1 Texas Nodal Texas Nodal Program Implementation TAC July 6, 2006 Agenda

2 Texas Nodal Agenda Market Participant Accountable Executive: 15 mins –Request approval to proceed - Vote Implementation Status Report & Key Planning Dates: 10 mins –Information –Discussion

3 Texas Nodal Texas Nodal Market Implementation TAC - Approval to Proceed Nodal Market Participant Executive July 6, 2006

4 Texas Nodal Nodal Market Participant Executive: Accountable for Market Participant Nodal Readiness Authority* to include : Authorized to bind the entity to meet the Market Participants requirements of the agreed Nodal Program Implementation plan and schedule Authorized to secure adequate Market Participants funds and resources to fulfill the Market Participants obligations to implement the Nodal Program Authorized to share Market Participants Nodal implementation timeline and project status with ERCOT staff, the ERCOT Board and the PUCT Authorized to certify Market Participants progress on market readiness Duties* to include : Serves as the authoritative point of contact for Market Participant Nodal implementation efforts Secures the appropriate Market Participants participation at TPTF meetings Facilitates ERCOT’s verification of progress for the entities represented by the Market Participant * “or to liaise with those with the authority to commit if required by structure”

5 Texas Nodal Texas Nodal Market Implementation ERCOT Board of Directors Meeting Program status briefing - June 20,2006 TAC July 5, 2006

6 Texas Nodal Overall Status Overall program status remains red The size, complexity and risk of the program is not yet contained:  The common network model and CRR are subject to significant uncertainty  Expectations for extensive fork-lifting must be tempered by the fact of unique Texas Nodal Protocols  Budgetary implications are not firm Enlisting TPTF to expedite resolution of key issues Scenario analyses will inform options for substantial de-risking “green” software and integration ERCOT will confirm the budget – and its risk-based contingencies – on September 1 (to coincide with the go-live date determination) Low confidence in the feasibility of 1/1/09 (<5%): ERCOT and the Market Participants will confirm the go-live date by September 1 (Results delivered at the 9/13/06 BOARD meeting) Staffing is not yet fixed:  Mobilization and productivity levels are behind expectations  Resources for business requirements are the priority A comprehensive staffing model is now being deployed, utilizing ERCOT staff, short-term staff augmentation, contractors and consultants Business requirements are the short-term critical path challenge:  The scale of effort required to achieve the necessary quality and approval is not yet understood  Mobilization and productivity levels are behind expectations  NPRRs have not been impacted through the Nodal Change Control The combined NODAL team is driving to complete business requirements by October 30

7 Texas Nodal Texas Nodal Team achieved a major milestone: - selected preferred vendors (RFP’s issued April 14) Vendor selection completed on schedule:  ERCOT selected preferred vendors for the critical Nodal systems  Rigorous selection criteria have been applied, consistent with the Nodal Charter: -No “green” software – code in production will have fewer bugs, more robust, with proven integration -Consistent with ERCOT’s technology roadmap/footprint – to minimize total cost of ownership -Risk mitigation – minimized integration risks having schedule and cost implications -Proven track record of delivery – client references have been leveraged to validate predicted performance -Strength of vendor team – demonstrate adequate commitment of skills and experience, particularly project management Preferred VendorOther comments Credit Monitoring ROME Corporation CRR Nexant, Inc. Energy Solutions Division EMS AREVA T&D, Inc. (current vendor) Financial transfer None  To be developed internally Load Forecast AREVA T&D, Inc. (current vendor)  Improvements to the zonal application currently underway will be migrated to Nodal. The application will be supplemented by a forecasting service for reference/assurance Market Operations ABB, Inc. PSN/Power Systems Division Network Modeling & Telemetry Nexant, Inc. Energy Solutions Division  Assessment and improvement of model and SE – short- and long-term NMMS Siemens Power Transmission & Distribution, Inc. Energy Management & Automation Division Outage Scheduler ABB, Inc. PSN/Power Systems Division  Vendor governed by MMS selection RPP forecast AWS Truewind, LLC Note - Commercial Systems (including Billing and Settlement) to be developed internally).

8 Texas Nodal A strategy for integration has been established – requiring additional procurements The strategy – messaging through web services with specialized solutions e.g. for real time and bulk data:  Focus on information architecture – applications need common definitions to communicate  Applications are loosely coupled through web services – insulating each application from changes in other applications. Changes center on messages, not the implementation of messages  Applications need not be “aware” of the web services, transforming interfaces into messages  Adhere to widely adopted open standards (i.e. xml, soap, wsdl, uddi) to reduce the technology implementation issues  Preferred vendors can all support this strategy The strategy for integrating information addresses a number of risks:  Applications must communicate with each other, an EDW and presentation layer  Avoids the risk of point solutions without incurring the cost and effort of a major EAI implementation ERCOT will issue an RFP to specialist IT integration vendors

9 Texas Nodal Spending year to date  O&M  Internal labor $ 1452K  Equipment, tools, supplies$ 19K  Outside services$ 878K  Facilities and Utilities$ 91K  Employee expenses$ 19K  Interest and fees$ 21K  Total O&M:$2,480K  Capital  Total Capital$ 473K  Total spending through May$2,953K83%  since April

10 Texas Nodal Preliminary Key Dates 6/7/06Preferred vendors selected 7/5/06 Start joint requirements, use cases, test cases was 6/30/06 7/6/06EDW Roadmap complete 7/10/06Market Participant readiness activities list 7/30/06MIS & Integration Roadmap complete »Scenario Development and Choices 6/7-9/1 9/13/06 ERCOT Board of Directors meeting (commitment: date and dollars) 10/30/06Rqmts complete and approved * requires TPTF approval 3/31/07Market Participant interface specs complete 4/1/07EMS FAT begins 1/1/08 Market Participant SCED offers begin (EDS3) 7/1/08Market systems, Market Participant offers (EDS4)