1 1 Texas Nodal Program UpdateMarch 21, 2008 Nodal SAS70 Audit – Readiness Approach & Timeline March ‘08June ‘08 Sept ‘08 Dec ‘08 Jan ‘09 Define Readiness Metric (E5) Update SAS70 Control Objectives Document Pre-Audit Assessment & Recommendations  Nodal project team defines metric and obtains TPTF approval  Nodal project team reports periodic progress to TPTF and ERCOT Steering Committee  Each department updates their respective controls sections  Nodal project team facilitates and tracks progress  ERCOT Internal Audit develops approach and performs analysis  Internal Audit reports progress to Steering Committee and Nodal project team  Nodal project team facilitates and tracks progress  Internal Audit develops final recommendation packet in November 168 Hour Test CRR Auction Nov ‘08 This is support material for the E5 SAS70 metric conversation

2 2 Texas Nodal Program UpdateMarch 21, 2008 Proposed IBM reviews of Market Readiness Background:  At the February Board meeting it was proposed that the independent Nodal review efforts by IBM be redirected towards Market Readiness  IBM will support ERCOT in independent evaluations of readiness of both Market Participants and ERCOT inc  The plan is to conduct both sets of reviews in the April-May timeframe such that beneficial recommendations can be implemented in advance of the 168 hour test and, ultimately, Go-Live Proposed approach:  Both reviews will follow a similar pattern involving reviews of the latest metrics and planning documentation (including the ERCOT Nodal Transition Plan, handbooks, etc) and interviews with key Nodal staff as well as their counterparts in the ERCOT organization or selected Market Participants  The evaluation of Market Participant readiness will involve a sampling of Market Participants and visits with their Accountable Executives and project teams to evaluate status and outlook  It is proposed that ERCOT select 3 of the largest Market Participants from the following segments:  Cooperatives  Independent Generator  Independent Power Marketers  Independent Retail Electric Providers  Investor-Owned Utilities  Municipals  We believe these reviews are consistent with the ERCOT Nodal Transition Plan - section 3 (2): Each Market Participant has the responsibility to carry out its functions in the Transition Plan and to provide ERCOT with timely information about the status of its efforts. We seek TPTF’s guidance in finalizing our proposal and facilitating participation in the reviews

March 17, Texas Nodal Project Artifacts - Schedule Key Projects Reflect Approval obtained; reflects changes since last update; Dates, reflect plan of approval obtained NMMSMMSEMSOSCRRREGS&BCMMDISPUTESFTMISEDWEDSEIP Business Requirements B0 B1&B2 Planned July/08 Multiple documents B0 B1&B2 Multiple documents B0 B1&B2 B0, B1&B2 B0 B1&B2 Multiple documents B0 (Business Specs) - Conceptual Systems Designs B0 B1&B2 Planned July/08 Multiple documents B0 B1&B2 Multiple documents B0 B1&B2 B0, B1&B2 Multiple documents B0 B1&B2 Planned Mar/08 B0 B1&B2 Planned Mar/08 B0, B1&B2 Planned Mar/08 B0, B1&B2 B0, 1 & 2 Plan Jan/08 EDS 1, 2, 3, 4 Approach External Interface Specification Information Strategy Detail Design B0 B1&B2 Planned July/08 Multiple documents, in releases B0, B1&B2 Planned Mar/08 Multiple documents, in releases B0, B1&B2 Planned EMS 1-5 Apr/08 B0, B1&B2 B0, B1, B2 (Build1) (Build 2, 3) Planned Mar/08 B0 Planned Mar/08 B1&B2 Planned Mar/08 B0, B1&B2 Planned Mar/08 B0, B1&B2 EDW1A = Mar/08 EDW 1B&C Apr/08 EDW 1D = Aug/08 EDW2 = Jun/08 EDW3 = Aug/08 (Technical Specs) Multiple documents 20 of 51 Complete 16 of 51 Not started 15 of 51 in progress Final Mar/08 Use Cases B0 Multiple documents B0 B1&B2 Planned April/08 Multiple documents B0, B1&B2 Planned Mar/08 B0, B1&B2 B0 B1&B2 Planned Mar/08 B0 B1&B2 Planned Mar/08 Multiple documents, in releases B0, B1&B2 Planned Mar/08 B0, B1&B2 Planned Mar/08 B0 B1, B2 (minor changes) Planned Mar/08 B0, B1&B2 N/A Multiple documents 20 of 51 Complete 16 of 51 Not started 15 of 51 in progress Final Mar/08 Test Cases B0 B1&B2 Planned July/08 Multiple documents B0, B1&B2 Thru MMS 3 Feb/08 MMS 4 March 08 Multiple documents B0, B1&B2 EMS 1-3 Feb/08 EMS 4, 5 Mar/08 B0, B1&B2 B0 B1&B2 B0 B1&B2 Planned Mar/08 B0 B1&B2 Planned Mar/08 In releases B0 Planned Mar/08 B1&B2 (no changes from B0) B0, B1&B2 Planned Mar/08 B0 B1, B2 (minor changes) Planned Mar/08 B0, B1&B2 EDW1A = Mar/08 EDW 1B&C Apr/08 EDW 1D = Aug/08 EDW2 = Jun/08 EDW3 = Aug/08 Multiple documents 8 of 46 Complete 37 of 46 Not started 2 of 46 in progress Final April/08 Test Scripts B0 B1&B2 Planned July/08 Multiple documents, in releases B0, B1&B2 Planned Mar/08 Multiple documents B0, B1&B2 Planned EMS 1- 3 EMS4, 5 Mar/08 B0, B1&B2 Planned MAR/08 B0 B1&B2 B0, B1&B2 Planned Mar/08 B0 Planned Mar/08 B1&B2 Planned Mar/08 In releases B0 (R1 ), B0 (R2-6) Planned to Mar/08 B1&B2 (no changes from B0) B0, B1&B2 Planned Mar/08 B0 (In Review) B1, B2 Planned Mar/08 B0 B1/B2 Planned Jan/08 EDW1A = Mar/08 EDW 1B&C Apr/08 EDW 1D = Aug/08 EDW2 = Jun/08 EDW3 = Aug/08 Multiple documents 8 of 46 Complete 37 of 46 Not started 2 of 46 in progress Final April/08 Test Plans FAT B1&B2 Planned July/08 FAT Planned B0 Del1 “NA” B0 Del2 Jan/08 B0 Del3 Feb/08 B0 Del4 Apr/08 FAT Planned EMS1 – Dec/07 EMS2A,B,C – Dec/07 EMS3 – Feb/08 EMS4, 5 – Mar/08 FAT Planned Dec/07 FAT In releases FAT TBD FAT Planned Mar/08 FAT EDW1 = Mar/08 EDW 1B&C Apr/08 EDW 1D = Aug/08 EDW2 = Jun/08 EDW3 = Aug/08 ICCP Handbook SCED Handbook LFC Handbook CRR handbook S&B Handbook Planned 01/30/08 DAM/RUC/SASM Handbook OS Handbook Planned Feb Hour test Handbook Planned 06/10/08 Nodal Cut-Over Handbook Planned 08/05/08 Zonal Wind-down Handbook Planned 10/03/08 Multiple documents 8 of 46 Complete 37 of 46 Not started 2 of 46 in progress Final April/08 * Note the total has increased because counting all iterations, not just final deliverables

4 4 Texas Nodal Program UpdateMarch 21, 2008 Program Artifacts* – Detailed status by project New QA process in place to track project artifacts to completion ArtifactThis weekTrendQA ReviewCommentary NMMSG  3/5/089/12 Artifacts approved MMSA  3/24/087/13 Artifacts approved EMSR  3/18/088/19 Artifacts approved OSG  3/25/086/7 Artifacts approved CRRG=3/17/089/9 Artifacts approved REGA=3/18/087/12 Artifacts approved S&BA=3/18/085/12 Artifacts approved CMMA=4/1/085/10 Artifacts approved DisputesR=3/18/081/7 Artifacts approved FTA=3/18/085/10 Artifacts approved MISG=4/18/088/9 Artifacts approved EDWR=3/13/081/15 Artifacts approved EDSA=3/25/086/11 Artifacts approved EIPA=3/18/087/17 Artifacts approved * Artifacts include but not limited to Conceptual System Design, Detail Design, Test Plan, Test Case, Test Script, Migration Control Document and System Monitoring Document.