Topics:

• 2004 Annual Report Posted on Web Site
• Board’s Investigative Committee Files Final Report
• ERCOT Sets New Peak Usage Record August 23
• Acting Vice President of Finance Announced
• Market Rules Manager Moving to Internal Control Management
• ERCOT Meeting Calendar

2004 Annual Report Posted on Web Site

ERCOT’s 2004 Annual Report, including financial statements certified by PricewaterhouseCoopers, has been completed.  The document is posted on the ERCOT Web site under Reports and Presentations 2005.

Throughout last year, ERCOT “remained a top-performing Independent System Operator, consistently fulfilling its responsibilities for ensuring electric grid reliability and managing the wholesale and retail markets,” according to the report’s letter from ERCOT Board Chair Mike Green and CEO Tom Schrader.  2004 was also a year of examination for ERCOT, following the discovery of employee misconduct in the spring, the letter says.

“The ERCOT Board of Directors, management, staff, and stakeholders took stock of where the organization stood after five years of extraordinary growth in work requirements, employees, and expenses to implement the Texas retail market and other responsibilities assigned by Senate Bill 7,” the statement says, and “ERCOT has emerged a stronger, more transparent, more credible organization.”

Board’s Investigative Committee Files Final Report

The ERCOT Board of Directors Special Committee, formed June 2004 to review auditing activities and develop recommendations in response to employee misconduct identified earlier in the year, issued its final report at the Aug. 16 board meeting.  Committee chair Miguel Espinosa said this report concludes the activity of the committee.  Any follow-up needed on outstanding matters, such as completion of audit points, will be handled by the Finance and Audit Committee.

The six-page report addresses the past lack of procedures and internal controls that made ERCOT vulnerable to criminal conduct and recognizes changes implemented to prevent such abuse in the future. The committee identified several key areas that it believes support an anti-fraud environment including:

• Internal controls/policies and procedures tightened, including tighter controls in contracting and procurement practices and in hiring practices
• Enterprise risk assessment underway
• Internal audit function strengthened.

The committee’s report is posted on the ERCOT Web site.

ERCOT Sets New Peak Usage Record August 23

The ERCOT region set a new electricity usage record of 60,279 megawatts (MW) of power Tuesday, Aug. 23, over the peak hour from 4 to 5 p.m., exceeding the previous all-time peak of 60,095 MW, set on Aug. 7, 2003.  The news release is posted on the ERCOT Web site.

Acting Vice President of Finance Announced

Steve Byone has been appointed acting vice president of finance, CEO Tom Schrader announced Aug. 18.  Byone assumes the day-to-day responsibility for the finance division activities with a particular focus on his continuing responsibility for the Internal Control Management Program.  He reports to Roy Bowman who will continue as interim CFO until later this year.

Byone has over 25 years of experience in financial aspects of the energy and electric industry.  His experience includes financial, risk and commercial responsibilities, most recently as the vice president and chief risk officer at Progress Energy. 

Market Rules Manager Moving to Internal Control Management

Cheryl Moseley, who served as manager of Market Rules since June 2000, has been selected as manager of the Internal Control Management Program.  Moseley has over 10 years experience conducting, leading and managing audits.  She has an MBA with a concentration in accounting and is a licensed CPA.  Diana Zake will assume the role of interim manager of Market Rules until a replacement is hired.

ERCOT Meeting Calendar

August 2005