ERCOT IT Update

1. ERCOT IT Update Ken Shoquist VP, CIO Information Technology Board Meeting April 2004

2. Agenda • Market Oversight and Monitoring System - Shoquist • Projects Update - Connell • CASUP Update - Galvin, Gruber, Judice,

3. Market Oversight and Monitoring SystemProject Update Ken Shoquist

4. Project began in mid-2003 to provide the PUCT with enhanced market monitoring capabilities. System went live in mid-February 2004. Joint effort between multiple industry partners — PUCT, ERCOT, AREVA and Potomac Economics Two Main Applications: StudyMarket Application Ability to simulate and analyze historical market clearing conditions in a standalone environment. Market information available to PUCT in near real-time after each interval. Indices, Screens and Report (ISR) Application Near real-time monitoring of market activity and behavior. Ability to generate reports on market indices and review of participant conduct. Market Oversight and Monitoring System

5. Indices, Screens and Report (ISR) Application (cont.) Automated reports will detect bidding conduct or other events that warrant further investigation by MOD. Screens and indices are designed to: Identify generating units that have local market power. Detect flaws in market rules or procedures that interfere with the efficient operation of the market or create gaming opportunities. Detect bidding strategies or other conduct that may constitute economic or physical withholding. Identify potential manipulation of transmission constraints. Example Index: Residual Supply Index Identifies when a supplier faces limited competition because its resources are needed (at any price). Market Oversight & Monitoring System

6. Projects Update Rob Connell – Director, Project Management

7. Projects Completed in January Texas Set 1.6 Commercial Applications Development System (P-Test Prime) Congestion Management Zones Lawson Procurement System Projects Completed in February PUCT Market Monitoring System Transmission Congestion Rights – Phase 1 Payment for Minimum Energy when OOMC Issued SeeBeyond and PaperFree Upgrades Projects Completed First Quarter • Projects Completed in March • MS Project Server – Phase 1 • Market Operations QSE Test Environment • Commercial Applications System Upgrade (CASUP) Project • Direct Load Control • Computer Room HVAC and PDU Upgrades • Facilities Expansion Construction at Taylor locations

8. IT Project Performance March 2004 Projects Project Process Improvements In 2004 • 6 completed • 36 in progress • 21 in planning • Release 3 moved 11 projects to in progress • Program Area Teams Launched • CART (Continuous Analysis & Requirements Teams) being implemented to plan releases and provide impact analysis Project Performance Project Activity

9. Market Operation Test Environment • Scope • Provide a standalone, functional market operations test environment dedicated to wholesale market participant testing that enables XML interface and business testing for qualified scheduling entity (QSE) market participants. • Budget = $735K. Actual Committed to Date = $494K • Negotiations with EMP vendor saved ~$200K for separate license purchase. • MOTE released on time using top tier portal! • All 12 deliverables met. • Major Deliverables: • Production-like HW (three platforms) • Fully licensed environment • Ready for TML prerelease to QSE’s scheduled by Client Relations. • ERCOT is the ONLY ISO to provide such an environment! Init/ Planning 12 weeks Design 8 weeks Build 12 weeks Test 4 weeks Prove-in 4 wks Today 5/19/03 8/10/03 10/21/03 1/15/04 2/16/04

10. Commercial Applications Systems Upgrade Project -Project Update Jim Galvin – Director, Market OperationsRichard Gruber – Director, Market ServicesKevin Judice – Director, IT Development

11. CASUP Project • The CASUP project began in October 2003 to: • Evaluate the core systems that comprise the commercial systems platform – Lodestar, PaperFree, SeeBeyond (TCH) and Siebel • Evaluate existing commercial software applications and other options that may better meet ERCOT’s functional and cost-of-ownership requirements • Develop a set of business and technical requirements using a process that includes representatives from both business and IT

12. RequirementsGathering • Business Requirements for Commercial Systems • Used an agile approach, including the Rational Unified Process (RUP) and Joint Requirements Planning (JRP) sessions, to capture and articulate requirements • Completed Enterprise Business Model (EBM) • Completed Business Use Cases • Technical Specifications for Commercial Systems • Completed Supplementary Specification • Completed Technical Architecture Design

13. Product Evaluation • Commercial Systems Software Product Evaluation • Request for Qualification (RFQ) process completed: • 19 responses received • Responses evaluated by Project Leadership Team and rated using weighted scoring • List categorized and shortened to: • Full Solution: Excelergy, Lodestar, SAP • Aggregation & Settlements: Alstom/AREVA(Eterra), ICF, OM • Retail: Siebel • Product demonstration process completed: • Demos focused on functional, technical and rough cost criteria • Products evaluated by ERCOT managers and SMEs - rated using weighted scoring • Solution Option alternatives developed by CASUP Team • Enterprise Application Integration (EAI) product evaluation process constructed

14. Solution • Mid-term actions to improve vendor support level • Upgrade Lodestar wholesale to v3.7 to get current with vendor and gain advertised performance improvements • Upgrade Siebel to v7.0 and evaluate work flow capabilities • Develop enterprise-wide application integration strategy (EAI) • Long-term to improve reliability, scalability, and extensibility • Implement EAI application and architecture plan • Conduct a Proof-of-Concept (POC) to investigate using Lodestar to support retail business functions • Conduct a POC in support of future TNT initiatives, evaluate billing and settlements capability of AREVA’s Eterra and Lodestar’s 4.x products

15. Attachments

16. Production Metrics • Released six projects and 90 SIRs into production • SIR procedure being updated and improved • Currently in testing for TML portal launch three • SAS 70 audit preparation and documentation continues for May 1 start Summary for March • EMMS • Four intervals missed • Focused on Release 3 • Transaction Processing • Vendor patch installed to correct post update problems • Processing times continue to improve • Settlements • 5,638 in Mar • 99% on-time settlement posting • Project Management • 6 completed • 36 in process • 21 in planning

17. System Reliability Results and Challenges Action Items • Currently preparing for Release 3 • Opportunities for improved monitoring of hardware and network 2003 Mission Critical Unplanned EMMS Outages Intervals Missed Outage Minutes 746 Ceiling Target EMS and MUI 45 minutes (99.9%) Ceiling Target 3 RTB Intervals

18. Transaction Processing Results and Challenges Action Items • Vendor patch applied to address transaction issues • Major vendor release end of Feb with post migration issues that impeded transaction throughput in the first week of March 2003 Retail Transaction Processing Transaction Volume (MM) Processing Time (hrs) Average 814 transaction processing times exclude maintenance (type 20).

19. Reporting Performance Action Items • Continuous system improvements in processing • Strengthening staff to improve production support 2003 Report Posting Settlements # Settlements Settlement %