of that CSC on December 2 and 3. This was due to the fact that transmission outages scheduled (a minimum of 3 days) before Dec 2 and 3 were not included in transmission capacity study cases that were used to calculate the transfer capability of TCR’s available for sale in the annual and monthly auctions. We do not derate TCRs for such incidents. Beth Garza, ERCOT’s Manager of Congestion Analysis, reviewed this with Market Participants at the January 14 meeting of the Wholesale Market Subcommittee.

9 Other Items Added RepsAdded QSEs None