1. 79 th Texas Legislative Session 2005 – Summary of ERCOT Impacts ERCOT Board of Directors June 21, 2005 Mark Walker

2. 2 June 21, 2005ERCOT Board ERCOT Direct Impact - Senate Bill 408 Consistent with Sunset Commission Recommendations PUC Reauthorized to 2011 OPUC reauthorized in SB 409 (to 2011) PUC clear authority to oversee ERCOT Board Governance Independent Market Monitor

3. 3 June 21, 2005ERCOT Board Bills and Amendments that did NOT pass Open records law for ERCOT State Agency Task Force over ERCOT Renewable Energy (yes, all wind bills died) Broadband over Powerline

4. 4 June 21, 2005ERCOT Board Senate Bill 408 ( eff. September 1, 2006) Oversight Authority – PUC may: Oversee and investigate finances, budget, operations, cost efficiencies, salaries & benefits, use of debt Prescribe a system of accounts Require reports Conduct audits Inspect ERCOT facilities, records & accounts Assess administrative penalties Resolve disputes

5. 5 June 21, 2005ERCOT Board Senate Bill 408 - cont. Board Governance Add 2 new unaffiliated members (effective Sept. 2006) Board chairman to be one of the 5 independent members Clarification of public meetings policy for Board, including 7-day notice, public comment, special provisions Board member disclosure of “direct interest” in matters before the board, recusal from voting or participation PUC approval of governance changes

6. 6 June 21, 2005ERCOT Board Senate Bill 408 - cont. Independent Market Monitor ERCOT to support and fund the independent market monitor selected by the PUC PUC to supervise the Monitor PUC to retain enforcement role Consultation with ERCOT Board Committee Ethical Standards for Monitor Annual Reports

7. 7 June 21, 2005ERCOT Board Action Plan - Oversight Cost Effectiveness Highly detailed fee filing in by Oct. 1 Resource justification, workforce analysis, salary survey, internal controls development Accountability Complete audit responses Follow up audits to test internal controls and security enhancements (2006) Full cooperation with the Commission

8. 8 June 21, 2005ERCOT Board Action Plan - Governance Bylaws Review and PUC Rules Board membership, conflicts of interest, public meetings Ethics Agreement Refinement of current re-draft Board Processes Conform procedures and practices

9. 9 June 21, 2005ERCOT Board Action Plan – Independent Market Monitor PUC Rulemaking – Definition of IMM, selection, ethical standards PUC Detail of ERCOT Support Contract with IMM, workflow, staffing, systems, budgeting Board Committee Input on resource commitment Input on annual reports

10. 10 June 21, 2005ERCOT Board Other Significant Legislation - Metering Metering & Energy Efficiency (HB 2129) –Future competitive metering services limited to customers required by ERCOT to have IDR meters –Surcharge to allow TDSPs to recover costs of deploying advanced meters or meter networks for non-IDR customers –REPs may request that non-IDR customers receive advanced metering if the REP pays the difference in cost –Clarifies that customers own their meter data

11. 11 June 21, 2005ERCOT Board Energy Efficiency Energy Efficiency (SB 712) –Clarifies that TDU efficiency programs may address reductions in peak demand as well as energy consumption and costs –Standard offer programs must be technology-neutral –Requires PUC to expand market transformation programs to include energy-smart schools, appliance recycling, A/C system tune-ups, trees for energy efficiency –Allows the TDUs to spend up to 10% of their efficiency funds on R&D for efficiency technologies –Restores the low-income weatherization programs previously funded by the System Benefit Fund

12. 12 June 21, 2005ERCOT Board Entergy Area (SE Texas) Competition formally delayed until PUC certifies an independent power region for the area (HB 1567) Lifts the rate freeze imposed by SB7

13. 13 June 21, 2005ERCOT Board Credit Scoring Prohibits REPs from denying electric service to or setting prices for residential customers based on their credit history (HB 412)