TEXAS NODAL (ERCOT REVISIONS) Board of Directors Austin, Texas July 15, 2003

Process Overview PUCT Board of Directors Facilitation Team MOD TAC Oversight, Direction & Protocol Approval MOD Advice / Updates Board of Directors Timely Compliance with PUCT Order TAC Review of Recommendations And Protocols ERCOT EC Allocation of Resources And Funding Facilitation Team Implement Board Directives Coordination Group MINORITY POSITIONS MOD Guidance Concept Groups Concept Groups Concept Groups Concept Groups Stakeholders Policy and Technical Direction (via Representative Voting Structure)

Resources Facilitation Team Coordination Group Concept Groups Chair: Independent Facilitator Vice Chair: Jim Galvin TAC Sponsor: TAC Chair ERCOT Sponsor: VP Market Ops Concept Groups System Operations Chair: Ind Facilitator Vice Chair: Kent Saathoff Node/Zone Design Chair: Ind Facilitator Vice Chair: Bill Bojorquez Market Operations Chair: Ind Facilitator Vice Chair: Ken Ragsdale Forward Markets & Market Mitigation Chair: Ind Facilitator Vice Chair: Rich Gruber ERCOT Staff Program Management, Meeting Coordination, Communications/Coordination/Website, Market Design Documentation, Protocol Update & Development, Systems Implementation & Migration

Roles and Responsibilities ERCOT Board: - Approval of design and protocols - Approve and/or select facilitators/experts as needed - Rule on disputes and appeals - Provide guidance to MPs and ERCOT staff on financial parameters - Direct oversight of all phases

Roles and Responsibilities Technical Advisory Committee: - Co-Sponsor facilitation process with ERCOT - Review minority positions - Present briefing materials for ERCOT Board on minority positions - Advise ERCOT staff during implementation phases

Roles and Responsibilities Coordination Group: - Chair facilitation process - Propose solutions to remove “seams” - Plan/coordinate stakeholder education activities about nodal markets - Request engagement of economic experts - Oversee Concept Group activities - Oversee communications with stakeholders, e.g., website - Consolidate and present Concept Group recommendations to Board - Report monthly status to Board and TAC - Report status to PUCT as requested

Roles and Responsibilities Concept Groups: - Chair participative process - Coordinate development of work plans and schedules - Track and follow up on schedules, issues, and assignments - Establish agendas and provide notice of meetings - Organize flow of issues consideration and discussion - Gather white papers, diagrams or other materials as necessary - Coordinate development of straw dogs - Ensure and administer Phase I and II voting on all issues - Present recommendations to Coordination Group - Report weekly status to Coordination Group

Roles and Responsibilities Standing TAC subcommittees: - Primary focus on on-going market operations during Phases I and II - Provide advice as necessary during Phases I and II - Coordinate with ERCOT staff during the implementation phases

Roles and Responsibilities ERCOT Staff: - Co-Sponsor facilitation process with TAC - Continue to operate and fine tune existing market - Maintain website with agendas, straw dogs, minutes, issue resolutions, etc. - Provide advice as necessary during Phases I and II - Provide logistical and staff support - Develop cost estimates of alternatives upon request of Facilitation Team - Prepare design and protocols filings for PUCT consideration - Lead responsibility for implementation phases

Roles and Responsibilities Market Participants: - Development of straw dogs - Participate actively - Only corporate members may vote - Right to appeal minority position(s) through TAC

Roles and Responsibilities Market Oversight Division: - Actively participate in all facilitation activities - Advise PUCT on Phase I and Phase ii developments - Ensure compliance with PUCT rules and orders

Roles and Responsibilities Public Utility Commission: - Resolve appeals from the Board - Resolve disputes arising from Board decisions - Monitor progress and provide feedback - Final approval of protocols

Summary of Revised ERCOT Proposal ERCOT agrees with TAC that independent facilitator will Chair the Coordination and Concept Groups (with ERCOT as Vice Chair) ERCOT largely agrees with TAC’s proposed Roles and Responsibilities and has incorporated them in this revised proposal Exceptions not incorporated are: Direct TAC oversight of Phases I and II (Direct Board oversight) TAC presents design proposals and protocols to Board for approval (Coordination Group performs this function) All meeting attendees may vote (Only corporate members may vote)