May 22, 2008 TPTF Texas Nodal Market Implementation Program Update Raj Chudgar

2 2 Texas Nodal Program UpdateMay 22, 2008 AGENDA Program Status ERCOT and Market Participant Readiness Schedule

3 3 Texas Nodal Program UpdateMay 22, 2008 Program Status: Summary Nodal Delivery status is: ERCOT Readiness status is: MP Readiness status is: Cost ScheduleScope / Quality Green AmberGreenRed Nodal Delivery EDS1EDS2EDS3EDS4 Green Red AmberRed Green Red Current performance trend is acceptable Changed due to schedule impact Primary Rating Indicators Secondary Indicators Significant recent improvement, but single metric (MP-11, Resource Asset Registration Form) driving overall score to red status Issues (EDS): EDS 2:Data for State Estimator impacting performance and accuracy (MP Registration and late arrival of the last delivery of EMS.) Network Operations Model performance issues. EDS 3:Amber due primarily to carryover issues resulting from EDS 2 (SCED and LMPs) and LFC. EDS 4: Verification of Outage Evaluation System Functionality (Areva) and System Failover

4 4 Texas Nodal Program UpdateMay 22, 2008 ERCOT Readiness ERCOT Readiness status is green due to primarily to staffing* ERCOT Executive Readiness Survey is updated monthly Received updates to Transition Plans this past week. The next update is scheduled for June Business Process model is being updated in conjunction with procedures development Procedure plans have been created for each department and are being monitored and reported in Procedures scorecard Steady progress on training Staffing plans developed; recruiting ongoing; timeframes established Staffing, Procedures and Training progress being updated on Nodal scorecard weekly Procedures and Training completion target is by August 31, 2008 ERCOT staffing levels, training, engagement, and readiness is under control * Green status: 90+ percent of positions filled by May 1; 95+ percent by June 1

5 5 Texas Nodal Program UpdateMay 22, 2008 Market Participant Readiness Engagement and Training [green ] - Vast improvement across the board - Many Market Participants were red in April, but are now green - Strong push to more actively engage the LSEs Connectivity and Telemetry [green] - Minimal changes Trials Participation [green] - MP16 - EDS4 – trials participation - anticipating red status due to RARF status Registration and Qualification [red] - MP11 - Resource Asset and Registration Form (RARF) - - Non-responsivness/inaccurate data caused the change to red status - QSE’s w/Resources whose RARFs have not been accepted will be rejected from EDS trials * Status would be green but for MP11 (metric regarding Resource Asset Registration Form) A significant outreach program is being conducted to assist Market Participants in submitting RARF data Market Participant Readiness status is red* primarily due to non-submitted or incomplete registration forms

6 6 Texas Nodal Program UpdateMay 22, 2008 Market Participant Readiness Data as of QSEs with Resources - RED American Electric Power Service Corp Barton Chapel Wind LLC City of Austin DBA Austin Energy Eagle Energy Partners I LP Formosa Utility Venture LTD FPL Energy Power Marketing Lower Colorado River Authority Luminant Generation Company LLC NRG Texas LP Reliant Energy Power Supply LLC QSEs without Resources - RED Aquila Inc DBA Aquila Networks Citadel Energy Products LLC Clearview Electric Inc Glacial Energy Inc MPs with red status under Registration and Qualification Kansas City Power and Light Company National Power Company Inc Texpo Power LP Urban Energy Source LLC

7 7 Texas Nodal Program UpdateMay 22, 2008 Schedule: Nodal Market Delay The Board was told that schedule had been negatively affected by the most recent delay in the EMS CIM importer from May 2 to June 13 An AREVA representative estimated that there was an 85% chance of successful delivery of the CIM importer by June 13, but could not guarantee it. (While not discussed in the BoD meeting, CIM importer testing also contains risk.) The Board was informed that this slippage had pushed back the 168 hour test and the full market functionality associated with December 1 Go-Live There was no new date set or discussed as to when the Nodal market would go-live Bob Kahn stated that “Schedule is important, but quality is number one” The Executive Director Nodal Program Implementation (Sullivan) noted that work was underway to evaluate the impact to both schedule and budget The Board has requested an update on both schedule and cost impact analyses at its next meeting (i.e., June 17 th ) Following the May 20 BoD meeting, ERCOT announced the nodal market will not open on Dec. 1, 2008 as planned due to software deliveries later than expected.

8 8 Texas Nodal Program UpdateMay 22, 2008 Schedule: Near-term actions The Nodal Program is working to identify cost and schedule impacts to the project TPTF input is needed to identify options and determine the most viable way forward Key assumptions underlying the new, baseline schedule will be identified and highlighted. Different scenarios based on different assumptions (e.g., delivery date of CIM importer, length of market trials, etc.) will be evaluated as time permits Other alternative market deployment options (e.g., real-time first, then day-ahead at a later date) require TPTF input and discussion