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

page 2 IT Metrics Framework To provide a consistent structure to report on ERCOT’s Information Technology environment through the use of a fact-based, problem- solving framework. To improve the management of IT. Defining boundaries and examining metrics enables us to rapidly understand issues, form hypotheses and deploy solutions. Using this structure will strengthen our thinking and keep our eye on the goal of providing solutions and solving problems as they arise. The framework consists of three key elements. 1.Collection and presentation of the metrics with meaningful context. 2.Analysis of results and challenges. 3.Implementing appropriate action items.

July 2003 page 3 Framework How do we measure the value-add of IT to ERCOT? 1.System Reliability  We keep the business running. 2.System Security  We protect ERCOT’s information assets. 3.Information Timeliness and Accuracy  We ensure transactions are timely and accurately stored and processed. 4.Information Reporting  We ensure that reporting is completed on a timely basis. 5.Fiduciary  We are responsible for IT infrastructure investment and maintenance. 6.System Improvements  We ensure that new systems and modifications requested by the business and regulatory agencies are developed and implemented on time and within budget. 7.Customer Service  We provide technical support for our internal and external customers. 8.Industry Leadership

July 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 and Challenges Action Items  Installed Oracle 9i in late May to correct chronic Alstom MMS problem that was causing high RTB Intervals missed in April and May.  The Oracle 9i upgrade caused two extended duration (75+ minutes) EMS outages in June.  A file corruption caused the MUI outage on 6/03 from 1:00a to 2:00a.  Reviewing Problem Escalation procedures to help minimize outage duration.  Reviewing Testing and Change Management processes to minimize events due to change.

July 2003 page 5 Cyber Security 2003 Cyber Security Status Security CategoryDescription Internet Threats Potentially malicious inbound traffic (Internet to ERCOT Network). This dangerous traffic is stopped by intrusion prevention technology at the perimeter. Virus Infections These are the number of systems that became infected with identifiable viruses or worms. Definitions Results and Challenges Action Items  Lack of adequate security tools.  Network environment not hardened to industry best practices.  Recently hardened WEB servers to adequate thresholds. Virus Infections Internet Threats  Hardening Network / Server environments following industry best practices and NERC Guidelines.  Re-engineering security processes in accordance to ISO standards.  Expanding Security Team to best address ongoing security challenges.

July 2003 page 6 Transaction Processing Processing Time (hrs) Transaction Volume (MM) 2003 Retail Transaction Processing Average 814 transaction processing times exclude maintenance (type 20). Results and Challenges Action Items  Reaching the next level in processing efficiency will require changes to the application architecture and technical infrastructure.  Lack of high availability continues to be a challenge.  Project to reengineer the retail transaction processing. Software Architecture Infrastructure Engineering Fail-over Capabilities

July 2003 page 7 Reporting Performance Results and Challenges Action Items  None 2003 Report Posting Data Aggregation and Load Profiling Days Missed  Data Aggregation and Load Profiling is consistently posted to the WEB portal on time. Data Aggregation Reports Transmission Loss Factor (TLF)6:00am daily Distribution Loss Factor (DLF)6:00am daily Unaccounted for Energy (UFE)Daily Proxy Day ReportDaily Load Profiling Reports Forecasting Profiles 10:00am daily Backcasting Profiles 10:00am daily Definitions

July 2003 page 8 Reporting Performance Results and Challenges Action Items  Infrastructure improvements being made in late July to reduce batch processing time.  Process improvements will include parallel processing and elimination of duplicate handling of settlements and invoices Report Posting Settlements  May/June Volume increase represents BOD mandated resettlements of 2002 that began in mid-May and will continue through year-end.  The 2002 resettlements stretched our capacity by accounting for an 80% increase in processing (10 hrs/day to 18 hrs/day).  Settlements not posted on time due to issues with increased volume, batch timing, and infrastructure (hardware and software).

July 2003 page 9 IT Project Performance IT Project Updates Results and Challenges Action Items  For the 50 Priority-1 Projects: 22Completed during Q1 and Q2 7 WIP 31 Planning – Will move into WIP during Q3  Transitioning to formal Project Management methodology  Continued training and consulting for improved PM process. Monthly ActivityProject Performance

July 2003 page 10 Development Performance Major Upcoming Deployments  SCADA Alarm System (Jul 2003)  QSE Testing (TBD) Market SCR being approved Increase availability Increase functionality  Portal Replacement (Oct 2003)  Portfolio Mgmt Software (Nov 2003)  Document Management (TBD)  Enterprise Data Warehouse (TBD)  BUL / LAAR (Aug 2003)  Load Research Sampling (TBD)  Mismatched QSE Schedules (Aug 2003)  MIMO Long Term Market (Aug 2004) Market Coordination Team formed Requirements being finalized Energy Management Systems Enterprise Operations Settlement & Billing Transaction Processing

July 2003 page 11 Key Focus Items for IT  Production Processes, production staffing/skills (Uranga) EMMS  Testing Environments (Grendel) Market Participants Internal ERCOT  Architecture Evolution (Judice) Excelergy/Lodestar/Other direction Upgrade paths and vendor support of existing products Degree of change for non-project related items is too high and a symptom of a bigger issue  Data Management (Judice/Uranga/Grendel)  Succession Planning – Completing management level in August

July 2003 page 12 Industry Leadership Texas Electric Market IT Forum September 15, 2003  Complete Invitations mailed Registration website launched Website includes agenda and survey Began receiving registration responses the week of July 7 th  Planned Second invitation and reminder Follow-up info to registrants CD-ROM for all participants, including forum presentations