News Release

August 11, 2006

ERCOT at a Glance: News Update - August 11, 2006


Former Employees to Begin Prison Terms for Fraud Against ERCOT

Former employees Ken Shoquist and Chris Uranga were formally sentenced in Williamson County District Court this morning to immediately begin prison terms for engaging in criminal conspiracy to defraud ERCOT through a web of shell companies paid for services not rendered.

Former CIO Shoquist was sentenced to eight years and required to pay $120,000 in restitution to ERCOT. Former IT director Uranga received seven years and was ordered to repay $505,000.

Sentencing of Chris Douglas, a former ERCOT manager, and John Cavazos, a non-employee former contractor, was deferred to October 2 and September 5, respectively. Cavazos has already returned $8,700.

Shoquist handed over his total payment for $120,000 today. Uranga was unable to pay the amount of restitution ordered for him at this time. The total amount stolen is estimated at over $2 million. ERCOT continues to pursue civil lawsuits and insurance claims to ensure full restitution is eventually made.

Both Shoquist and Uranga were taken into custody at the sentencing and will begin serving their sentences immediately.

"We have long awaited this day," said President and CEO Sam Jones, who attended the sentencing in Georgetown, "from early 2004 when ERCOT detected the fraud and the investigation began, to January 2005, when the indictments were announced, and finally, to today. The pain caused by the betrayal of these individuals is hard to measure. The many hard-working employees of ERCOT are truly ready to get this behind us and move forward."

Former employee Carlos Luquis was sentenced by a jury last week to 12 years in prison, fined $10,000, and required to pay $205,000 in restitution.

Proceedings against the sixth and final indicted individual, Steve Wallace, are still pending.

The Texas Attorney General''s news release is posted on the AG''s Web site.

High Demand Expected Today

If the week''s high temperatures continue today, the ERCOT system may come close to the recent new peak demand of 62,396 megawatts (MW), which occurred July 17. At 11 a.m., the forecast for 4-5 p.m. today was 62,337 MW, although cloud cover was forecast in the coastal area which could lower the temperatures and the demand.

So far this week, the highest peak-hour demand was 61,573 MW, which occurred on Wednesday during the 4-5 p.m. hour. Thursday''s high demand forecast was tempered by late afternoon rain in the Houston area, with the day''s peak of 60,609 MW occurring in the 3-4 p.m. hour.

The Public Utility Commission changed its Conservation Alert to yellow Wednesday, indicating "Additional Conservation Needed," in recognition of the anticipated high demand for electricity this week.

ERCOT''s System Operations group said it does not anticipate problems today – barring unexpected outages on the power system – but, as always, will be closely monitoring the situation in anticipation of the expected high demand.

Interconnection Requests Increase 2,288 MW in July

Three new interconnection requests for screening studies were received in July, totaling 2,288 megawatts (MW). ERCOT System Planning is currently tracking 99 active generation requests with a total potential new capacity of 38,495 MW. A table of the public projects is included the July System Planning Report. Additional highlights from the monthly report include:

New Wind Generation in Operation
Horse Hollow 3 (223.5 MW) and Horse Hollow 4 (116 MW) wind farms in Nolan County near Sweetwater went into commercial operation last month.

Fannin Units Scheduled for Retirement Not Needed for Reliability
System Planning and System Operations have determined that Valley SES 1, 2 and 3 in Fannin County are not required to be available to maintain transmission security on the ERCOT System and will not be pursuing Reliability Must Run contracts for these units. The units, which total 1,123 MW, were previously mothballed and returned to service for the summer, but are now scheduled for retirement.

Uvalde Area Transmission Projects Approved
A series of reliability improvement projects in the AEPTCC/Medina Electric Cooperative Western Region (Uvalde, Del Rio, Pearsall area), totaling $160 million, were approved last month by the Technical Advisory Committee and the Board of Directors. The area also includes transmission operators South Texas Electric Cooperative and City Public Service Energy.

West Texas Dynamic Limit Study Underway
A study of dynamic limits for power transfer out of West Texas is underway. Base cases with dynamic models for wind farms, including updated voltage and frequency protection data, have been prepared for varying scenarios.

For more information, see the July System Planning Report posted with the August Reliability Operations Subcommittee meeting documents.

ERCOT Reaffirms LODESTAR for Nodal Market

ERCOT announced recently that it will continue to use the LODESTAR® Customer Choice Suite™ (CCS™) for its settlement and billing operations for the nodal market. ERCOT first implemented LODESTAR''s BillingExpert® and LODESTAR® Profile & Settlement System™ in 2000 for the opening of the Texas market.

ERCOT''s nodal project team will make the required changes and upgrades internally to the wholesale settlement and billing systems using the LODESTAR products. "ERCOT''s decision to continue using LODESTAR''s CCS was based on software performance and the working relationship LODESTAR and ERCOT have forged over the past several years," said Nodal Program Director Kathy Hager.

ERCOT Retail Market Called ''The Rising Star''

"Texas stands alone amongst U.S. energy retail markets as an exemplar of truly successful retail energy competition," according to an article by Paul Grey in The Public Utilities Fortnightly''s July issue of Spark.

"Customer switching activity in the Texas electricity retail market places Texas at number one in the United States and number four worldwide," the article says, according to the latest research form Peace Software VaasaEmg Utility Customer Switching Research Project.

"The Texas electricity market, now in its fifth year of full retail competition, is a rising star on the world ranking chart. It has moved from eight to fourth position in the last year, overtaking Sweden, Norway, Netherlands, and New Zealand," according to Grey, chief market strategist at Peace Software, developer of utility customer information software for competitive energy retailers and regulated utilities.

ERCOT Board of Directors Meeting Tuesday

The ERCOT Board of Directors'' monthly meeting is scheduled for 10 a.m.-4 p.m., Tuesday at ERCOT Austin, 7620 Metro Center Drive. Agenda items posted for possible votes include CenterPoint Dynamic Reactive Support Project, Protocol Revision Requests, and Nodal Protocol Revision Requests. The agenda and meeting materials are posted on the ERCOT Web site.

The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power to more than 26 million Texas customers -- representing about 90 percent of the state’s electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects more than 46,500 miles of transmission lines and 650+ generation units. It also performs financial settlement for the competitive wholesale bulk-power market and administers retail switching for nearly 8 million premises in competitive choice areas.

ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. Its members include consumers, cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities, transmission and distribution providers and municipally owned electric utilities.