1. MCWG Update to WMS 12/07/2011 1

2. Exposure / Collateral Update Nodal Total Potential Exposure reported by ERCOT as of 11/30/11 now exceeds the Zonal Estimated Aggregate Liability (TPE = ↑105% since 11/30/10) Collateral Posted has increased since 11/30/2010 Cash/LOCs ↑ 34% @ $1.3B Guarantees ↑14% @ $0.9B Net Impact – Secured MPs are posting 3.39xTPE vs. 2.0xEAL Unsecured Credit Limits have increased Dollar % ∆ = ↑ 1% @ $0.8B [Dollar / CPTY] ∆ = ↓2MM from $31.7MM # MPs ↑+8 from 20 Note – Exposure (“TPE”) reported does not include DAM Credit Exposure nor CRR Auction Credit Exposure as calculated in Section 4 and 7 of the Protocols Source: Finance And Audit Committee Meeting Materials, ERCOT Market Credit Status, Sept 2010 – Dec2011 2 Collateral = $ 2.6 Billion

3. General Update Real-Time and DAM Credit Review: – Impact of Proposed Changes to Price Caps will be reviewed in January 3

4. CFTC Update – Preparing application for CFTC & Filing date is not yet known – Drafting other Binding Documents that will address: Market participation criteria – Expertise in markets with appropriately trained traders – Appropriate operational capabilities to respond to ERCOT communication – Adequate risk management capabilities – Capitalization requirements » Supported by audited financial statements » May require Independent Amount rather than minimum capital in the event of financial material adverse changes 4 To participate in markets other than CRR market To participate in all ERCOT markets Minimum capitalization requirements $5 million total assets or $500,000 tangible net worth $10 million total assets or $1 million tangible net worth Counter-Parties not meeting the capital requirements above $200,000 Independent Amount$500,000 Independent Amount

5. CFTC Update Annual Officer Certification process and certification form – Certification due no later than 120 days after the close of the fiscal year of the Counter-Party or its guarantor Process for verification of risk management capabilities Proposed mandatory annual verification for Counter-Parties that: 1.Have had CRR PtP Obligation exposure in the year prior to the date of the Officer Certification, and 2.Are ineligible for unsecured credit under the ERCOT Creditworthiness Standard Other Counter-Parties may also be verified. Provision for cure periods for Counter-Parties with deficiencies. Verification may be contracted to a third party. Any material provided in support of the risk management capability verification process will be confidential. ERCOT may, in its sole discretion, accept verifications performed by other ISOs. 5