ERCOT Finance Summary

1. ERCOTFinance Summary February 17, 2004

2. Significant Events • 2004 ERCOT Fee Case (Docket No. 28832) • PUCT Hearing – February 12th • PUCT Staff, OPC, and Steel Mill Interveners Actively Participating • 6 ERCOT Witnesses; One witness each for PUCT and OPC • Major issues raised • Capital project management processes • Need for flexibility to provide ERCOT services (unbudgeted Commission and market priorities arising during the year) • Employee salary levels

3. Significant Events • Fee Case - Major issues raised (cont.) • Historic Test Year versus Future Test Year • Implications for ERCOT Financial Policy • Known and measurable standard (vs. flexibility) • Use of favorable budget variances (debt reduction) • Reasonableness of other expenses • Healthcare benefits • Employee relocation costs • ERCOT sponsored stakeholder meeting costs • Employee events

4. Significant Events • FEE Case - Major opposing positions • PUC Staff and OPC combined request for a $0.02 per MWH reduction in 2004 ERCOT Administrative Fee • Request for Commission to direct ERCOT to use an historical test year for determining revenue requirement • Request for salary survey • PUCT Open Meeting February 25, 2004 – Final Order to be considered

5. Questions?