NOTICE DATE: January 20, 2009

NOTICE TYPE: M-B012009-01 Settlements

SHORT DESCRIPTION: Uplift Invoice

INTENDED AUDIENCE: QSE Financial Personnel

DAY AFFECTED: Invoices due January 27, 2009

LONG DESCRIPTION: Market Participants are aware that the ERCOT Region experienced several “Mass Drop” scenarios as a result of defaulting Qualified Scheduling Entities (“defaulting QSEs”) in the summer of 2008. The defaulting QSEs include Pre-Buy Electric, LLC, National Power Company Inc., Hwy 3 MHP LLC, Sure Electric LLC dba Riverway Power Company and Leach Energy Trading LLC. In each instance, the defaulting QSEs engaged in financial transactions with ERCOT and owe monies to ERCOT as a result of those transactions.

Paragraph 5 of Section 9.4.4, Partial Payments, of the ERCOT Protocols provides:

One hundred eighty (180) days following a short pay occurrence, if sufficient funds continue to be unavailable for ERCOT to pay all amounts in full (excluding interest or late fees) to short paid Entities, and the short paying Entity is not in compliance with a payment plan designed to enable ERCOT to pay all amounts in full (excluding interest or late fees) to short paid Entities, the total short pay amount, less the total payments expected from a payment plan, will be collected from the QSEs representing LSEs, on a Load Ratio Share basis, using the Load Ratio Share for the calendar month three (3) months prior to the date on which the Invoice is issued, and paid to the QSEs that were previously short paid. ERCOT will cease charging Late Fees to the default Entity when the conditions initiating Uplift are met. Any uplifted short payment amount greater than two and one half million dollars ($2,500,000) shall be scheduled such that two and one half million dollars ($2,500,000) is charged on each set of invoices until the total short payment amount is uplifted. Short pay Invoices shall be issued at least thirty (30) days apart from each other. Payments will be due on the date specified on the short pay Invoice. Any short and late payments will be handled pursuant to Section 9.4.4, Partial Payments and 9.4.6, Late Fees, respectively. (emphasis added)

Currently, the defaulting QSEs do not have payment plans and are, therefore, “not in compliance with a payment plan designed to enable ERCOT to pay all amounts in full to short paid Entities.” Consequently, pursuant to the ERCOT Protocols, ERCOT intends to begin the process of uplifting to QSEs representing LSEs the principal amount remaining on the defaulting QSEs’ obligations to ERCOT over the next couple months.

On Tuesday, January 20, 2009, ERCOT will send invoices totaling $2,500,000.00 to QSEs representing LSEs based on their Load Ratio Share (“LRS”) in October 2008. This total amount represents the uplift of short payments by defaulting QSEs for Invoices due 06/06/08 – 06/21/08. The total amount may be adjusted due to credits applied by ERCOT to the defaulting QSEs’ obligations. The Table below provides a breakdown of the total amount being uplifted by each defaulting QSE.

QSE Name	Total Invoices	Less Payments Held	Amount Uplifted
Pre-Buy Electric LLC	$218,300.78	$50,524.99 (1)	$167,775.79
National Power Company, Inc.	$1,384,780.17	$0.00	$1,384,780.17
Sure Electric LLC	$185,749.20	$0.00	$185,749.20
Hwy 3 MHP LLC	$730,313.30	$0.00	$730,313.30
Leach Energy Trading LLC	$31,381.54	$0.00	$31,381.54
		TOTAL	$2,500,000.00

(1) Payments held from credit invoices received.

PLEASE NOTE: The Invoice for this uplift will not be posted on the website as the regular weekly invoices are. The Invoice will be delivered by e-mail to your Authorized Representative, with a copy to your credit contact.

The payment due date will be five (5) Business Days after the Invoice date (i.e. January 27, 2009). ERCOT intends to distribute the funds to previously short paid entities on January 28, 2009. Payments received should be applied to oldest short-paid invoice first.

If necessary and as they arise, ERCOT will uplift any additional unpaid amounts owed by the defaulting QSEs which may arise from Resettlements. Pursuant to the ERCOT Protocols, ERCOT will calculate those uplifts (if necessary) using the LRS for the calendar month three months prior to the date on which ERCOT issues the Invoice. As ERCOT receives monies associated with the outstanding debt, ERCOT will apply these monies to the principal amount due from the defaulting QSEs and, in turn, distribute the monies received to previously short paid entities. Please note that since Late Fees were not collected from the defaulting entities, distributions to short-paid Entities will be net of Late Fees previously credited for the above listed entities.

ACTION REQUIRED: The payment due date will be five (5) Business Days after the Invoice date (i.e. January 27, 2009).

CONTACT: If you have any questions, please contact your ERCOT Account Manager. You may also call the general ERCOT Client Services phone number at (512) 248-3900 or contact ERCOT Client Services via e-mail at [log in to unmask].

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