1 Update from ERCOT Market Services to the Board of Directors October 15, 2002

2 Retail Market Update Topics –ERCOT’s Master Project Plan –Move-In/Move-Out Issues/Initiatives –GISB 1.4 Update –Data Transparency Project Update –Quick Recovery Team Update –New Power Transfer Update –Market Synchronization Activities –Consumption Data Loading Reports –Lodestar Data Loading Improvements –Resettlement Update

3 Master Project Plan Update

4 Master Project Plan 2003 Proposed Projects –Project worksheet established with list of all known requested projects Status/Updates Targeted outcomes Resources (Funding & Headcount) required identified where known –Internal reviews of projects with ERCOT steering committee completed –PRS completed prioritization of projects originated by Market Participants on August 28 th –TAC approved list of priorities on September 5 th –List delivered to ERCOT BOD targeted for approval at October meeting –3 New projects requested since September 5 th

5 Master Project Plan 2002 Planned Projects –51 Projects in progress –22 Projects completed between August 1 st and October 14 th 2002 –5 Projects continuing on into 2003 for completion –5 Projects removed from the 2002 plan (require reprioritization for 2003) 2002 Projects continuing into 2003 for completion include: –PR Internal Map Testing and Verification –PR Change Deployment Instructions_PRR281 –PR Simultaneous Procurement of Ancillary Services –PR Hardening Initiatives –PR IDR/NIDR Gap Corrections

6 Master Project Plan 2002 Projects removed from active status (requires reprioritization to proceed) –PR Interzonal Congestion Management: Interim fix completed; any further effort will go back through the prioritization process. –PR Two Settlement System: Manual fix announced to market and Board. If automated solution desired a new project request will be submitted through the prioritization process. –PR Define OOME as Instructed Deviation: PRR282 withdrawn and project canceled –PIP106 Direct Load Control: Deleted from 2002 Active list and has been prioritized for 2003 and included in Consolidated Prioritization List. –PR Ratcheting of OOME: Project withdrawn

7 Master Project Plan Next Steps… –Conduct Project Management Office Procedures Training from October 30 th through November 13 th 2002 –Remaining ERCOT resources aligned and scheduled against Q projects by December 6 th 2002 –Monthly project prioritization adjustments and recommendations: ERCOT Executive Steering Committee Market committees and subcommittees ERCOT IT and Business Teams –Finalize and distribute documentation on the projects request/prioritization process

8 Move-in and Move-out Solutions Update

9 Market Participant Meeting

10 MP Visits Purpose –‘Root out’ all sources of pain associated with Move-Ins –Get each MPs opinion of worst problems –Discuss possible solutions –Find out if identified problems are common among all types of market participants –Discuss concepts with consumer advocacy group –Verify that all participants are dedicated to solving the problems and aware of the possible systemic impacts –Discuss deployment of workarounds (Safety Net, Same CR Move-Ins, etc.)

11 MP Visits Audience –TDSPs (5 - CenterPoint, AEP, Oncor, Entergy, TNMP) –AREPs (4 - Reliant Retail, AEP, TXU E, Entergy) –CREPs (6 - Coral, GEXA, Republic, TCE, Constellation New Energy, Green Mountain) –Vendors (2 - Exolink, EC Power) –Consumer Protection (1 - Public Utility Council)

12 MP Visits Results –Identified several issues that were not previously identified –Confirmed several common problems across many Market Participants –Discussed concepts for solving identified issues –Developed an average ‘pain’ level and frequency for major issues based on input from each MP –Discussed several concepts with consumer advocacy group to verify compliance with Customer Protection –Revealed inconsistencies and improper executions of workarounds

13 MIMO Workshop

14 MIMO Workshops Methods –Three type of issues; Existing Systems, Current Execution, & Market Gaps –Two measurements for identifying order of discussion for issues pain level quantity of ESI Ids affected. –The issues that are being pursued are as follows: 1.Those that rank high on the pain level and quantity affected and are expected to be relatively easy to repair 2.Those that either are easy to fix but don’t rank high on the measurements or rank high on the measurements and are difficult to fix. 3.Those that are most likely to remain as workarounds for a longer period of time. –They rank low on pain and quantity, but appear difficult to fix –Three time frames for solutions are being applied; Short-Term (solutions that can be implemented immediately or prior to next April) Mid-Term (solutions that can be implemented next year after April) Long-Term (solutions that can be implemented after 1/1/2004)

15 MIMO Workshop Level of Pain Number of ESI ID’s affected Issue 1 Issue 6 Issue 3 Issue 4 Issue 5 Issue 6 Issue 2 Issue 7 Issue 8 Issue 9 Low High

16 MIMO Workshop Level of Pain Number of ESI ID’s affected Issue 1 Issue 6 Issue 3 Issue 4 Issue 5 Issue 6 Issue 2 Issue 7 Issue 8 Issue 9 Low High Low - Net Effect of Issue - High

17 MIMO Workshop Cost of Addressing Net Effect of Issue on Market Issue 1 Issue 6 Issue 3 Issue 4 Issue 5 Issue 6 Issue 2 Issue 7 Issue 8 Issue 9 Low High

18 MIMO Workshop Cost of Addressing Net Effect of Issue on Market Issue 1 Issue 6 Issue 3 Issue 4 Issue 5 Issue 6 Issue 2 Issue 7 Issue 8 Issue 9 Low High Higher Impact & Lower Cost

19 MIMO Workshop Results –32 Concepts were discussed 7 Concepts were dismissed for various reasons 1 Concept was determined as solved in Version Concepts were discussed –4 Concepts were tabled until additional information can be obtained –19 Concepts were discussed at length and are being considered for recommendation to RMS »10 Short-Term »9 Mid-Term 1 Concept was not discussed (lack of time)

20 Next Steps MIMO Taskforce meetings –October 23, & 24 in Austin –October 29, & 30 in Dallas (tentative) Recommendations to RMS at November RMS meeting –Potentially Concepts Release of implementation timelines Development of Texas Set Change Controls, Protocol Revision Requests, and RFP(s) as needed Deployment of Solutions Re-Evaluation of Move-In/Move-Out processes

21 Timeline RMS establishes Task Force Kickoff Meeting – assignments given for MP transaction root cause analysis Complete root cause analysis and comprehensive list of business scenarios TBDDevelop detailed requirements document for RFP -RMS Approves MIMO requirements document(s) -Release RFP(s) to vendors -RFP Responses due from vendors -Summarize vendor responses for Task Force review -Recommendations to EOTF on vendor “Short List” -Vendor presentations to Task Forces -EOTF recommendation to ERCOT Board -Begin contract negotiations End 1Q03Award contract Move-in/Move-out Long-term Solution Status

22 GISB 1.4 Update

23 GISB 1.4 Update RMS agreed at August meeting to move forward with implementing GISB 1.4 at ERCOT Internal testing and implementation of a GISB 1.4 interface is underway at ERCOT, –Production Sign-off scheduled for 10/25 All production components are in place as of 10/11 –Acceptance Testing and Market Participant Testing – 10/15-24 TDTWG is surveying market participants to finalize migration readiness dates –Preliminary migration schedule reviewed at TDTWG –Market Participant migration will begin week of –Goal is to complete migration by April 1, 2003

24 ERCOT Data Transparency (ETS)

25 Data Transparency Project ETS Phase I Progress –Development and Production Database Servers and Application Servers are configured and installed on the network –Report Development 99% complete –Production testing is underway –Database transaction loading to start 10/21 –User Documentation is being finalized –Backup and restart procedures coordinated –Implementation Schedule is being revised to ensure adequate testing Estimated to move three weeks to last week in November

26 Quick Recovery Team Update

27 ESI Ids Reported to QRE (as of October 15, 2002) Current StatusQuantity New461 In Analysis6766 In Progress50140 Resolved79638 Total EntityQuantity TDSP34271 QRE Team7049 CR8820 Total50140 Point of FailureQuantity Cause Not Reported6990 CR37000 ERCOT EAI3979 ERCOT FTP694 ERCOT Manual Process (814_08) 3428 ERCOT PaperFree7359 ERCOT Siebel2129 ERCOT TCH6427 TDSP11632 Total79638

28 New Power Transition Status

29 New Power Transition Status as of 10/11/2002 Two ESI Ids remain to be completed “Scheduled” at ERCOT Waiting for Scheduled meter read date 9/24/2002 (backdated)

30 Final New Power Transition Numbers 42,690 ESI IDs TXU Energy Services 37,175 ESI IDsReliant Retail Services 2,022 ESI IDs 3 rd Party Competitive Retailers 260 ESI IDsNew Power Submitted Move-Outs 82,147 ESI IdsTotal Transitioned

31 Market Synchronization Activities

32 Objective –Address market issues resulting in an out of sync “Rep of Record” between ERCOT, TDSP, and CR systems for all ESI IDs resulting from market startup/processing issues as well as subsequent workarounds Completed –ERCOT identified “Perfect Sync” and “1 Day Perfect” – sent lists to MPs –ERCOT identified out-of-sync categories at Sept 10 th design meeting –Task Force identified additional ESI IDs considered “In Sync” – sent lists to MPs –Task Force prioritized 8 categories based upon potential customer impact – sent lists to MPs In Progress –TDSPs and CRs to complete analysis of priority 1-4 files and respond to ERCOT by October 18 th (priority 5-6 response date TBD) –Weekly conference calls scheduled on Tuesdays through October –“How to” make repairs face-to-face meeting scheduled for October 25 th. Market Synchronization Retailer Synchronization Project

33 Market Synchronization Retailer Synchronization Project Considered In Sync 5,399,860 Under Analysis 739,039 Non-ERCOT area Removed from Analysis 945,000 ESI IDs Considered In Sync 5,279,063 Under Analysis 859,836 Non-ERCOT area Removed from Analysis 945,000 ESI IDs September 26, 2002 Report October 16, 2002 Report

34 Next Steps –October 15 th, 22 nd, 29 th  Follow-up Conference Calls  Define items for immediate “fix” and report on progress  Define issues to raise to RMS –October 25 th  Face-to-face meeting to finalize decision on “backdating” fixes –November 13 th  Present any disputed scenarios to RMS –December 5 th  Escalate issues to TAC (if required) Market Synchronization Retailer Synchronization (continued)

35 Market Synchronization “TDSP as LSE” Clean-up Objective –Ensure that all ESI ID are converted from the “TDSP as LSE” by the time True- Up Settlement of February 2002 begins (December 7, 2002) Clean-up Plan –ERCOT to send TDSPs list of ESI ID affiliated with “TDSP as LSE” any time after Feb 01, 2002 –TDSPs to provide correct effective date concurrent with usage record prior to February 01, 2002 or identify de-energized/inactive ESI IDs –ERCOT to make correction based upon TDSP response (complete pending orders, establish relationship, etc…) –Weekly conference calls with TDSPs (already takes place with ONCOR and CenterPoint) In Progress –ERCOT to send revised lists to TDSPs by –TDSPs to respond with new effective dates or status data by November 01, 2002

36 Market Synchronization – Non Price to Beat Objective –Make necessary corrections to ensure that >1MW Customers were switched on the correct date in January 2002 Completed Items –Per RMS direction, ERCOT sent lists to each MP for reconciliation: Full list of ESI ID in the >1MW project was confirmed Still to be fixed list (subset of the full list) was also confirmed –1,133 ESI Ids (>1 MW) identified by CRs (meeting the April 30 deadline) Number increase attributed to reconciliation of lists with Market Participants –1001 (88%) ESI IDs are corrected – 74 ( 7%) ESI IDs were agreed not to fix by TDSP and CR In Progress –58 (5%) ESI IDs remaining to be fixed 11 – CR of RECORD needs to be fixed 42 – Date of when CR became CR of Record needs to be fixed 5 – where CR and TDSP are not in agreement – CR will have to escalate

37 Market Synchronization – Non Price to Beat Next Steps –ERCOT to continue to confirm changes in Siebel and Lodestar –Final analysis in progress at ERCOT –ERCOT will provide suggested next steps to the submitting CR and TDSP –Conference calls being held with TDSP to determine next steps for those ESI IDs that still need to be fixed (ERCOT metering team included on calls) –Affected CR to determine next steps for ESI IDs where no agreement is reached

38 Consumption Data Loading Reports

39 IDR Data Loaded into Lodestar September 24 th Report 95% or better expected 91%

40 IDR Data Loaded into Lodestar October 11 th Report 95% or better expected 93%

41 IDR Data Status Report 99% Data Available per MRE

42 Non-IDR Data Status Report October 14, 2002

43 Lodestar IDR Data Loading Improvement Recommendations by TDSPs

44 Objective –Implement process improvements which alleviate problems loading IDR data into ERCOT’s Lodestar system Completed Items –ERCOT and MPs met August 15 th to define scope of 9 items –Conference call held on August 26 th to refine scope and follow-up –6 items are complete (see matrix on next page) –TX SET reviewed 2 EDI related recommendations on Sept 16 th (see matrix) In Progress –2 items defined for immediate action (both are currently in test) –4 items defined as long term fixes (project request being drafted) Next Steps –ERCOT to define scope of “additional Lodestar Data Loading Improvements” project IDR Data Loading Recommendations by TDSPs

45 Resettlement Update

46 Resettlement of True-up Status Update Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec December 7, 2002 True-Up Settlement of February 01, 2002 The date all ESI IDs should no longer be with the “TDSP as LSE”. November 1, 2002 True-Up Settlement of November 20, 2001 The date we move from the ERCOT Board resolution to the Protocols IDR Data Threshold April 1, 2003 Date we expect to be back to six month after the trade day True-Up Settlements November 14, 2002 True-Up Settlement of December 17, 2001 Drop dead date for correction of Non-PTB ESID Backdating October 16, re-settlements performed to date (Through Oct 18, 2001)