TAC Program and Projects Update March 6, 2003

1. TAC Program and Projects Update March 6, 2003

2. Task to Product Product to Shared Services Shared Services to Six Sigma 2004 2004 2005 2003 2005 2003 Beyond Beyond • Lower priority tasks addressed and delivered • Enhanced cost control and funding leverage • More functionality • More nimble organization • Improved market participant satisfaction • Naturally address architecture issues • Group tasks into product groups • Build product release cycle • Introduce better collaboration and management tools • Collaborate with market, compliance, and vendors • Minimized market participant total cost of operation • Minimized ERCOT total cost of operation • Adaptable, reliable and scalable services for the market • Shift focus from Program Management to Process Management • Institute Six Sigma continuous process improvement • Process Management oversight and improvement program for market • Perfect and expand product line • Group products and features into shared services • Build potential/total outsourcing management capabilities • Lower total cost in market • Parallel support of multiple product releases • Availability of reduced-cost infrastructure Action Result Three Year Program Management Plan Become Proactive Introduce Innovation Lead the Industry Task to Product Product to Shared Services Shared Services to Six Sigma

3. Market Participant Requests MR1 High MR2 High MR3 High MR4 Medium MR5 Medium MR6 Medium MR7 Medium MR8 Medium MR9 Low MR10 Low MR11 Low MR12 Low Project Priorities MR1 In-progress MR2 In-progress MR3 In-progress ER1 In-progress ER2 In-progress MR4 In-progress MR5 Pending MR6 Pending MR7 Pending MR8 Pending ER3 Pending ER4 Pending ER5 Pending ER6 Pending ER7 Pending ER8 Deferred MR9 Deferred MR10 Deferred MR11 Deferred MR12 Deferred ER9 Deferred ER10 Deferred New Project Priorities MR1 In-progress MR2 In-progress MR2.a In-progress MR3 In-progress ER1 In-progress ER2 Paused MR4 Paused MR5 Pending MR6 Pending MR7 Pending MR8 Pending ER3 Pending ER4 Pending ER5 Deferred ER6 Deferred ER7 Deferred ER8 Deferred MR9 Deferred MR10 Deferred MR11 Deferred MR12 Deferred ER9 Deferred ER10 Deferred ERCOT Requests ER1 High ER2 High ER3 Medium ER4 Medium ER5 Medium ER6 Medium ER7 Medium ER8 Medium ER9 Low ER10 Low Budget Cutoff Budget Cutoff Today’s Task Oriented Process NEW High MR2.a

4. Market Participant Requests MR1 High Prod1 MR2 High Prod2 MR3 High Prod1 MR4 Medium Prod1 MR5 Medium Prod1 MR6 Medium Prod1 MR7 Medium Prod2 MR8 Medium Prod2 MR9 Low Prod1 MR10 Low Prod3 MR11 Low Prod1 MR12 Low Prod1 ERCOT Needs ER1 High Prod3 ER2 High Prod2 ER3 Medium Prod1 ER4 Medium Prod3 ER5 Medium Prod1 ER6 Medium Prod2 ER7 Medium Prod2 ER8 Medium Prod1 ER9 Low Prod3 ER10 Low Prod1 MR9 Deferred MR11 Deferred MR12 Deferred ER10 Deferred MR9 Deferred MR11 Deferred MR12 Deferred ER10 Deferred Budget Cutoff Budget Cutoff NEW High MR2.a Product Delivery Process

5. Serve, Ensure, Protect and Operate 6/03 9/03 12/03 06/04 12/04 Release 2.0 Release 2.1 & 2.2 Release 3.0 Release 4.0 Release 2.0 • Direct weather data path to EMMS • Integrate OSI PI systems • Commission alarm system • Smoothing algorithm (PRR350) • Outage sensitivity factor • Outage scheduler customization • BULs and Blocked deployment (PIP112/PIP210) • Oracle 9i upgrade • QSEMOS web enhancements • Balancing energy deployment timing improvement • Market operator interface – printing requirements • Release 2.1 & 2.2 • EMS front end replacement • System map • Customized generation monitoring • Customized one line displays • EMP 2.2 upgrade • User interface enhancements related to resource plan and schedule changes • Ability to print resource plan • Additional development work with BOD approval • Release 3.0 • Mitigate constraint oscillation • Security constrained optimal power flow • Dynamic ratings • Load rollover during line outage • Multi-hour, multi-day outage evaluation studies • Special protection schemes in contingency analysis • VSAT/TSAT Interface upgrades • Enhance PTI export • Simultaneous A/S procurement (PRR342) • Balancing energy – ramp rates (PRR349) • Enhancements to BES and RPRS markets • RPRS market re-design (SCUC) • Association of BE bids with RPRS awards (PIP137PRR211) • Resource ramp rate constraints • Allow resource plan updates after adjustment period (PRR359) • Automate calculation and posting of CSC Limits • Handling of resources in Test Mode (PRR332) • Release 4.0 • Locational Marginal Pricing? • FERC Standard Market Design? • Automate A/S qualification testing • Changes to A/S performance monitoring and frequency control algorithms • Remove BE and energy schedule dependencies on resource plan • Regulation service from loads (PRR307) • Fleet deployment of OOME Product Groupings (Sample is for Technical Operations) Technical OperationsMarket Operations Enterprise Operations Energy Management Systems Clearing, Settlement and Billing Portal / PUCT Market Interface Market Management Systems Market Relationship Management Transaction Management Transaction Processing Cyber Security Facilities Architecture and Maintenance

6. Current Picture of ERCOT Projects • Individual Projects have been Initiated Based on Market and ERCOT Prioritization Process • 32 Projects Currently Active • 8 Scheduled to complete in March • Active Projects being bundled as Releases to Support Market and Systems Stability • EMMS Releases have been defined • Texas Set 1.5 with Related changes to be Released in April • Remaining Prioritized Projects being Grouped as Logical Releases to Support a Predictable and Stable Market • Releases will Reflect Market Priorities • Releases will Include System, Architecture and Infrastructure Improvements to Support the Texas Market Going Forward

7. Ability to Assess our Project Portfolio

8. Gain Insight Into Our Projects

9. Ability to Model What If Scenarios