1 TX SET Mass Transition Project RMS Update March 15, 2006

2 Today’s Process for Mass Transition Business Day 0  ERCOT verifies the list of affected ESI IDs with Defaulting CR, along with if possible obtaining current customer information for each ESI ID affected to be communicated to the gaining CR (POLR) via Spreadsheet  ERCOT announces to affected Market Participants (POLRs and TDSPs) that a Mass Transition is underway.  ERCOT sends list of ESI IDs to affected TDSPs to verify and/or confirm REP of Record in TDSPs system for each ESI ID.

3 Today’s Process Business Day 1  TDSPs Verification of List (ESI ID Synch with ERCOT) is completed and results is communicated to ERCOT via spreadsheet  ERCOT provides POLR(s) with list of ESI IDs affected via a spreadsheet where POLRs are expected to provide Switch (814_01) transaction to become REP of Record due to CR Default – Mass Transition Project.

4 Today’s Process Business Day 2 – 6  POLR CRs create Switch Request with the First Available Switch Date (Switches must be submitted within 5 Business days of receipt of the ESI ID List, unless the gaining CR is a POLR and the ESI ID has a peak demand of one (1) Megawatt, then the Earliest Switch Date will not exceed 11 days for the submittal request to ERCOT. In this event First Available Switch Date will depend upon premise type as stated above. Also entry of the transaction will affect transition completion, which may depend upon volume of Switch transactions involved in the transition due to manual processes.

5 Today’s Process Business Day 3 – 11  ERCOT Receives Switch Request from POLRs involved to forward to TDSP, 814_03 transaction includes Requested Switch Date.  TDSP responds to each Switch transaction providing Scheduled Meter Reading Date (814_04) for each ESI ID along with 867_02 Historical Usage transactions, if usage is requested by the gaining POLR. Completion of any of these activities depends upon volume of Switch transactions involved in the transition due to manual processes.

6 Today’s Process Business Day 5 – 13  Affected TDSP(s) complete process to obtain meter readings for all ESI IDs received from ERCOT for the Mass Transition. After Business Day 8 or >18  Transactions received by ERCOT completing the transitioning of the ESI ID (TX SET Transactions Initial 867_04 and Final 867_03 Reading/Usage) Completion of any of these activities depends upon volume of Switch transactions involved in the transition due to manual processes.

7 Today’s Process Transactional Issues  The issuing of Move-Ins transactions instead of Switches Issue: Move-Ins are received prior to POLR Switches and in the order of work to be performed the Move-In could be completed a day or two earlier. Later during that same week the POLR Switch may be scheduled and/or completed transferring the customer to POLR. This is very confusing for all entities involved and potentially a negative impact to the Retail Customer. Issue: Some of these Move-In (MVI) transactions received by the TDSP are within certain city jurisdictions that require tenant permits for all Move-Ins delaying the transitioning of those ESI IDs from the Defaulting CR.  Defaulting CR issuing Drop to AREP transactions instead of operating within the confines of the market approved POLR process for Mass Transitions. Issue: These transactions must be cancelled before the appropriate POLR Switch transaction can be created at times adding days to the transition.  Switch Request received by ERCOT without the appropriate rescission indicator being flagged resulting in ERCOT rejecting the Switch request. Issue: This may add some additional time to recreate the transaction with the rescission flag, especially if there are a large volume of ESI IDs to be re- entered along with the manual entry process needed to complete this task by the gaining POLR.

8 The ‘Future’ Mass Transition Process TX SET Concept Assumptions  For All ESI IDs involved in the Mass Transition Project: Customer Rescission would be waived because of the type of event that initiated the transitioning of ESI IDs involved. Automation would be flexible enough where transactions could be generated by ERCOT for transmission to the affected TDSPs and the appropriate POLR and/or Designated CR. Historical Usage would be provided by the TDSPs via the 867_02 Historical Usage transaction to the POLR or Designated CR for all Mass Transition Drop transactions generated by ERCOT. Specific Customer Information would be provided within the Mass Transition Drop transaction generated by ERCOT to automate the loading of needed premise/customer information into the POLR or Designated CR’s system removing manual processes that could delay the process, potentially impacting the Customer by delaying CHOICE. TDSPs would be permitted to estimate meter readings for this type of event to allow automation based upon the Mass Transition flag in the transaction and to prevent delays in completing the transition, especially during high volumes of transactions.

9 Future (Long Term) Process Business Day 0  ERCOT Announces to affected Market Participants (POLR and/or Designated CR and TDSPs) that a Mass Transition is underway.  ERCOT sends list of ESI IDs to affected TDSPs to verify and/or confirm REP of Record in TDSPs system for each ESI ID.

10 Future (Long Term) Process Business Day 1  TDSPs Verification of List (ESI ID Synch with ERCOT) is completed and results is communicated back to ERCOT via spreadsheet  ERCOT provides POLR(s) or Designated CR with list of ESI IDs affected via spreadsheet ONLY for Information to prepare for receipt of transactions from ERCOT.

11 Future (Long Term) Process Business Day 1  ERCOT generates Mass Transition Drop transaction to the affected TDSPs: Each transaction involved would have a special flag identifying it as apart of the Mass Transition Project. Customer information would be included in each transaction, when and if available. With the elimination of the manual entry created by today’s Drop to POLR process for a Mass Transition this should remove several days or as much as a week from the Mass Transition Project completion.

12 Future (Long Term) Process Business Day 3  TDSPs respond to each Switch transaction providing Scheduled Meter Reading Date for each ESI ID. Business Day 4  ERCOT would provide POLRs and/or Designated CRs with: Mass Transition DROP transaction (814_14) Customer Information, if and when available, would be contained in the 814_14 transaction Historical Usage transaction (867_02)

13 Future (Long Term) Process Business Day 5 – 6  Affected TDSP(s) would complete the process to obtain meter readings for all ESI IDs received from ERCOT for the Mass Transition. Based upon volume and along with the Mass Transition flag identified in the transaction, the TDSPs may obtain meter readings by one or a combination of the following methods: Actual Field Readings Estimate Readings Actual Meter Reading via AMR or IDR equipment already installed at the premise After Business Day 6 or < 10  Transactions received by ERCOT completing the transitioning of the ESI ID ( TX SET Transactions Initial 867_04 and Final 867_03 Reading/Usage)

14 Resolving Today’s Issues (Long Term) The number of days for the transition project to complete is too long.  Resolution: TX SET’s priority in this project is to reduce the number of days to transition/transfer all ESI IDs from the Defaulting CR to complete the Mass Transition Project and with this concept it is possible for transitioning to complete in 10 days or less. Move-Ins received during the transition from CRs.  Resolution: With ERCOT generating Mass Transition Drops within (1) day of the Mass Transition announcement the opportunity for competing transactions have been minimized due to the window of time permissible for these transactions to process has been greatly reduced. Defaulting CR issuing Drop to AREP transactions instead of operating within the confines of the market approved POLR process.  Resolution: ERCOT will be generating the Mass Transition Drop transactions to reduce market impacts created by incorrect transaction entry, timing or processing delays. Also, this new process would resolve the issue where Defaulting CR can no longer create transactions, system inabilities or limitations, or has left the Market without communicating to the appropriate parties of their intent to no longer serve their Customers. CRs sending Switch Request without the appropriate rescission indicator being flagged causing ERCOT to reject the Switch request.  Resolution: As part of the process and requirement for all ESI IDs involved Customer rescission would be waived at the time when ERCOT announces the Mass Transition event is underway, just prior to generating the Mass Transition Drop transactions.

15 Question and Answer