Outline

1. RMS Task Force on Retail Market Customer TransitionStatus Report and Draft RecommendationsJune 12, 2003

2. Outline • Present RMS with initial task force recommendations for handling customer transition event • “Formalize” task force request for market review and comment on draft recommendations • Provide background and additional information to facilitate that review • Prepare for RMS vote planned for July RMS meeting

3. Task Force Scope As a reminder, the task force scope included the following: • Develop and document approaches, processes and procedures (including business processes, application/use of EDI transactions, data exchanges and market communications) • for the transition of customers between a REP and other REPs, AREPs, and/or POLR in the event that a REP exits the Texas electric market or otherwise has a need to transition customers to an alternate provider • Consider, as appropriate, a customer’s further transition from the POLR to a REP of their choice • Consider separately similar issues involved in the transition of customers from one TDSP to another (Note - this aspect of work scope was deferred pending completion of retail customer transition processes)

4. Task Force Activity Completed by task force (in 8 working sessions): • Established transition framework • Developed 57 scenarios around 5 variables • Worked through transaction and business process alternatives In progress: • Completing documentation of draft processes (to be issued by June 15) • Presentation as prelude to review and comment To be completed: • Market participant review and comment (due June 29) • Incorporate or address comments • Present for approval (target July 17 RMS meeting)

5. Important Transition Event Variables • Task force recommendations assume decisions have been made and approved (by PUCT and ERCOT) that establish: • “losing” CR • “gaining” CR • Transition ESIs • Target effective date or dates • Variables to be determined based on specific event: • Level of cooperation from “losing” CR • Number and type of transition ESIs • Number and type of pending transactions • Decisions and variables determine specifics of transition process

6. High Level Generic Process Flow Initiate Change REP of Record (From POLR) Obtain/Provide Effective Meter Read Obtain/Provide Effective Meter Read On-Going Transaction Processing, Service, Maintenance Initiate Change in REP of Record Launch Notification Communication For “clean” ESIs, transactions will be submitted by either “losing” or “gaining” party Pending transactions must be addressed Field reads Volume implications for obtaining reads and completing transactions Manual process to address timing concerns Transactions to be submitted by “new” REP Field reads Volume implications for obtaining reads and completing transactions Normal market operations after transition is complete

7. Initiating Transactions Depending on specifics of event (variables and timing), alternatives with respect to the initiating transition transaction are recommended. • Transactions are submitted by the “losing” CR (or ERCOT) • Drop to AREP (New if applied to ERCOT initiating in volume) • Drop to POLR (New transaction) • Drop to CR (New transaction) • “modified” drop process (exception use of existing or new transaction) Or, if not viable • Transactions are submitted by the “gaining” CR(s) • Switch • Transition event switch transaction (New transaction) • “modified” switch process (exception use of existing transaction)

8. Mitigating Initiating Delays To address concerns about delays in submitting transactions that initiate a transition, the task force recommends that: • If a new CR submits a transaction in compliance with applicable customer protection requirements with a requested date on or before the transition effective date and prior to the submittal of a transition transaction, the new CR transaction will prevail. In essence, “legitimate” transactions will not be cancelled.

9. Handling of Pending Transactions Recommended methods for handling pending transactions depends on: • the “direction” of the transaction (with a result either “to” or “away” from the “losing” CR) • the type of transaction • the number of transactions and • the requested date in relation to the transition effective date. Choices between recommended alternatives is to be made by the involved parties (ERCOT, “Losing” CR, “gaining” CR, “new” CR and PUCT) and include: • Cancel transaction (generally with resubmittal and/or date change) • Letting transaction complete as submitted (with potential for subsequent transition) • Processing with a date change

10. Large Volume Impacts Two parameters could have a significant impact on the transition timeline. • Special or off-cycle meter reads • Non-IDR reads can be completed at the rate of ~1,500 per day per TDSP • IDR reads that require field activity (60% of IDR meters) completed within 3 days • Completion of transactions requiring manual intervention • Non-IDR completion rate of 200 to 300 per day per TDSP Therein lies the driver of multiple effective dates and request for ability to adjust target effective dates to capture on-cycle efficiencies.

11. Recommendation /Request Summary At the July RMS meeting, the task force intends to ask for a vote: • Approve the proposed process and commission additional development work (primarily by Texas SET and ERCOT) • Direct a review/clean-up of premise type (PTB vs. non-PTB) in market participant systems • For transition event decisions: • Request consideration of transition process in establishing effective dates • Request ability to stage effective dates of transition should volumes warrant • Develop and implement additional Texas SET transactions for use on an exception basis in a transition event • In lieu of new transactions, approve use of a “modified” transaction processes • Direct ERCOT to develop a capability to initiate drop transactions on a high-volume basis

12. Request for Review/Comment • Document issued for review and comment by June 15 • Comment/feedback requested by June 29 • Pending nature and number of comments, issues, alternatives, etc., issue revised document by July 10 • Request vote at RMS meeting July 17