1 ERCOT Financial Summary For the Period Ending August 31, 2004 Board of Directors Meeting September...

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ERCOTERCOTFinancial SummaryFinancial Summary

For the Period Ending August 31, 2004For the Period Ending August 31, 2004

Board of Directors Meeting

September 21, 2004

2Preliminary - Unaudited

ERCOT Financial SnapshotERCOT Financial SnapshotRevenue

$0

$20

$40

$60

$80

$100

Month Ended 8/31/2004 FYTD 8/31/2004

Mill

ion

s

Budget Actual

Capital Expenditures

$0

$10

$20$30

$40

$50

$60

FY 2004

Mill

ion

s

Budget Actual

Headcount

0255075

100125150175200

SystemOperations

MarketOperations

InformationTechnology

Corporate

Em

plo

ye

es

Budget Actual

Operating Expenses

$0

$20

$40

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$80

$100

Month Ended 8/31/2004 FYTD 8/31/2004

Mill

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s

Budget Actual

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Year-to-Date Results of Operations($ Millions)

Revenues 87.1$ Total expenses (w/o depreciation) 52.1$ Excess revenues over expenses 35.0$ Depreciation (26.9)$ Change in unrestricted net assets 8.1$

Notes: Revenues – include interest income

Total expenses – include interest expense

Preliminary - Unaudited

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Year-to-Date Cash Flow Summary($ Millions)

Beginning Cash (January 1, 2004) 28.1$ Cash Provided by Operations 14.6 Cash Used in Investing Activities (Projects) (44.3) Cash Provided by Financing Activities 21.1 Ending Cash (August 31, 2004) 19.5$

Note:

Cash balance includes TCR auction receipts but does not include QSE or TCR security deposits.


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RevenueRevenue

$87 million year-to-date $87 million year-to-date 98% from System 98% from System Administrative FeeAdministrative Fee

70+% from top 5 QSE’s70+% from top 5 QSE’s



$2.1 million (2.5%) $2.1 million (2.5%) unfavorable year-to-dateunfavorable year-to-date

MWH volume 2.7% below MWH volume 2.7% below expectationexpectation


Revenue

$0

$20

$40

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$100

Month Ended 8/31/2004 FYTD 8/31/2004

Millio

ns

Budget Actual

$13.9 M $13.5 M

$89.1 M $87.0 M

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Operating ExpensesOperating Expenses$73.5 million year-to-date, $73.5 million year-to-date, including depreciationincluding depreciation

$46.6 million year-to-date, $46.6 million year-to-date, excluding depreciationexcluding depreciation

$11.5 million (13.6%) $11.5 million (13.6%) favorable over the yearfavorable over the year

Labor ($3.6 million)Labor ($3.6 million)

Consultants ($3.0 million)Consultants ($3.0 million)

SW/HW license and support SW/HW license and support ($1.8 million)($1.8 million)

Employee expenses and other Employee expenses and other ($3.1 million)($3.1 million)


Operating Expenses

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$20

$40

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Month Ended 8/31/2004 FYTD 8/31/2004

Millio

ns

Budget Actual

$73.5 M$85.0 M

$9.4 M$10.6 M

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FY 2004 Results (Income Statement)FY 2004 Results (Income Statement)Budget Actual $ Var % Var

Fav / (Unfav)

ERCOT Revenue by TypeERCOT System Administration Fee 88,413,798 86,082,875 (2,330,923) -2.6%Non-ERCOT LSE Fees 503,586 453,971 (49,615) -9.9%Membership Fees 160,000 173,056 13,056 8.2%Other Revenue 66,667 247,184 180,517 270.8%

Total - ERCOT Revenue by Type 89,144,051 86,957,086 (2,186,965) -2.5%

ERCOT Operating Expenses by Expense TypeLabor & Benefits 33,872,124 29,672,928 4,199,196 12.4%Contra-Labor to Capital Projects (4,554,565) (3,940,438) (614,127) 13.5%Tools, Equipment, Materials & Supplies 1,098,247 1,066,352 31,895 2.9%Hardware & Software Expenses 5,458,161 3,707,806 1,750,355 32.1%Consultants & Contractors 11,607,795 8,651,598 2,956,197 25.5%PUC-mandated Audits - - - NAUtilities, Maintenance & Facilities 3,313,255 2,974,123 339,132 10.2%Wide Area Network Services (Net) 489,944 310,092 179,852 36.7%Training, Travel & Other Employee Expenses 1,875,305 1,037,207 838,098 44.7%Insurance 1,166,667 1,015,319 151,348 13.0%Property Taxes 801,959 804,956 (2,997) -0.4%Depreciation & Amortization 27,937,973 26,920,420 1,017,553 3.6%Other 1,977,787 1,289,811 687,976 34.8%

Total - ERCOT Operating Expenses by Expense Type 85,044,653 73,510,174 11,534,479 13.6%

Excess (Deficiency) of Revenues over Expenses 4,099,398 13,446,912 9,347,514 -228.0%

Other income (expense)Interest income 333,333 179,084 (154,249) -46.3%Interest expense (6,539,441) (5,518,920) 1,020,521 15.6%

Change in Unrestricted Assets (2,106,710) 8,107,076 10,213,786 484.8%

Fiscal Year as of August 31, 2004

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HeadcountHeadcount

421 of 530 on staff421 of 530 on staff

41 FTE increase (net) 41 FTE increase (net) in 2004in 2004


Headcount

0255075

100125150175200

Sys temOperations

MarketOperations

Inform ationTechnology

CorporateEm

ploy

ees

Budget Actual

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Capital ExpendituresCapital Expenditures$23 million of $55 million $23 million of $55 million annual budget spentannual budget spent58 projects (many projects 58 projects (many projects have one or more have one or more subprojects) active in subprojects) active in year-to-date 2004 year-to-date 2004 Major projects underwayMajor projects underway

TCC Phase 2 BuildingTCC Phase 2 BuildingEMMS Release 4.0EMMS Release 4.0Enterprise Data Warehouse Enterprise Data Warehouse Phase 2Phase 2



$0$10$20$30$40$50$60

FY 2004

Millio

ns

Budget Actual

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2004 Forecast2004 Forecast

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2004 Forecast2004 ForecastBudget ForecastFY 2004 FY 2004 Difference

ERCOT RevenueERCOT System Administration Fee 129,510$ 127,179$ (2,331)$ Other Revenue 1,095 1,304 209

Subtotal ERCOT Revenue 130,605 128,483 (2,122)

ERCOT Operating Expense (excluding Depreciation)Labor & Benefits $ 50,808 $ 46,124 $ 4,684 Contra-Labor to Capital Projects (6,832) (5,029) (1,803)Tools, Equipment, Materials & Supplies 1,647 1,943 (296)Hardware & Software Expenses 8,187 6,724 1,463 Consultants & Contractors 17,412 13,714 3,698 PUC-mandated Audits - 1,500 (1,500)Utilities, Maintenance & Facilities 5,705 6,201 (496)Employee Expenses 2,813 1,894 919 Insurance 1,750 1,500 250 Property Taxes 1,203 1,211 (8)Other 2,967 2,634 333

Subtotal ERCOT Operating Expense 85,660 78,416 7,244

Debt Service and CapitalInterest Income 500 253 (247) Debt service - interest expense 9,809 8,279 1,530 Debt service - principal payments 13,636 13,636 - Revenue-funded capital 22,000 18,000 4,000

Subtotal Debt Service and Capital 44,945 39,662 5,283

Total Forecast Favorable 2004 Budget Variance 10,405

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Forecast RevenueForecast Revenue

$87 million year-to-date $87 million year-to-date

$2.1 million (2.5%) $2.1 million (2.5%) unfavorable year-to-dateunfavorable year-to-date

Forecast $2.1 million Forecast $2.1 million revenue shortfall in 2004revenue shortfall in 2004

MWH for remainder of year MWH for remainder of year assumed at budgetassumed at budget

Other revenue sources continue Other revenue sources continue actual trend over first eight actual trend over first eight months of 2004months of 2004


Revenue

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Month Ended8/31/2004

FYTD 8/31/2004 2004 Forecas t

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Budget Actual / Forecas t

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Forecast Operating ExpensesForecast Operating Expenses

$11.5 million favorable $11.5 million favorable variance year-to-date August variance year-to-date August 31, 200431, 2004

Projected $7.2 million Projected $7.2 million favorable variance in 2004favorable variance in 2004

Consultants ($3.7 million)Consultants ($3.7 million)

PUC-mandated audits (<$1.5 PUC-mandated audits (<$1.5 million>)million>)

Labor ($2.9 million)Labor ($2.9 million)

SW/HW license and support ($1.5 SW/HW license and support ($1.5 million)million)

Employee expenses and other ($0.6 Employee expenses and other ($0.6 million)million)


Operating Expenses

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$25

$50

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$150

Month Ended8/31/2004

FYTD 8/31/2004 2004 Forecas tMi

llions


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Forecast Capital ExpendituresForecast Capital Expenditures$$23 million of $55 million million of $55 million annual budget spent at annual budget spent at August 31, 2004August 31, 2004$45 million projected $45 million projected capital investment in 2004capital investment in 2004Major projects underwayMajor projects underway

TCC Phase 2 BuildingTCC Phase 2 BuildingEMMS Release 4.0EMMS Release 4.0Enterprise Data Warehouse Enterprise Data Warehouse Phase 2Phase 2



$0

$10

$20$30

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FY 2004 2004 Forecas t

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ns


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Reasons for Lower Capital Spend in 2004Reasons for Lower Capital Spend in 2004

Reduced Scope by Market on Competitive Metering, Texas Set 2.1 and Direct Load Control Projects - $4M

Delay in Implementing Recommendations from the Commercial Applications Systems Upgrade Project (CASUP) due to cross impacts with high priority market projects - $2.5M

Delay in Completing Requirements for EMMS Release 4 and other EMMS system deliveries - $2M

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Supplemental Supplemental

17Preliminary - Unaudited

ERCOT QSE Short PaymentsERCOT QSE Short Payments

Enron TCE Mirant Total

Net amount due at December 31, 2003 455,329 15,854,950 7,322,261 23,632,540

2004 payments to the market (collections)

- (905,611) (7,322,261) (8,227,872)

2004 true-up, resettlement, and interest additions

18,677 551,242 - 569,919

Net amount due at August 31, 2004 474,006 15,500,581 - 15,974,587

Expected payment under payment plans or other

(15,500,581)

Amount not currently under a payment plan or signed court order

474,006

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Budget Schedule• September 1 - Public meeting on 2005 budget - input from public• September 20 - Finance & Audit Committee meeting to review

preliminary budget• September 23 - Financial briefing with PUCT staff • October 8 - Finance & Audit Committee meeting to review draft

budget (special meeting)• October 12 - Public meeting on proposed 2005 budget• October 14 - Meeting with PUCT staff on proposed 2005 budget

(tentative)• October 19 - Finance & Audit Committee recommendation to

board at monthly meeting• November 16 - Board approval of 2005 budget• November 23 - Preliminary PUCT filing review (if needed)• November 30 - PUCT filing

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