This document provides an overview and update on issues related to the electric market in Texas, including recovery efforts after Hurricane Harvey and implementation of recent electricity legislation. It summarizes how various electric utilities were impacted by Harvey and the steps taken for recovery, including mutual assistance from other states. It also outlines regulatory timelines and proceedings around low-income programs, ratemaking, advanced metering, and the transition of Sharyland customers to Oncor infrastructure. Finally, it discusses Sempra Energy's recent outbid of Berkshire Hathaway Energy to purchase Oncor.

1. Legislative Advertising Paid For by: JuliaRathgeber, Association ofElectric Companies ofTexas
1005Congress, Suite 600,Austin,TX 78701 • 512-474-6725• www.aect.net
September 14,2017
Lunch-And-Learn:
Updateon the ElectricMarket

2. www.aect.net (512) 474-6725
2
AECT MemberCompanies

3. Recovery from Hurricane Harvey
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Utilities, Generators and Retailers Respond

4. HARVEY one of the Largest Storms In U.S. History
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Harvey Stats:
• First Category 4
hurricane to make
landfall in the Texas
Coastal Bend since
1961
• 51.9 inches of rain –
wettest storm in the
history of the
continental U.S.
• 13 million people
were under flood
watch
• 300,000 power
outages at Harvey’s
peak

5. HARVEY Damage
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6. HARVEY Recovery: AEP Texas
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• Most severe storm to hit
the AEP Texas service
territory in 44 years
• 220,000 customers
without power at its peak
• Lost 5,000 poles and 200
transmission structures,
such as lines and
substations
• 1,600 outages remain,
with half of those in areas
that are still flooded

7. HARVEY Recovery: CenterPoint Energy
www.aect.net (512) 474-6725
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• 300,000 customers
without power at its
peak
• About 900 planned
outages are due to
flooding and cannot be
restored at this time
• Restoration included
building a temporary
substation
• About 640 unplanned
outages remain

8. HARVEY Recovery: TNMP
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• TNMP serves
Angleton and
Dickinson, which saw
a peak of 20,000
outages during the
storm
• About 60 outages
remain in those
communities

9. HARVEY Recovery: Entergy Texas
www.aect.net (512) 474-6725
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• At the storm’s peak,
192,000 Entergy Texas
customers were without
power
• Oncor, Cleco and other
Entergy companies
provided mobile
substations
• About 4,000 customers
with extensive flooding
cannot yet be restored
• 1,600 outages remain,
including both planned
and unplanned outages

10. Restoration TimelineHighlightsGrid Resilience
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• Utilities must be prepared to respond to
all kinds of threats: weather events,
cyber attacks, physical attacks and
disruptions caused by animals
• The complexity of the electric grid is part
of its strength, allowing for greater
reliability and more effective recovery
• The focus of utilities is to quickly respond
to each threat, by having protocols and
replacement parts in place to recover
critical systems
• Hurricane Harvey tested the electric
grid, and utilities and generators were
able to get consumers online quickly,
given the magnitude of the event

11. Mutual assistance
and recovery
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• Electric companies
affected by significant
outages often receive
mutual assistance from
electric utilities
nationwide, including
employees and
stockpiled equipment
Source: EEI
• Over 10,000 workers were dedicated to Harvey
response, including mutual assistance crews
from at least 20 states

12. Keeping thegeneration On
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South Texas Project continued to run
• Flooding was not an issue at the nuclear plant, and
it did not face the most severe winds
• 250 storm crew workers remained on-site during
the storm, sleeping in beds on site
Coastal wind generation remained on-line
• Only one coastal wind facility was knocked off-line,
due to damage to its transmission system, not the
turbine itself
• Coastal wind provided normal to higher-than-normal
generation on August 25 through August 28

13. HelpingRetail Customers
www.aect.net (512) 474-6725
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• No deposits required for
customers directly affected
by Hurricane Harvey
• Offering payment
extensions and deferred
payment plans for eligible
customers
• Based in Houston, the
company contributed $1
million in cash donations
and $1 million in in-kind
relief efforts
• Waiving late fees and
extending payment due dates
with no down payment
required
• Reducing down payments and
deferring the balances over
five equal installments
• Providing $500,000 to assist
customers who need help
paying their bills in areas hit
by Hurricane Harvey
Local utilities have agreed to a disconnection
moratorium through Sept. 29

14. Implementation of Electricity Legislation
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Low-Income Programs, Ratemaking and AMI forEntergy Texas customers

15. SB 1976: Identificationto support Low-IncomePrograms
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Latest actions on implementation of SB 1976
• PUC Staff opened Project 47343: Rulemaking to amend Chapter 25 substantive
rules relating to the elimination of the System Benefit Fund
• The PUC filed a strawman proposal for stakeholder comment in August.
• The PUC will host a workshop on Project 47343 on October 12.

16. SB 735: Electric Utility Ratemaking
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SB 735 components effective immediately
• There is no longer a sunset date on the distribution cost recovery factor (DCRF),
as recommended by the PUC.
• ERCOT utilities may only utilize the DCRF once per year, but there is no longer a
four-time limit on an ERCOT utility‘s use of the DCRF between rate cases.
• The PUC now has an additional 60 days (for a total of 240 days) to evaluate a
sale, transfer or merger of a utility under its purview.
SB 735 components requiring action
• PUC Staff opened Project 47545: Rulemaking to establish filing schedule for
electric utilities pursuant to PURA.
• The PUC will host a workshop on Project 47545 on September 26.

17. SB 1145: AdvancedMetering for Entergy Texascustomers
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Latest actions on implementation of SB 1145
• Entergy Texas filed its application for approval of an Advanced Metering
deployment plan on July 18 in Project 47416.
• A pre-hearing conference was held on August 8, and intervenors were able to
file testimony through September 11.
• Entergy Texas expects to begin deployment in 2019 and finish in 2021.
2019 2020 2021
Electric Meters 166,000 204,000 107,000
Entergy Texas Preliminary Deployment Schedule

18. Sharyland Customers Moving to Oncor
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Regulatory Timeline of asset swap

19. Overview of the Sharyland/Oncor Asset Swap
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• Oncor receives retail
distribution assets and
retail distribution
operations in
Sharyland’s service
territory
• Sharyland receives 258
miles of 345 kV
transmission line
located in West and
Central Texas (not
pictured)

20. TentativeTimelineof ActivitiesRelated to theTransition
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Legal and Regulatory Approvals
Oncor ESI ID Creation
Motion for Rehearing Period
Closing of Agreement Between SU and Oncor
Sharyland Transition Readiness Workshop
REPs Submit MVIs and MVOs for the Transition Date To Be Determined
Oncor CIS Platform Replacement
Daily Transition Market Calls
Oncor Completes MVIs on Transition Date
Sharyland Completes MVOs on Transition Date
November 2017 December 2017September 2017 October 2017

21. Q&A on Sharyland Customer Transition
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How many customers will be impacted?
Approximately 54,000 customers will be transitioned from Sharyland
Utilities to Oncor for T&D service.
When will the transition be complete?
Oncor and Sharyland anticipate that all Sharyland retail customers will be
transitioned to the Oncor electric grid by January 5, 2018, pending
approval from the PUC.
Will Sharyland customers see their electric bills go down?
Sharyland customers will receive Oncor’s T&D rate, which is significantly
lower than Sharyland’s T&D rate.

22. Sempra to purchase Oncor
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Latest Updates

23. Sempra outbidsBerkshirefor Oncor
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July 6: Berkshire Hathaway Energy announces intent to purchase
Oncor in a deal worth $18.1 billion (including debt).
July 13: Elliott Management Group, which owns debt in EFH,
announces intent to offer a bid of $18.4 billion. That
offer never materialized.
Aug. 20: Berkshire withdraws offer as Sempra Energy announces
$18.8 billion offer for Oncor.
Sept. 6: Sempra Energy receives approval from the U.S. Bankruptcy
Court in Delaware to pursue the purchase.
Next: Sempra Energy will file for approval from the Public Utility
Commission of Texas.
Once the filing is made, the PUC has 240 days to approve or
deny the transaction.

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