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Review of Key ISO Credit Policies and Proposed Changes Review ERCOT Unsecured Credit Process

Review of Key ISO Credit Policies and Proposed Changes Review ERCOT Unsecured Credit Process. Overview. Review of Key ISO Credit Policies and Proposed Changes Maximum Unsecured Credit Minimum Credit Rating For Unsecured Credit Minimum Bank Letter of Credit Rating

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Review of Key ISO Credit Policies and Proposed Changes Review ERCOT Unsecured Credit Process

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  1. Review of Key ISO Credit Policies and Proposed Changes Review ERCOT Unsecured Credit Process

  2. Overview Review of Key ISO Credit Policies and Proposed Changes Maximum Unsecured Credit Minimum Credit Rating For Unsecured Credit Minimum Bank Letter of Credit Rating Bank Letter of Credit Concentration Limit per Market Participant Other Proposed Credit Standards Proposed ISO Credit Changes Already in Place at ERCOT ERCOT Unsecured Credit Process – Summary ERCOT Unsecured Credit Key Statistics

  3. Maximum Unsecured Credit

  4. Minimum Credit Rating For Unsecured Credit

  5. Minimum Bank Letter of Credit Rating

  6. Bank Letter of Credit Concentration Limit per Market Participant

  7. Other Proposed Credit Standards

  8. Proposed ISO Credit Changes Already in Place at ERCOT

  9. ERCOT Unsecured Credit Process - Summary • ERCOT credit staff compares the market participant’s or applicant’s financial and/or credit rating information against ERCOT Creditworthiness Standards to determine eligible unsecured credit limits. • Credit staff utilizes additional current information to further determine the market participant’s strength. • Other financial performance metrics • Recent stock price trends • Company news • Industry trends • ERCOT evaluates the market participant’s activity in the ERCOT market to determine a reasonable level of unsecured credit which is in line with the company’s activity level and financial strength. • EAL activity • NLRI activity • ERCOT establishes unsecured credit at a level that • Does not exceed the maximum allowed by the Creditworthiness Standards • Takes into consideration recent news • Takes into consideration the level of activity in the ERCOT market • Credit staff continues to track company and industry news, credit rating actions, and other factors to ensure the company remains creditworthy and will increase or decrease credit limits as appropriate.

  10. ERCOT Unsecured Credit Key Statistics Note: Statistics include direct unsecured and unsecured credit granted to guarantors. Note: No single QSE or affiliated group has been granted more than $75 million. Note: Chart figures as of 1-29-09.

  11. Update on Financial Statement Compliance

  12. Update on Financial Statement Compliance • ERCOT is in the process of preparing a filing for the PUCT to notify them of entities that are not in compliance with the Financial Statement requirement in the Protocols • Filing to be made by the end of February • Filing address non-compliance at this point in time only • With the Committee’s permission, ERCOT intends to waive prior non-compliance in 2008 • ERCOT will make a similar filing with the PUCT every quarter going forward • Within 30 days of the due date for financial statements

  13. Update on Uplifts in Process

  14. Update on Uplifts in Process • The market experienced short payments when 5 market participants left the market in June / July 2008. • ERCOT is in the process of uplifting the amounts of unpaid invoices to QSE’s on a Load Ratio Share basis. This process should be completed by the end of February 2008.

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