Prepared by Opinion Dynamics Corporation May 2004

 Opinion Dynamics was contracted to conduct a primary research effort to measure Market Participant perceptions of ERCOT’s performance with respect to meeting its responsibilities.  Results allow for comparisons between market perceptions and operational realities. Introduction

Three Phases: Methodology Phase 1: 9 in-depth interviews and 2 focus groups with ERCOT staff Phase 2: In-depth interviews with 17 Market Participants Phase 3: Survey of ERCOT’s Market Participants

ODC developed a sample of 1,157 unique Market Participants using the following lists provided by ERCOT staff:  Appropriate points of contact at market participant firms provided by MP’s via CSR’s  ERCOT Board members from 2003 and 2004  Current Committee members from  Attendees of the 2003 IT forum Survey Sample

Response Rate 429 completed surveys from a sample of 1,157 Market Participants (37%) ERCOT Board Membersn=16 Committee Membersn=112 Market Participant Staffn=301 Classification of respondent based on self-selected descriptions – QA1

By Market Participant Firm Type Response Rate

Survey Approach: 10 point scale  Many questions based on a 10 point scale: 1-3 = negative response, 8-10 = positive response.  Mean responses will trend toward the middle of a 10 point scale – only those with passionate opinion are likely to provide a rating in top or bottom 3.  In general, mean responses of 6.6 or above are favorable ratings, 7.5 and above are extremely positive responses.

Background and Context Market Participant Opinions Regarding ERCOT Staff’s Role In Developing Market Rules Findings ERCOT staff should participate in market rules development ERCOT staff should only administer the market rulesUndecided Board Member (n=16) 38%50%13% Committee Member (n=112) 67%28% 5% Market Participant Staff (n=301) 53%23%24%

Background and Context Market Participants’ Understanding of ERCOT’s Committee Structure Findings

Background and Context Market Participants’ Understanding of ERCOT’s Committee Structure (cont.) Findings

Background and Context Market Participant Interactions with ERCOT Staff Findings CSR’sSubject Matter Expert Executive Mgt. Board Member (n=15) 27%20%47% Committee Member (n=112) 38%48% 4% Market Participant Staff (n=299) 66%16% 1%

Background and Context Interest in Future Training Response Rate

Overview of Perceived Strengths  Performance of ERCOT staff, officers and directors  Personalized contact with Market Participants-- particularly CSR contact  Timeliness and accuracy of data provided  Providing effective training Findings

Color Key

ERCOT Staff Performance: Corporate Objectives (10 point scale, means shown) Findings Ensuring Reliability/Adequacy of Grid Nondiscriminatory access to transmission/ distribution Accurate accounting of electric production & delivery Timely information about customer’s choice of REP

Corporate objectives: Non-discriminatory access/Market Participant Registration (10 point scale, means shown) Findings Level of knowledge/ expertise displayed by the client service rep Communication and distribution of necessary information and forms Following procedures/ protocols for market participant registration Board Member (n=16) Committee Member (n=112) Market Participant Staff (n=301) 7.9

ERCOT Staff Performance (10 point scale, means shown) Findings Consistency Attitude Industry expertise Responsiveness to Market Participants Overall Performance Management of ERCOT organization (Officers & Directors only)

ERCOT Staff Performance: CSRs (10 point scale, means shown) Findings Timely response Knowledge/ Industry Expertise Response accuracy Direction of inquiries Accessibility Attitude/Willingness to resolve problem Overall expectations

ERCOT Staff Performance: Functional Areas (10 point scale, means shown) Findings Market Participant Registration Systems Testing Retail Transaction Processing Scheduling Grid Operations Settlements and Billing Settlements Dispute Resolution

Communications (10 point scale, means shown) Findings Amount of information Clarity of ERCOT Staff’s Messages Written Communication Verbal Communication Timeliness

Communications: Functional Areas (10 point scale, means shown) Findings Asset Registration Systems Changes Progress on Market Projects Bidding Systems Planning

Communications: Room for Improvement (10 point scale, means shown) Findings Impacts of PRRs Grid ops decisions When behind schedule for systems changes When systems are down Communicating…

Timeliness & Accuracy of Data (10 point scale, means shown) Findings Settlements Bill Transmission Congestion Rights Renewable Energy Credits Data Extracts Metered Data

Effectiveness of Training (10 point scale, means shown)

Overview of Areas for Improvement  Portal reliability  Spending priorities  Systems and tools for communicating with the market Website navigation EMMS IT Technical Helpdesk  Functional Performance congestion management data extracts settlement dispute resolution Findings

ERCOT Portal Level of Agreement with Statements About ERCOT IT Systems/Staff Findings The Portal is effectiveThe Portal is reliable

ERCOT Spending Practices (10 point scale, means shown) Findings Spending Funds Equitably Spending Funds on Things that are Important to Your Company Spending Funds Cost Effectively

Communications with the Market (10 point scale, means shown) Findings Navigation of the Web Site Usefulness of IT Help Desk Understanding EMMS

ERCOT Functional Performance (10 point scale, means shown) Findings Timely and Effective Implementation of Systems Changes Timely Resolution of Settlements Disputes Providing Data Extracts with Necessary Content Addressing Congestion Management issues

Market perceived areas of strength:  Grid reliability  Systems are providing timely and accurate data  ERCOT staff performance including personal interactions Conclusions

Market perceived need for system improvements with:  Web site navigation  Data extracts (content)  Web portal  EMMS Conclusions

Market perceived communication gaps in:  Impacts of PRRs  Systems changes  Spending priorities  Grid operations decisions Conclusions (cont.)

Specific areas for strategic consideration by ERCOT Board:  Role of committees in setting spending priorities and introducing market changes  Defining and communicating ERCOT staff’s market function Market is interested in more training--More research on potential types of training seminars is necessary Conclusions (cont.)