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

page 2 Agenda  Metrics  Project Updates  ERCOT Participation with other ISO’s  Texas Electric Market (TEM) Forum Update

September 2003 page 3 IT Highlights  Production – Good progress made in stabilizing EMMS production performance with NO intervals missed in month of August compared to 27 in July.  Development – 4 projects delivered in August. Continued development effort with ERCOT Business on Commercial Systems Architecture and product support issues. This will continue to put pressure on business staffing.  Texas Electric Market IT Forum –Over 200 Participants attended from 45 companies. ERCOT will form 2 groups for common interest items in IT and Security.

September 2003 page 4 EMMS 2003 Mission Critical Unplanned EMMS Outages Ceiling Target EMS and MUI 45 minutes (99.9%) Outage Minutes Intervals Missed Ceiling Target 3 RTB Intervals System Reliability Results Initiatives  Negotiate contract with vendors for fourth level response with vendor.  New EMMS production support manager joining September 15.  Continue to mature software management processes.  Extended automated monitoring of EMMS servers  Senior EMMS consultant added to support team for facilitation of cross training.

September 2003 page 5 Transaction Processing Processing Time (hrs) Transaction Volume (MM) 2003 Retail Transaction Processing Average 814 transaction processing times exclude maintenance (type 20). Initiatives  Capacity Planning for software/hardware footprint that supports target utilization and improves system availability and reliability.  Extend application monitoring tools, 4Q, Results  Recent moves of software components to alleviate resource contention have yielded productivity gains. Challenges  Current server support from vendor being phased out in 3 years. Server performance will mandate a change next year.

September 2003 page 6 Reporting Performance Initiatives  Reengineering of settlements transport tool to ensure posting of settlements at the Portal within Protocol Report Posting Settlements Results  Application tuning during the first part of August resulted in processing improvements for an 18 point gain over last month in the number of settlement statements posting within Protocol. Challenges  Continued high level of settlement volume

September 2003 page 7 IT Project Performance IT Project Updates Projects Deployed in August 2003  36 complete,  21 in progress, and  18 in planning  Move In Move Out – Mid term enhancements  QSE Mismatched Schedules  Smoothing Algorithm – PRR 350  Outage Scheduler Phase II Monthly ActivityProject Performance Year-to-Date Priority Projects

September 2003 page 8 Development Performance Upcoming Deployments at ERCOT  QSE Market Testing (Dec 2003) Increase availability Increase functionality  Portal Replacement (Oct 2003)  Portfolio Mgmt Software (Nov 2003)  Document Management (TBD)  Lawson G/L Upgrade (Dec 2003)  Enterprise Data Warehouse (Dec-PhaseI)  BUL / LAAR (Moved to Oct from Sept)  Load Research Sampling (TBD)  Commercial Dev/Test Systems (Nov 2003)  Texas Set 1.6 (Dec 2003)  MIMO Long-term Market (Aug 2004) Market Coordination Team formed Requirements being finalized Energy Management Systems Enterprise Operations Settlement & Billing Transaction Processing

September 2003 page 9 Technical Architecture Commercial Applications Systems Upgrade Project encompasses the entire end-to-end functionality of commercial systems. Operation Monitoring Data Collection / Reporting Auditing Customers, Communication, Disputes, and Resolution Settlements And Billing Billing Determinants (Data Aggregation) Transaction Services

September 2003 page 10 Why Now? Timing is never going to be perfect, but time is not likely to improve the condition: Ongoing cost of support and maintenance is going up. Severity of issues will increase. Cost of reliability and performance will impact the ability to respond to business and market requests. Without an “Agile” platform we will not be in the position to take advantage of opportunities. Convergence of upgrade cycles. Need for documentation on as is systems and processes necessary for SAS70 Type II. High availability for commercial systems arena is becoming a need to control costs and provide a higher degree of performance.

September 2003 page 11 Project Sponsors Executive Sponsors  Ray Guliani  Ken Shoquist  Steve Wallace Management Team  Betty Day  James Cohea  Ken Ragsdale  Ted Hailu  Karen Bergman  Dale Goodman  Calvin Opheim  Scott Middleton  Mohan Yeggoni  Dave Johnson  Chris Douglas  David Farley Director Sponsors  Jim Galvin  Richard Gruber  Kevin Judice  Rob Connell Project Management  David Troxtell  Paul Hutchison  Dave Odle  Glen Wingerd

September 2003 page 12 ISO/RTO Information Technology Committee  Promoting Communications  Providing Mutual Assistance  Technology Standardization  Share Expertise and Advice Purpose  Security Working Group  Meta Data Working Group  Peer Review (Base lining)  ITC Participation in ERCOT’s IT TEM Forum on September 15th Current Activities  Architecture Working Group  Vendor Synergies Opportunities

September 2003 page 13 ISO/RTO Information Technology Committee (ITC)  Data Initiative (CIM extensions)  Data Transmission  Market User Interface (API) Standardization Initiatives to Address “seams” issues  ISO Architect’s Meeting on October 14, 2003  Next Quarterly Meeting Scheduled for December Upcoming Events

September 2003 page 14  Over 200 Participants Attended  45 Unique Companies, 4 ISO’s, PUC  Homeland Security, FBI, and Secret Service  On-line, IT survey conducted of IT market personnel  Forum evaluations completed IT TEM Forum First IT TEM Forum a SUCCESS! Survey Says: 7 % Did NOT meet expectations 67 % Did Meet Expectations 26 % Exceeded Expectations

September 2003 page 15 Two New Groups in Formation Excellent support at Conference for:  ERCOT Critical Infrastructure Protection Group  Collaborative effort to bring together Market Participants to discuss solutions for CYBER and PHYSICAL Security.  ERCOT IT Common Interest Group  Collaborative effort on IT projects, direction, vendor synergies, and education on best practices.

September 2003 page 16 Critical Infrastructure Protection (CIP) Purpose: A collaborative effort to bring together owners and operators of critical physical and cyber assets for securing the Texas electric sector.  Channel security information from Local Authorities Regional Authorities Federal Authorities  Discuss security solutions  Share information  Communicate and clarify NERC security standards  Assist in security standards implementation

September 2003 page 17 CIP Group Communication Distribution:  All QSEs (65)  All Transmission Service Providers (17)  PGCs with total generation over 800MW (30) Others can participate by subscribing at Establishment of the group is vital in helping ALL stakeholders in the electric power industry respond to the threat of terrorist attacks and facilitate major outage recovery. Action:  Send informative letter discussing group role on 9/12/03  Collect Texas participant contact information  Initiate first group meeting in central location

September 2003 page 18 Testing the Myths  ERCOT must have EDI to function; it is the most cost effective method for the operation of the market.  If ERCOT is secure then the market is secure.  All the back office systems of market participants are competitive differentiators and should never be centralized within ERCOT.

September 2003 page 19 Summary  Production Management: Good progress in EMMS production; much more progress necessary.  Development  BUL/LAAR project slips by one month to ensure adequate testing.  Work continues with ERCOT Business on Commercial Systems Architecture/Product future supportability issues.  TEM Forum: Good Participation by Market. Two new groups will be formed: Security and IT