Information Technology Update ERCOT Board of Director’s Meeting October 18, 2005

page 2 Topics  Program Management Review  Market Redesign Project Flow  Release 4 summary

page 3 Program Management Review  The issue:  Over 70 projects in 2005, more in 2006  Increased focus on project delivery  Time to review the process  Level-set on Program Management maturity  The process  KEMA engagement —Review current PMO process —Perform a Process Maturity Model assessment (PMI standards) —Provide a “best practice” model —Present a plan for moving forward  Anticipated outcome  Goal: Level 4 organization  Plan to be delivered in two weeks  Will show short term (quick hits) and long-term plan  Will aggressively implement changes

page 4 Program Management Review  Findings  General observations —Some good processes are in place —Maturity level is at 2.1 —Some holes in existing maturity levels —At a stage where opportunity exists for improvement (stable)  Maturity Assessment Five Levels 1: Initial 2: Repeatable 3: Organized 4: Managed 5: Optimized

page 5 Program Management Review  Major Overall Issues  Accountability and ownership  Communications  Tools

page 6 Program Management Review  Maturity grade level 1’s  Quality issues —Quality policies are lacking —No evidence of quality management  Risk Management —No standard risk management practices —Little contingency planning done (budget focused)

page 7 Program Management Review  Short-term tasks (Solidify existing level next 4-6 months)  Revise the PMO and Business organizational structure  Establish an effective project reporting structure  Revise the resource utilization process  Long-term tasks (to reach level three next months)  Resource management  Establish a formal quality management process  Establish formal SDLC and IT Governance integrated with PMO

page 8 Market Redesign Project Flow Protocols Business Requirements Conceptual Design BuildTest Detailed Design TAC Approval Implementation TAC Approval Issues Market Ready TAC Approval TPTF

page 9 Release 4 summary  The Project  Went live on October 5  Covered 9 PRR’s through 17 projects  More than 85 ERCOT employees were involved in all phases  ERCOT Hours 31,000  Areva Hours 23,000  60 servers were impacted  Outcomes  No impact to Frequency Control Application  Minimal impact to Real Time Balancing Market (2 intervals missed)  Anticipated market savings of $20.1 million year