1. H.B. “Trip” Doggett President & Chief Executive Officer Board of Directors Meeting ERCOT Public September 18, 2012 Tab 4: CEO UPDATE

2. 2 F INANCIAL P ERFORMANCE (U PDATED THROUGH A UGUST ) YTD B UDGET VS. A CTUAL P ERFORMANCE : $5.2 M ILLION F AVORABLE Tab 4 E XPENSES R EVENUES $5.1 Million favorable 2011 carry forward $0.5 Million favorable other revenues $0.4 Million unfavorable system administration fees $3.4 Million unfavorable outside services $1.7 Million favorable salary & related benefits $0.7 Million favorable facility & equipment costs $1.2 Million favorable hardware & software maintenance or licensing ERCOT PUBLIC

3. 3 F INANCIAL P ERFORMANCE (U PDATED THROUGH A UGUST ) Y EAR -E ND P ERFORMANCE F ORECAST : $3.0 M ILLION F AVORABLE Tab 4 E XPENSES R EVENUES $5.1 Million favorable 2011 carry forward $4.6 Million unfavorable outside services $2.7 Million favorable salaries & related benefits $0.8 Million favorable facility & equipment costs ERCOT PUBLIC

4. 4 I MPACTS OF E CONOMY & W EATHER – 2012 ERCOT PUBLIC Economy Impact Weather Impact Model Error 2012 YTD Forecast Energy 225.7 TWh Actual Energy 224.9 TWh Error: (-0.3%) August 2012: Forecast Energy 35.0 TWh Actual Energy 35.4 TWh Tab 4

5. 5 S UMMER 2012 R EVIEW As expected, weather was hotter than normal (15 year average), but not as extreme as summer 2011 The peak demand of 66,626 MW was set June 26, unusually early in the summer, 1,753 MW less than the August 2011 peak of 68,379 MW The summer 2012 SARA forecasted a peak of 67,492 MW No significant challenges serving load –Generation forced outages were lower than last year possibly due to temperatures and load not sustained at extreme levels –ERCOT region experienced more rain during the summer of 2012, so drought was not a broad concern –One watch for Physical Responsive Reserve below 2500 MW due to the tripping of two large generating units on July 30 –No Energy Emergency Alert events Four Transmission Watches issued for areas of South and West Texas due to high loads and some transmission outages –Load growth in West Texas due to gas and oil development led to more transmission congestion in the area ERCOT PUBLICTab 4

6. 6 SARA R ELEASES – S EP 4 TH 2012 Fall 2012 (Final) & Winter 2012-13 (Preliminary) Sufficient installed generating capacity to serve forecasted peak demands with historical typical generation outages Persistent drought conditions in ERCOT do not pose a threat to generation operations Extreme load and extreme generation outage conditions can be accommodated in the Fall Extreme load and extreme generation outage conditions could lead to rotating outages in the Winter ERCOT PUBLICTab 4

7. 7 N ON - BINDING F ORWARD P RICE P ROJECTION ( E VALUATION P HASE ) Analyzed error between 6/28/12 and 8/27/12 looking at the Generation-to-be-Dispatched (GTBD) and Load Zone LMPs Per NPRR 351, ERCOT must post projected non- binding prices for at least 15 minutes into the future ERCOT PUBLIC Mean Absolute Error for GTBD and Load Zone LMPs Tab 4

8. 8 N ON - BINDING F ORWARD P RICE P ROJECTION ( E VALUATION P HASE ) Observations during the first two months include –Forward Price Projection is reasonable for the first 30 minutes except in the West Zone –Short-term load and wind forecast errors get amplified by the shape of the aggregated offer curve resulting in higher errors in Forward Price Projection –False price spikes have occurred near the top of the hour due to Timing & modeling of generator start-ups & shut-downs Handling of differences between COP & telemetered generator status –Updated logic was implemented on 8/29/12 to mitigate the above two issues ERCOT and Stakeholders are continuing to evaluate further improvements ERCOT PUBLICTab 4

9. 9 D EPARTMENTAL H IGHLIGHTS Compliance Jim Brenton was appointed by the NERC Board of Trustees to the newly created Reliability Issues Steering Committee (RISC). RISC is an advisory committee that reports directly to the NERC Board of Trustees and triages and provides front-end, high-level leadership and accountability for nominated issues of strategic importance to Bulk Power System (BPS) reliability. In some cases, that includes solutions other than new or revised standards. Jim Brenton represents ERCOT and the NERC CIPC (Critical Infrastructure Protection Committee) on this new steering committee. ERCOT PUBLICTab 4 Jim Brenton Principal, Regional Security Coordination Hired: August 1, 2005

10. 10 D EPARTMENTAL H IGHLIGHTS Information Technology Several members of the IT organization have completed a comprehensive draft of a Technology Roadmap forecasting technology needs over the next 2 to 5 years. This effort required cross-functional collaboration across IT organizations including IT Strategic Services & Asset Management, Enterprise Architecture, Application Services, Infrastructure, and IT Operations, as well as with Business Integration, Security, and other business stakeholders. A high-level presentation was given to the ERCOT Board in March. A more detailed IT Deep Dive, along with a Security Deep Dive, was provided to two Board members in August. An overview will be presented to the November Finance & Audit Committee. ERCOT PUBLICTab 4

11. 11 IEEE PES G ENERAL M EETING, S AN D IEGO, J ULY 2012 ERCOT PUBLIC Topics Included Extreme Weather Phasor Measurements Situational Awareness High Wind Penetration Demand Response Real-Time Contingency Analysis State Estimation Sub-Synchronous Control Interaction Topology Control Wide Area Damping Control Impact of Wind Resource on Prices Modeling of Wind Parks Load Modeling Presentations by 14 ERCOT Staff Kent SaathoffJose ContoDavid Maggio Bill BlevinsResmi SurendranTejaswi Potluri John AdamsSandip SharmaJian Chen Diran ObadinaHong XiaoMike Legatt Sarma (NDR) Nuthalapati Shun-Hsien (Fred) Huang Tab 4

12. 12 T OP C OMMUNITY P ARTNER – T AYLOR ISD Award from Texas Afterschool Centers on Education (ACE), a Texas Education Agency program ERCOT PUBLIC ERCOT outreach to Taylor ISD 47 ERCOT employees 600+ volunteer hours Programs included MAPS – Mentors for 2 nd grade students MUNCH – Mentors for 3 rd through 12 th grade BLADE – Beginners Learning Alternative Designs for Energy Duck University – Official Afterschool Center on Education (ACE) Tab 4