Ken Shoquist VP, CIO Information Technology Board Meeting October 2003 ERCOT IT Update Ken Shoquist VP, CIO Information Technology Board Meeting October 2003

Agenda Metrics Cost Savings Efficiency Effectiveness Portal Summary

Metrics Identified opportunities for improvement Maintain reporting of key metrics IT Blue Book Developed and in use Measuring key indicators Net for September EMMS Acceptable levels Missed 3 intervals in September Transaction Processing Market volume slightly down by 7% (seasonal) Average processing time continues to decrease Settlements All-time high of 7351 in September 75% volume increase in 8 months Project Management 4 projects completed in September 23 in process Schedule slips from EMMS vendor for ERCOT and PUC projects forecasted

$ 10.57M Cost Savings Three-Year Projected Savings Vendors Savings % Market Flow Thru Consultant and Contractor Rates (Capital $) A 20.0 1,800K B 22.5 50K C 17.5 364K Communications (WAN) 46.0 265K 40% 54.0 645K Service/Support Agreements 1,000K 100% Annual Savings $4,124,000 Three-Year Projected Savings $ 10.57M

Business Value = Efficiency Requirements Training Drive down consulting costs Prepare us for future projects; i.e., Texas Nodal Progress Tools purchased to support consistent development methodology Implementing tools for enterprise project management Opportunities Weakness in transition of software from test to production Production processes continue to be a significant focus area Example: failure of portal implementation New Key Management in Place Tony Dulin, Manager System Engineering & Administration Carlos Gonzalez-Perez, Manager EMMS Production Business Value Skillfulness in avoiding wasted time and effort and The ratio of the output to the input of any system =

Effectiveness Effective EMMS Systems Effective Commercial Systems Improving network modeling with more effective use of state estimator for improved reliability Focusing on production processes Effective Commercial Systems Focus on commercial systems architecture/Reliability – Requirements underway CIG (Common Interest Group) Texas architecture group in process ISO architecture meeting held at ERCOT last week Effective Server Consolidation & Automation Consolidation – effective staffing ratio, avoid expanding costs Automation – effectively build and manage servers Virtualization – effectively utilizes server assets Effective Security Practices ERCOT CIP meetings progressing Secured infrastructure = high value

CIP Advisory Group Critical Infrastructure Protection Advisory Group Meeting held October 13 Unanimous agreement on importance of group Base charter created, modifications being made Providing advice, assistance and best practices Companies volunteering time and energy BP Energy Reliant TXU Steering Committee & Group Proposed steering committee from Generators (6), Transmission (2), QSE (4), ERCOT (1) Group membership – open to all ERCOT market entities Working task groups created from group membership Working task groups (examples) Regulation compliance Texas market standards CenterPoint LCRA ERCOT Trending Analysis & Reporting Confidentiality

Texas Market Link – Summary Background TML migration began Friday, 10/3 and completed Sunday, 10/5, as scheduled Stability issues reported on Monday morning 10/6 at 7:45 AM Efforts to research TML stability issues halted at 9:30 AM TML backed out and pre-migration portal restored Wholesale functionality (excluding Rpt Explorer) available by 10:30 AM Retail functionality (excluding Rpt Explorer) available by 6:00 PM Full functionality for Report Explorer not available until 10/9 Root Cause Migration produced issues in Production that did not exist in Test Proposed Migration Solution Team will expand load tests to identify/correct potential issues For migration, MPs will be pointed to the new TML servers at cut-over Target re-launch and potential pilot date based on Market and User input Separate incident with the Commercial Applications API Impacting MP ability to extract commercial reports programmatically Cause: Hardware failure twice Issue: Unable to regain full functionality restored without rebuilding modules Manual solution via portal in place Redeploy commercial API functionality within 2-3 weeks

Summary Good progress in renegotiation of major contracts, several key contracts remaining to rework/establish. Major focus areas: EMMS vendor product delivery schedule issues Production process and procedures Server consolidation Commercial Systems Architecture Project Delivery of new Portal