April 17, Texas Nodal Market Implementation Readiness Update May 8, 2007

April 17, Discussion Outline Guiding Principles Current Status and Direction Nodal Success The Metric Map Progressive Measurement The Metric Template Metric Examples Next Steps

April 17, Metrics are designed to promote Market Readiness for 12/1/08 Goals of Readiness –Encourage early participation –Minimize delinquency –Inform market of readiness declarations Characteristics of Metrics –Simplicity –Easily reportable –Motivational tool for the market as a whole –Progressive measurement –Forwarding looking –Market Participant self reporting & ERCOT Observability

April 17, New Direction: Comprehensive Draft Inventory developed Current Status –78 Metrics have been defined to include measurement criteria –Metric Map aligned to Early Delivery System Sequence Timeline Direction –Begin preliminary measure of metrics –Review metrics with TPTF –Progressively report upon metrics status –Adopt Hall of Shame/Wall of Shame

April 17, Nodal success is dependent on three critical components The success formula is stark and unforgiving… Time12/1/08Today Nodal Control Milestones Readiness Metrics Importance to Nodal Success Progress IndicatorsPerformance Indicators …the emphasis will change over time NODAL PROJECT ERCOT STAFF ALL OF US!YOU

April 17, Metric loading is time dependant upon Early Delivery System Sequence Timeline Measured Not Measured In Measurement

April 17, Progressive measurement provides a temporal view of market readiness Not Measured – Metric not measured. –White = Metric criteria is not evaluated In Measurement – Metric is under preliminary measurement –Amber = Metric criteria is not met –Green = Metric criteria is met Measured – Metric is under measurement –Red = Metric criteria is not met –Green = Metric criteria is met

April 17, Three distinct yet aggregated views: Temporal, ERCOT, Market Participant EDS -1- EDS -2- EDS -3- EDS -4- Roll-up Method Reported to: ERCOT Directors Reported to: MP AE Roll-up Method Reported to: TPTF TAC BOD Roll-up Method

April 17, All metrics have been defined in a consistent manner

April 17, Example: First out of the box Initiation Mobilization Delivery

April 17, Example: A little later in the game

April 17, Furthering the momentum ERCOT to send Metric Inventory to TPTF for review and comment –TPTF to provide comment on initial review packet by: mm/dd/yyyy Initiate self reporting Review Roll-up method Begin Reporting Hall of Fame / Wall of Shame