ERCOT IT Update

1. ERCOT IT Update Ken Shoquist VP, CIO Information Technology Board Meeting September 2003

2. Metrics Project Updates ERCOT Participation with other ISO’s Texas Electric Market (TEM) Forum Update Agenda

3. Production – Good progress made in stabilizing EMMS production performance with NO intervals missed in month of August compared to 27 in July. Development – 4 projects delivered in August. Continued development effort with ERCOT Business on Commercial Systems Architecture and product support issues. This will continue to put pressure on business staffing. Texas Electric Market IT Forum –Over 200 Participants attended from 45 companies. ERCOT will form 2 groups for common interest items in IT and Security. IT Highlights

4. System Reliability Results Initiatives • Negotiate contract with vendors for fourth level response with vendor. • New EMMS production support manager joining September 15. • Continue to mature software management processes. • Extended automated monitoring of EMMS servers • Senior EMMS consultant added to support team for facilitation of cross training. 2003 Mission Critical Unplanned EMMS Outages Outage Minutes Intervals Missed Ceiling Target EMS and MUI 45 minutes (99.9%) Ceiling Target 3 RTB Intervals

5. Transaction Processing Initiatives • Capacity Planning for software/hardware footprint that supports target utilization and improves system availability and reliability. • Extend application monitoring tools, 4Q, 2003. Results • Recent moves of software components to alleviate resource contention have yielded productivity gains. Challenges • Current server support from vendor being phased out in 3 years. Server performance will mandate a change next year. Transaction Volume (MM) 2003 Retail Transaction Processing Processing Time (hrs) Average 814 transaction processing times exclude maintenance (type 20).

6. Reporting Performance Results • Application tuning during the first part of August resulted in processing improvements for an 18 point gain over last month in the number of settlement statements posting within Protocol. Challenges • Continued high level of settlement volume  Initiatives • Reengineering of settlements transport tool to ensure posting of settlements at the Portal within Protocol. 2003 Report Posting Settlements

7. IT Project Performance Year-to-Date Priority Projects Projects Deployed in August 2003 • 36 complete, • 21 in progress, and • 18 in planning • Move In Move Out – Mid term enhancements • QSE Mismatched Schedules • Smoothing Algorithm – PRR 350 • Outage Scheduler Phase II IT Project Updates Monthly Activity Project Performance

8. Development Performance Upcoming Deployments at ERCOT • QSE Market Testing (Dec 2003) • Increase availability • Increase functionality Energy Management Systems • BUL / LAAR (Moved to Oct from Sept) • Load Research Sampling (TBD) Settlement & Billing • Portal Replacement (Oct 2003) • Portfolio Mgmt Software (Nov 2003) • Document Management (TBD) • Lawson G/L Upgrade (Dec 2003) • Enterprise Data Warehouse (Dec-PhaseI) Enterprise Operations • Commercial Dev/Test Systems (Nov 2003) • Texas Set 1.6 (Dec 2003) • MIMO Long-term Market (Aug 2004) • Market Coordination Team formed • Requirements being finalized Transaction Processing

9. Project encompasses the entire end-to-end functionality of commercial systems. Commercial Applications Systems Upgrade Technical Architecture Operation Monitoring Transaction Services Billing Determinants (Data Aggregation) Settlements And Billing Customers, Communication, Disputes, and Resolution Auditing Data Collection / Reporting

10. Timing is never going to be perfect, but time is not likely to improve the condition: Ongoing cost of support and maintenance is going up. Severity of issues will increase. Cost of reliability and performance will impact the ability to respond to business and market requests. Without an “Agile” platform we will not be in the position to take advantage of opportunities. Convergence of upgrade cycles. Need for documentation on as is systems and processes necessary for SAS70 Type II. High availability for commercial systems arena is becoming a need to control costs and provide a higher degree of performance. Why Now?

11. Executive Sponsors Ray Guliani Ken Shoquist Steve Wallace Management Team Betty Day James Cohea Ken Ragsdale Ted Hailu Karen Bergman Dale Goodman Calvin Opheim Scott Middleton Mohan Yeggoni Dave Johnson Chris Douglas David Farley Project Sponsors Director Sponsors • Jim Galvin • Richard Gruber • Kevin Judice • Rob Connell Project Management • David Troxtell • Paul Hutchison • Dave Odle • Glen Wingerd

12. ISO/RTO Information Technology Committee Purpose • Promoting Communications • Providing Mutual Assistance • Technology Standardization • Share Expertise and Advice Current Activities • Security Working Group • Meta Data Working Group • Peer Review (Base lining) • ITC Participation in ERCOT’s IT TEM Forum on September 15th Opportunities • Architecture Working Group • Vendor Synergies

13. ISO/RTO Information Technology Committee (ITC) Standardization Initiatives to Address “seams” issues • Data Initiative (CIM extensions) • Data Transmission • Market User Interface (API) Upcoming Events • ISO Architect’s Meeting on October 14, 2003 • Next Quarterly Meeting Scheduled for December

14. IT TEM Forum First IT TEM Forum a SUCCESS! • Over 200 Participants Attended • 45 Unique Companies, 4 ISO’s, PUC • Homeland Security, FBI, and Secret Service • On-line, IT survey conducted of IT market personnel • Forum evaluations completed Survey Says: 7 % Did NOT meet expectations 67 % Did Meet Expectations 26 % Exceeded Expectations

15. Two New Groups in Formation Excellent support at Conference for: • ERCOT Critical Infrastructure Protection Group • Collaborative effort to bring together Market Participants to discuss solutions for CYBER and PHYSICAL Security. • ERCOT IT Common Interest Group • Collaborative effort on IT projects, direction, vendor synergies, and education on best practices.

16. Critical Infrastructure Protection (CIP) Purpose: A collaborative effort to bring together owners and operators of critical physical and cyber assets for securing the Texas electric sector. • Channel security information from • Local Authorities • Regional Authorities • Federal Authorities • Discuss security solutions • Share information • Communicate and clarify NERC security standards • Assist in security standards implementation

17. CIP Group Communication Establishment of the group is vital in helping ALL stakeholders in the electric power industry respond to the threat of terrorist attacks and facilitate major outage recovery. • Action: • Send informative letter discussing group role on 9/12/03 • Collect Texas participant contact information • Initiate first group meeting in central location • Distribution: • All QSEs (65) • All Transmission Service Providers (17) • PGCs with total generation over 800MW (30) • Others can participate by subscribing at marketsecurity@ercot.com

18. Testing the Myths • ERCOT must have EDI to function; it is the most cost effective method for the operation of the market. • If ERCOT is secure then the market is secure. • All the back office systems of market participants are competitive differentiators and should never be centralized within ERCOT.

19. Summary • Production Management: • Good progress in EMMS production; much more progress necessary. • Development • BUL/LAAR project slips by one month to ensure adequate testing. • Work continues with ERCOT Business on Commercial Systems Architecture/Product future supportability issues. • TEM Forum: • Good Participation by Market. • Two new groups will be formed: Security and IT