Chapter 1 - "Dudley Demented" - In which Harry is angry and picks on Dudley, Dudley is attacked by Dementors, and their neighbour Mrs. Figg returns.
In the Hydrangea Bush
We find Harry lying in the flowerbed beneath the [Dursleys]' window, listening to the news for any sign of Voldemort's return as [Vernon] and [Petunia] discuss him, [Dudley], and the neighbors. Finally, Harry concludes that nothing will come of the news, and moves to leave his flowerbed.
Without warning Harry hears a loud crack and jumps up, smashing his head on the open window and infuriating [Uncle Vernon]. Finally, after an argument with Vernon and [Petunia], Harry insults them and walks off down the street.
A Park, a Punch, and a Patronus
Harry walks off alone, thinking about the crack that he heard and sure that it was the sound of someone [Apparating]. He thinks with frustration about the [Daily Prophet]'s ignorance, his lack of news from Ron and Hermione, and his memories of seeing Cedric killed, and resists the temptation to confront [Dudley]'s gang.
Getting up from the swing, Harry heads for home, stopping [Dudley] en route to torment him. Dudley, however, tells Harry he's heard him crying out in his sleep, prompting Harry to threaten him with his wand.
[Dudley] and Harry both feel suddenly cold and plunged into darkness, and Harry realizes that Dementors have appeared. Thinking it's Harry, Dudley punches him, but Harry just manages to drive them away without any permanent damage to himself or Dudley.
Chapter 2 - "A Peck of Owls" - In which Harry is expelled from Hogwarts, Uncle Vernon swears, Aunt Petunia reveals knowledge of the wizarding world, Dumbledore interferes and Harry is no longer expelled, but suspended pending a Ministry of Magic disciplinary hearing.
Mrs. Figg reveals herself to be a [Squib] and a friend of [Dumbledore], and is furious at Mundungus Fletcher for shirking his guard duty responsibility. When he shows up, Mrs. Figg screams at him to run to [Dumbledore], and she manages to walk Harry and [Dudley] home before bolting off to her own house herself.
Harry Explains About the Dementors to the Dursleys