Special Board of Directors Update

1. Special Board of Directors Update Ron Hinsley Texas Nodal Program Update

2. Agenda • Background • Newly Developed Delivery Approach • Work performed by projects to date • Work remaining (software releases) and why • Nodal program / project risks and issues • Options for Go-Live Texas Nodal Program Update

3. Background • Deep Background • Target date established before business requirements were complete • Joint decision between the Market Participants (MPs) and ERCOT to go with ‘Best of Breed’ nodal solution • Joint decision between the MPs and ERCOT to deploy Nodal with a Common Information Model (CIM) • More Recent Background • Program controls proved inadequate • Several vendor deliveries missed due to their internal delivery issues and ERCOT staff missing requirement deadlines • To date, 112 Nodal Protocol Revision Requests (NPRRs) have been approved by the Board, with minimal impact. Pending/future NPRRs could have an impact (details) Texas Nodal Program Update

4. Newly Developed Delivery Approach • The program structure has been revamped • Developing a realistic integrated nodal program schedule that will be used for measuring progress and focusing on activities that affect the critical path • Reorganized the projects into core and supporting activities, with core projects having accountability for all aspects of project delivery (details) • Rebuilt the Project Management Office (PMO) with a structure and the skills needed to support Nodal size and complexities (details) • Designed jointly-defined formal releases across nodal teams • Supporting document – Release Windows spreadsheet • Plan for sufficient time to test in the lower environments (example) • Improved vendor management • Program structure will continue to evolve Texas Nodal Program Update

5. Work Performed by Projects to Date Texas Nodal Program Update

6. Details – Work Performed Texas Nodal Program Update

7. Progress to date • A large percentage of EMS and MMS development complete, some releases remain to be delivered • FAT testing in progress • Limited integration completed • Limited integrated testing completed • Limited EDS testing completed Texas Nodal Program Update

8. Significant Work Remaining NMMS • Data validation issues • CIM XML • No releases have completed FAT • Other systems have dependencies on network model data from NMMS Settlements and Billing, MIS • These “downstream” systems depend on data and interfaces from “upstream” systems, such as NMMS, EMS, MMS Texas Nodal Program Update

9. Remaining Software Releases Texas Nodal Program Update

10. How we developed the new sequence and durations Legend Indicates project milestones in a release Cross project dependency Project milestone EDS • FAT milestone put into time-boxed Integration releases • These will be integration tested and pushed to EDS Integration Test Project 1 Core and Supporting Projects (FAT) Project 2 Project 3 Texas Nodal Program Update

11. Release 2 – Market submissions and Results • MMS provides SCED stability and compliance with V 1.12 of CIM • All web services available less Disputes, Market Information, and Resources Parameters • Ability to test Commercial Systems Integration (CSI) Texas Nodal Program Update

12. Release 3 – 1st attempt at Bid to Bill process for DAM • Ability to perform Bid to Bill through Settlements integration (for most Settlement charge types) • MMS compliant with V 1.16 of CIM (closer to the final version) • EMS – MMS integration for DAM, SCED and RUC provides ability to execute DAM and RUC with minimal data stubs • CRR integrated to CMM and MMS • All web services available less Market Information Texas Nodal Program Update

13. Release 4 – NMMS integration with EMS, Siebel etc • NMMS integration with EMS, Registration, Outage Scheduler provides for a consistent dataset flowing between applications • Alerts and notices integrated with each of the applications such as MMS and EMS • Settlements Integration for DAM and RTM Texas Nodal Program Update

14. Release 5 – Integrated CIM • Ability to perform end-to-end CIM business process testing (all systems using the same data set) • Enables re-start of EDS activities for Day-Ahead Market, RUC and Settlements • Enables performance of 2, 8 and 48 hour LFC tests Texas Nodal Program Update

15. Release 6 – Integrated Nodal system • Final MMS version, enables testing of final versions of interfaces and External Web Services • All system-to-system integration deployed • Web Service chunking enabled (splits MP submissions of large files into smaller ones) Texas Nodal Program Update

16. Release 7 – Patches and bug fixes • After Integration Release 6, majority of the effort will be involved in fixing outstanding defects in preparation for the 168-Hour Test • Other activities include Performance testing, Security testing and fail-over testing Texas Nodal Program Update

17. Remaining Software Releases – NMMS NMMS 5 – required for SEM Go-Live Production model business processes and workflow support Auto model scheduler MIS posting folder structure Historical models and NOMCR tracking PTC screens to support PMCR linkage to NOMCR Reports NMMS 6 – required for SEM Go-Live Project Tracking Coordinator (PTC) functionality and screens for Model Coordinator Outage Clarifications Name Service As Built Report NMMS 7 – not required for SEM Go-Live Auto Model Scheduler Data Validation (supports Outage Scheduler and Outage Evaluation) Texas Nodal Program Update

18. Remaining Software Releases – EMS EMS 5.1.5 Outage Evaluation (OE) – Testing at ERCOT (Post-FAT bug fix phase) Voltage Support (VSS) – Testing at ERCOT (Post FAT bug fix phase) Alerts and Notification along with the MMS-EMS Interface Bug fixes EMS future drop EMS Habitat upgrade EMS CIM Importer – still testing at AREVA Bug fixes Other drops Changes related to SIG papers – in analysis, Private Use Network paper reviewed by TPTF subgroup last week Remaining interfaces (e.g., reports, replication) in progress Bug fixes Texas Nodal Program Update

19. Remaining Software Releases – MMS • MMS 4, Patch 4 • Partial implementation of NPRR 102 • Bug fixes • MMS 4, Patch 5 • Code changes based on consumption of latest CIM XML test file • Bug fixes for Settlements integration • Final patch scheduled for MMS4; delivery added to ensure progress is made while waiting for validated and synchronized CIM XML file from NMMS • MMS5 is the last scheduled release of functionality, target delivery to ERCOT is TBD; triggered off an NMMS-delivered validated and synchronized CIM XML file ready for consumption by downstream systems • CIM XML import processing and end-to-end testing • Bug fixes • Remaining NPRR as approved (e.g., NPRR102, NPRR113), SIG paper changes (e.g., rounding) and software implementation changes based on testing (e.g., performance improvements, startup cost eligibility, SASM constraint modeling) • Additional monthly patch releases are planned to fix any defects that are identified during subsequent testing efforts Texas Nodal Program Update

20. Remaining Software Releases – CRR • Enhancement patch (internal to software) • Additional patches, as needed, to address defects originating from iTest Texas Nodal Program Update

21. Remaining Software Releases – COMS • Settlements and Billing Core Development • DAM • RTM • Invoices • Statements • Data Aggregation • Combine Cycles Unit • Flow Gates • Batch Scheduling • Reports • Commercial Systems Integration • Integration to MMS, NMMS, EMS, S&B, CMM, CRR • Bill Determinant Calculations • Registration & Disputes • Market Participant Account Management • Settlement Dispute Management GUI • Settlement Dispute API • Integration to MMS, NMMS, EMS, S&B, CMM, CRR Texas Nodal Program Update

22. Risks and Issues Texas Nodal Program Update

23. Nodal Program / Project Issues and Risks • Staffing risk • Reliance on vendor deliverables • Resolving data integrity issues • Integration • Rework due to clarification of requirements • Traceability to Protocols • Zonal project resource conflicts • Stakeholder relations Texas Nodal Program Update

24. Options for Go-Live Texas Nodal Program Update

25. Go-Live Options that could Impact Go-Live Date • Separate Day-Ahead and Real-Time Markets • Considered, would lengthen schedule • Implement a CIM XML file work-around • Under review • Start EDS earlier • Considered, would lengthen schedule • Shorten EDS testing effort (on critical path) • Under review Texas Nodal Program Update

26. Supporting Materials Texas Nodal Program Update

27. Count of NPRRs By Type Texas Nodal Program Update

28. Count of NPRRs By Type - Legend • Corrections to Protocol Language - No Impact • Changes with no system impacts • Corrections to Protocol Language - Impact Absorbed • Changes with minimal system impacts • Corrections to Protocol Language – Incremental Impact • Changes with incremental project costs noted on the Impact Analysis • PUCT Requirements • PUCT elements added since the May 2006 protocol baseline • Scope Reduction • Changes resulting in reduced effort for the Nodal project • Synchronization with Zonal PRRs • Changes that kept the Nodal protocols in sync with PRRs that apply to both the current protocols and the Nodal protocols • Enhancements Deemed Essential • Changes not technically required but deemed essential for Go-Live • TBD (in progress NPRRs) • Changes currently in the stakeholder process Back to presentation Texas Nodal Program Update

29. Functional Organization: Nodal Delivery • Serve as the authoritative point of contact for nodal readiness and transition efforts for each affected ERCOT division/area • Secure the appropriate participation of staff for their organization to meet schedule • Facilitate ERCOT’s Readiness Declaration of progress for the departments within their organization Executive Sponsor Ron Hinsley Transition Executives Division VPs • Serves as an escalation point for PMO • Acts as liaison with Executive Team, TAC and Board Executive Program Director Ron Hinsley Business Owners Directors • Hold business owners accountable for appropriate involvements with nodal projects • Own business requirements for nodal systems • Own responsibility for maintaining nodal systems after EDS • Develop internal procedures for operating in the nodal market • Directs the day-to-day activities of the nodal projects • Serves as an escalation point for core and supporting project issues • Administers program controls (see PMO organization) Business Owners Managers Program Mgmt Office Janet Ply • Accountable for end-to-end delivery of core nodal system • Accountable for core project schedule and budget • Directs day-to-day activities of the supporting projects that interface with their project • Manages vendor relationships CORE PROJECTS A Core Project Core PM These are the core nodal systems and include: NMMS, EMS, MMS, CRR, Commercial Systems and EDS Integration Supporting PM Integration Testing Supporting PM Current Day Reports Supporting PM MIS Portal Supporting PM Enterprise Data Whse Supporting PM SUPPORTING PROJECTS • Provides resources to the core projects as needed • Directs activities that are not shared across core projects (i.e. MIS My Page, documentation) Back to presentation Texas Nodal Program Update

30. Program Management Office Program Management Office Janet Ply Program Administration Program Schedule John BlumJD Mullikin Data Quality / Mgmt Kenneth Ragsdale Risk / Issue Mgmt Brett Economides Requirements Mgmt Betty Luedke Communications Adam Martinez Architecture Shawn Catoe Resource and Contract Mgmt Dawn Moldenhour Process StandardizationTBD • Develops and maintains standard project plans and overall integrated schedules • Analyzes schedules to identify critical path(s), trends, resource constraints, potential problem areas • Develops project controls and supporting processes • Tracks status of data availability and quality across program • Determines impacts across the program when data is not available or of sufficient quality • Ensures requirements are documented at the right level and traceable • Ensures program level traceability to protocols and other binding documents • Program scope change management • PMO liaison to the Change Control Board • Resolves architectural issues • Facilitates integration of nodal systems with existing ERCOT architecture • Identifies, documents, assesses & communicates project & program level risks • Develops mitigation strategies with PMs • Works with PMs & schedulers to assess program & project level impacts • Develops nodal presentations & communications to ensure consistent messaging across the program • Clarifies points of confusion within the program • Improves meeting effectiveness • Works with PMs & PMO to develop a resource management plan • Reports SOW status for contractors • Determines appropriate staffing levels within projects • Identifies areas for staffing optimization within projects • Reviews existing contracts for nodal vendors to identify areas for optimization • RUP • Project mgmt/ MS Project • Estimation • Risk mgmt • Process training • Develops, implements & communicates training effectiveness measures Back to presentation Texas Nodal Program Update

31. Number of weeks of test vs. Number of weeks of defect management The longer the test duration, the shorter the defect management time (when number of weeks in test increases defect management time decreases) Back to presentation Texas Nodal Program Update

32. Work Performed by Projects to Date Detailed Information Texas Nodal Program Update

33. Developed EMS exporter for extracting zonal data to initially seed the nodal network model as a starting point for data population Released functionality to enable ERCOT Transmission Service Providers (TSPs) to enter descriptions of Network Operations Model Change Requests (NOMCRs), with the following components: Information Model Manager – database to support operational network models, dataset management service that is capable of producing time based operations models, and services that import/export models in CIM XML/RDF bulk formats Project Tracker and Coordinator – allows user to describe construction projects or any changes to the network model parameters, and to perform some validation of submitted projects Topology Processor – converts operations models to planning models Planning Model On Demand – capabilities to manage multiple planning projects and to produce and manage multiple time-based planning models Completed NMMS training for TSPs on steps to complete a NOMCR Completed development of the four core Network Model Group business procedures needed to support business workflows after Single Entry Model Go-Live Generate, Post, and Distribute Models & Files, Conduct NOMCR Validation, Respond to Model Changes & Interim Updates, Maintain Network Model Although functionality has been delivered, NMMS has not yet successfully passed FAT Work Performed by Projects to Date – NMMS Back to presentation Texas Nodal Program Update

34. Work Performed by Projects to Date – EMS • Released the base EMS system which facilitates the data exchange between ERCOT and MPs, monitoring of generation, load frequency control, assessment of the network security of the ERCOT system through applications such as: • SCADA (in EDS) • ICCP interface, Local calculations, Alarming, ERCOT Control Rooms interface to the EMS Applications • Dynamic Ratings (in EDS) • Temperature dependent limits (better use of existing facilities) • Forced Outage Detection (in EDS) • Extends alarming beyond SCADA (detects and alarms on discrepancies between SCADA, Current Operating Plan and Outage Schedules) • Generation Functions (in EDS) • Load Frequency Control, energy deployment, Ancillary Service performance monitoring, Resource qualification testing, Resource Limit Calculator • Load Forecasting (in EDS) • Seven-Day hourly, past pattern and weather based • Wind Power Forecasting (in EDS) • Short-Term Wind Power Forecast (expected power for 2 days), Wind-Powered Generation Resource Production Potential (80% probability, for 2 days),  Long-Term Wind Power Forecast (provided by resources) Back to presentation Texas Nodal Program Update

35. Work Performed by Projects to Date – EMS • Released the base EMS system (continued) • State Estimator (in EDS) • Real-Time estimate of the true and complete state of the system; identify real-time violations, inconsistencies between different measurements, and critical locations for measurements; Study version for debugging • Network Security and Stability Analysis (in EDS) • Real-Time Contingency thermal overload analysis; Voltage and Transient stability analysis (completed FAT); Transmission Congestion management; • Backup scheme when State Estimator fails to provide solution for extended time; • Determination of look-ahead limits for use in market functions • Voltage Support Requirements Specification (in FAT) • Finds a suggested voltage profile to correct Real-Time voltage problems • Outage Evaluation (in FAT) • Multi-hour, multi-model reliability analysis to determine if requested outages can be approved • Interfaces to downstream applications • MMS (most in EDS, some in FAT), EDW (most in EDS, some future work), All Wind Service (in EDS), External Load Forecast (in EDS), Weather Service (in EDS), Settlement & Billing (in EDS) • Alarms and Notification to market participants (in FAT) • Supply Data to Reporting functions • Telemetry standards; congestion reports;  SE performance monitoring • Data Model Import (in process) • Import and processing of CIM models needed for security assessment, generation control and outage evaluation Back to presentation Texas Nodal Program Update

36. Work Performed by Projects to Date – MMS • Delivered four releases through MMS4 that includes baseline 0, 1 & 2 functions in support of Day-Ahead (DAM), adjustment, and operating period markets • Continuing work on MMS Processes & Procedures to support these markets • Testing and all testing-related documentation through initial release of MMS4 FAT is completed • Delivered and received approval for all requirements and conceptual design documentation through baseline 2 and any other approved changes (e.g., co-optimizing energy & AS for self-committed resources in DAM changes) • Continuing work on functional & detailed design specifications, as changes are needed • Continuing work on additional documentation that includes: • Test plans, test cases, test scripts, test results, traceability matrix for MMS4 patches and MMS5 • DAM, RUC, adjustment period & real-time process documentation development in progress • DAM, RUC, adjustment period & real-time procedure documents development in progress • Evaluated and planning for inclusion (into MMS5) of all post-baseline 2 NPRRs approved by the board or deemed essential for go-live by TPTF (seven total as of Aug. 25, 2008) Back to presentation Texas Nodal Program Update

37. Work Performed by Projects to Date – CRR • Delivered a fully tested CRR system that meets the functionality and performance measures in accordance with approved requirements by using manually uploaded production files • Resolved all defects found during Pre-FAT and FAT testing cycles • Delivered a CRR process that is fully traceable and compliant with the respective Protocols as well as other official published defining documents • Full Non Opt-In Entity (NOIE) participation in EDS testing of Allocation Markets Back to presentation Texas Nodal Program Update

38. Work Performed by Projects to Date – COMS • Planning and Documentation • Completed Market Requirements and Conceptual Design documentation and received approval from TPTF • Created Detailed Designs (Living Documents) • Created Test Plans, Cases, and Scripts (over 11,000 testing artifacts) • Development • Completed Lodestar core development; targeted to deploy with Lodestar 4.7 Upgrade in September 2008 • Completed core development of batch cycle for DAM, RTM, and CRR • Completed and deployed builds for Commercial Systems Integration to support EMS, SASM, CRR, DAM, GUI, and 70% of all billing determinants • Completed and deployed three Registration releases to ERCOT production (zonal) that includes TML screens, Siebel screens, Metadata, and EIS changes • Deployed base CMM product, critical calculations build, and build 3.1 (critical interfaces) • Testing • Completed testing of all MMS patches from ABB (up to MMS4 patch 2) in support of market based solution for settlements • Continuing testing of Siebel Phase 4 • Completed framework testing of shadow settlements extracts Back to presentation Texas Nodal Program Update

39. Work Performed by Projects to Date – EIP • Simple, reliable and secure Market Participant interaction with ERCOT • Delivered interfaces for and supported all EDS testing activities since August 07 • Nodal Web Services have been used 250,000 times since March 2008 by 315 different Market Participant identities • Supported Market Participants’ efforts to develop their side of the Nodal services including workshops, Google, samples, sandbox and regular meetings • Automated and controlled internal interfaces for all Nodal systems • Provided the interfaces that enable ERCOT’s new MMS and OS user interfaces • Designed 35 of the total 36 interfaces required for Nodal • Constructed 30 of the total 36 interfaces required for Nodal • Deployed 19 of the total 36 interfaces required for Nodal to iTest or equivalent • Established a service oriented architecture platform for future enhancements • New common services and design pattern library that ensure interfaces are reliable, controlled, simple to extend and maintain • Comprehensive TIBCO-based infrastructure and description of all services and interfaces to improve and simplify maintenance and extension Back to presentation Texas Nodal Program Update

40. Work Performed by Projects to Date – CDR • Reporting Engine • Schedules and creates reports based on time from the source systems (MMS and EMS) and inserts them into the ERCOT common data storage known as the Market Information Repository (MIR) • Direct Posting to MIR • Inserts the file to the MIR database directly without using any brokers or middleware thereby significantly decreasing the time to insert files, especially large ones • Reports and Extracts – 38 complete, 8 pending completion • Outage Scheduler (4 of 4 complete); Day Ahead Market (7 of 7 complete) • Reliability Unit Commitment (3 of 3 complete) • Security-Constrained Economic Dispatch (3 of 3 complete) • Load/Demand Forecasts (6 of 6 complete); State Estimator (2 of 5 complete) • System Adequacy – PUCT (1 of 1 complete) • Distribution Factors (1 of 1 complete); Ancillary Services (4 of 5 complete) • Locational Marginal Prices and Settlement Point Prices (2 of 2 complete) • System Data (3 of 6 complete); QSE specific data (1 of 2 complete) • Weather Data (1 of 1 complete) Back to presentation Texas Nodal Program Update

41. Work Performed by Projects to Date – EDW • Infrastructure and software are in place for data replication to store Real-time Nodal information for EMS, MMS, CMM, CRR, Lodestar • Energy Management System data marts are built to support future reporting requirements • All State Estimator reports and data extracts completed in iTest using Nodal data, allowing MPs and ERCOT to track convergence and violations that occur during State Estimator execution • All Telemetry reports are completed in iTest using Nodal data, allowing MPs and ERCOT to identify equipment failures and communications issues • XSDs and DDLs for State Estimator and Telemetry reports posted for MP use • All Shadow Settlement extracts currently in iTest; DDLs and XSDs posted for MP use • All COMS Non-Shadow settlement extracts under development Back to presentation Texas Nodal Program Update

42. Work Performed by Projects to Date – MIS • Deployed Portal framework and supporting infrastructure to EDS • Designed, created and deployed 16 Landing Pages containing approximately 40 portlets • Deployed the following reports and extracts to EDS • 11 sample Settlement Statement and Invoices • 36 CDR Reports, 4 MMS Reports, 9 EDW Reports and Extracts, 3 CMM Reports, and 6 COMS Reports and Extracts • Deployed links to launch CRR, MMS and OS UI applications to EDS • Implemented Simple Search functionality • Deployed LMP Contour Map dashboard to iTest • Implemented Protocol View Back to presentation Texas Nodal Program Update

43. Work Performed by Projects to Date – Infrastructure Infrastructure Process Changes Completed operational procedures for a fundamental technology change of Unix platforms and Oracle platforms Implemented a release management process capable of supporting a 500% increase in releases Implemented an SLA for the EDS systems which will become the Nodal SLA Infrastructure deployments and upgrades Licensed all database and supporting software Implemented the Market Participant Identity Management (MPIM) solution currently in production Revised the architecture of the monitoring tools to support the high availability needs of Nodal Deployed most infrastructure components required expected to be needed to support the new market prior to performance tests Consolidated 91 Unix servers to 4 to support both the Zonal and Nodal markets Upgraded the architecture of the data warehouse to support the availability and throughput requirements of the new market Implemented a virtualized development environment to maximize data center capacity Completed all possible data center power conservation activities Back to presentation Texas Nodal Program Update

44. Work Performed by Projects to Date – INT • Testing Infrastructure / Tools • Documented overall Nodal Test Strategy and Procedures • Purchased and implemented a central defect tracking tool and process across the program • Purchased and Implemented test automation tools for integration, performance, and regression testing • Partially completed Integration Test Environment (supported by INF) • Test Planning • Documented test plans for CRR, Siebel, and CMM functional testing • Developed approximately 600 test cases • Developed approximately 18,000 test scripts • Created automated testing suites for approximately 60 integration adapters • Created automated testing scripts to support functional regression testing of MIS, CRR, CMM, CDR, and EIP systems • Created test data generation tools to facilitate early testing of software • Test Execution in FAT • Executed approximately 18,000 test scripts Back to presentation Texas Nodal Program Update

45. Work Performed by Projects to Date – EDS • Test Planning • Developed and gained approval on EDS 1, 2, 3, & 4 Test Plans • Developed and gained approval on 168Hr Test & Go-Live Procedures • Test Execution • Supported all MPs through initial connectivity and use of all Nodal systems (MMS, CRR, Outage Scheduler, NMMS) • Completed Real-time system connectivity (ICCP) • 10 months of generating LMPs (SCED) • 13 Day-Ahead Markets, 2 SASMs, 6 DRUC and 2 HRUCs • 2 Monthly and 1 annual CRR Auction • 2Hr Total System LFC Test, including 5 open preparatory tests • Market Support • Hosted ~100 test status calls & 10 face-face workshops • Answered ~6000 emails Back to presentation Texas Nodal Program Update