ERCOTERCOTFinance Finance SummarySummary

February 17, February 17, 20042004

Significant EventsSignificant Events2004 ERCOT Fee Case 2004 ERCOT Fee Case (Docket No. 28832)(Docket No. 28832)

PUCT Hearing – February 12PUCT Hearing – February 12thth

PUCT Staff, OPC, and Steel Mill Interveners Actively PUCT Staff, OPC, and Steel Mill Interveners Actively ParticipatingParticipating

6 ERCOT Witnesses; One witness each for PUCT and 6 ERCOT Witnesses; One witness each for PUCT and OPCOPC

Major issues raisedMajor issues raised Capital project management processesCapital project management processes Need for flexibility to provide ERCOT services Need for flexibility to provide ERCOT services

(unbudgeted Commission and market priorities arising (unbudgeted Commission and market priorities arising during the year)during the year)

Employee salary levelsEmployee salary levels

Significant EventsSignificant EventsFee Case - Major issues raised (cont.)Fee Case - Major issues raised (cont.)

Historic Test Year versus Future Test YearHistoric Test Year versus Future Test YearImplications for ERCOT Financial PolicyImplications for ERCOT Financial PolicyKnown and measurable standard (vs. flexibility)Known and measurable standard (vs. flexibility)

Use of favorable budget variances (debt reduction)Use of favorable budget variances (debt reduction) Reasonableness of other expensesReasonableness of other expenses

Healthcare benefitsHealthcare benefitsEmployee relocation costsEmployee relocation costsERCOT sponsored stakeholder meeting costsERCOT sponsored stakeholder meeting costsEmployee eventsEmployee events

Significant EventsSignificant EventsFEE Case - Major opposing positionsFEE Case - Major opposing positions

PUC Staff and OPC combined request for a PUC Staff and OPC combined request for a $0.02 per MWH reduction in 2004 ERCOT $0.02 per MWH reduction in 2004 ERCOT Administrative FeeAdministrative Fee

Request for Commission to direct ERCOT to Request for Commission to direct ERCOT to use an historical test year for determining use an historical test year for determining revenue requirementrevenue requirement

Request for salary surveyRequest for salary survey

PUCT Open Meeting February 25, 2004 – PUCT Open Meeting February 25, 2004 – Final Order to be consideredFinal Order to be considered

Questions?Questions?