June 12 th, 2007 PRS/TPTF Joint Meeting Baseline 1 Update (Slide 9 Corrected) Jeyant Tamby

2 2 Texas Nodal Program UpdateJune The Nodal Protocols continue to evolve since the TNT process to establish them… Initial Nodal Protocols Zonal Protocols April 2004 PUCT approved Nodal Protocols Baseline 0 May 2006 Nodal Protocols Baseline 1 March 2007 Zonal PRRs April 2005 Source #1 Synchronization (by ERCOT & TPTF) Source #4 Value Engineering ERCOT / TPTF / Vendor Source #5 Consistency, Integration & Design Authority (IDA) White Papers Source #6 Market Participant Requirements Source #2 Clarifications by ERCOT / TPTF Sept Source #3 Requirements Development Q Progression of Nodal Protocols Sources of change (includes 6 change items combining sources 1 & 2) 7 Items 6 Items 28 Items 2 Items 7 Items 4 Items

3 3 Texas Nodal Program UpdateJune Based on the data, these 6 sources in Baseline 1 have unique qualitative attributes and are being analyzed for cost and schedule impacts Change types and estimated number in each type Very few change items have resulted due to “New Functionality” Clarifications, synchronizations & revisions to the existing Protocols Consistency & efficient operational changes NPRRs due to “synchronization of Zonal Protocols to Nodal Protocols. NPRRs created due to “ERCOT Staff Clarifications” (before vendor involvement) ERCOT or MP NPRRs with terminology “cleanup, correct, clarify, describes, rewording, or requires” (with vendor involvement) Synchronization #1 ERCOT/MP Staff Clarifications #2 ERCOT/MP/Vendor Requirements Development #3 “Value Engineering” #4 IDA White Papers #5 Market Participant Requirements #6 ERCOT or MP NPRRs or Change Requests due to “value engineering” ERCOT provided IDA whitepapers to ensure consistency of functionality across systems NPRRs requested by MPs #1 #2 #3 #4 #5 #6 #1/2 Source 5 7 items Source 6 4 items Source 4 2 items Source 3 28 items Source 1 7 items Source 2 6 items Source 1/2 6 items

4 4 Texas Nodal Program UpdateJune Project 12 Project 11 Project 10 Project 9 Project 7 Project 8 Project 6 Project 5 Project 4 Project 3 Project 2 Project 1 For Scope Change Control, it is imperative to synchronize projects to a common baseline and maintain synchronization… Nodal Budget $263m Synchronization Deficit To maintain overall system integrity – for Nodal to work as a whole – each project has to be synchronized on an explicit, current, common baseline Current Baseline ScopePending Baseline Baseline 2 TBDGo-Live Baseline (TBD) NPRR “Backlog” Change items already incorporated in Project requirements to satisfy TPTF approval Baseline 0, May, 2006 ProtocolsBaseline 1, NPRRs approved by 3/31/07

5 5 Texas Nodal Program UpdateJune The costs of making changes will increase exponentially as we move forward beyond Baseline 1 Cost of Rectification System definition DesignDeliver Accept  The first 20% of a project freezes over 80% of the costs and risks  Early resolution of problems costs orders of magnitudes less than the rework associated with fixing them when in build or test  More effective effort up-front saves expensive iteration later on Effort Undiscovered re-work Pro-actively dealing with threats Coasting Home

6 6 Texas Nodal Program UpdateJune Change control objectives: future NPRRs as well as the backlog  To maintain overall system integrity by ensuring each project is focused on an explicit, current, common baseline  To formally authorize additional scope into the program, and its budget and schedule implications  To verify that a request is approved by the appropriate authority  To ensure implementation of each accepted change  To support the maintenance of traceability across the system (from protocols to test cases) by synchronizing all projects to one version of the protocols Current emphasis is the backlog and advancing the current baseline - but process must handle additional NPRRs and subsequent baseline advances

7 7 Texas Nodal Program UpdateJune Baseline 1 will follow the following process for recommendation and approval… Items to be approved PRS June 12 TAC June 28 BoD July 17 Baseline 1 NPRRs*Change Item*White Papers* Approved by BoD Language approved by PRS Language not approved by PRS Recommend impact analysis (IA) for approval Recommend language & IA for approval Endorse impact analysis Recommend impact analysis (IA) for approval Recommend language & IA for approval Endorse impact analysis Approve protocol language and scope, timeline and cost impacts  PRS to endorse NPRRs and CIs, recommend white paper IA’s for approval.  Jerry Sullivan to direct projects to begin baseline 1 implementation subject to BoD approval.  TAC to recommend language and impact analysis for approval.  Jerry Sullivan to update directive if any revisions or rejections occur.  BoD to approve protocol language and scope, timeline and cost impacts.  Jerry Sullivan update directive if any revisions or rejections occur No. of items

8 8 Texas Nodal Program UpdateJune The proposed process is designed to handle NPRRs and Nodal change requests in tandem TPTF PRS 1 IC (1-4) PRS 2 TAC CCB CR* Approval Process Y/N for Go-Live IA (group changes) Draft NPRR CR* Projects BOD Approves PRS to do an initial review and provide a recommendation of approval PRS to approve time and dollars ERCOT to provide an initial impact categorization and a Program position for Go-Live Approval depends on budget thresholds and funding sources The process is modified slightly to accommodate the change control objectives… CR* - A Change Request is the Nodal program’s mechanism for incorporating changes to scope, timescales, cost. A change request normally incorporates multiple items including NPRRs, white papers, etc. Technical Change Control Board to work with projects to develop and submit change requests to the CCB CR Approval Periodic updates will be provided to TPTF, PRS, TAC & BOD on the status of NPRRs NPRR Approval

9 9 Corrected Texas Nodal Program UpdateJune The 60 change items have been grouped for impact assessment purposes… Impact assessment groupings determined by functional consistencies and implementation synergies Number of items in each Group Total estimated cost of implementing Baseline 1 changes is $5M-$6M Change types and estimated number in each type #1 #2 #3 #4 #5 #6 #1/2 Source 5 7 items Source 6 4 items Source 4 2 items Source 3 28 items Source 1 7 items Source 2 6 items Source 1/2 6 items

10 Texas Nodal Program UpdateJune Impact Summary – Cost Information CategoryCost ($’ 000s) Source 1$250K-$500K Source 2 $50K-$100K Source 1&2 $500K- $1M Source 3 $2M-$3M Source 4 $50K-$100K Source 5 $1M - $2M Source 6$1M - $2M Cost Impact Level Number of Items <$039 $50K-$100K7 $100K-$250K7 $250K-$500K3 $500K - $1M3 $1M - $2M1 Total Est. Cost = $5M-$6M

11 Texas Nodal Program UpdateJune Requested action items for today…  Baseline1  Confirm agreement on whether Essential for Go-Live  PRS to approve language for TAC consideration on NPRR 50  PRS & TPTF to vote on “Impact Assessment” of all NPRRs  PRS to forward to TAC the following NPRRs – NPRR 035, NPRR039, NPRR 041, NPRR 042, NPRR 043, NPRR 044, NPRR 047, NPRR 048, NPRR 049, NPRR 050, NPRR 051 & NPRR 052  TPTF to vote on “Impact Assessment” of all change items and White Papers  Go-Live Baseline  Decide position on Go-Live Baseline (E/D/N)  Add any potential items required for Go-Live Baseline

June 12 th, 2007 PRS/TPTF Joint Meeting Appendix Slides

13 Texas Nodal Program UpdateJune Group 1 – Items with minimal or no impact Group No.1 Characteristics No. of items NPRR18Total $ impact range$0 Change ItemSchedule Impact (weeks)None White Paper4EDS (1/2/3/4)4 Total items23Essential for Go-Live (E/D/N) E Detail Item description:Cost Drivers / Risks / Dependencies:  NPRR 001  NPRR 003  NPRR 007  NPRR 010  NPRR 011  NPRR 013  NPRR 015  NPRR 017  NPRR 019  NPRR 023  NPRR 025  NPRR 027  NPRR 028  NPRR 030  NPRR 038  NPRR 043  NPRR 046  NPRR 048  NPRR 050  WP EMS 003  WP EMS 004  WP EMS 006  WP IDA 039  Cost Drivers: None  Risks: None

14 Texas Nodal Program UpdateJune Group 2 – Multiple Projects with impact category of 1 Group No.2 Characteristics No. of items NPRR3Total $ impact range$2M - $3M Change Item2Schedule Impact (weeks) None * White Paper6EDS (1/2/3/4)4 Total items11Essential for Go-Live (E/D/N) E Detail Item description:Cost Drivers / Risks / Dependencies:  NPRR035 - Nodal Protocol Clarifications Required For Net Metering Provisions  NPRR041 - Corrections to Section 4, Day – Ahead Operations  NPRR047 - Credit Monitoring – ERCOT Staff Clarifications  CI10 - Business Process for SPS/RAP in Nodal  CI57 - Move Resource Parameters from Registration to MMS  WPIDA002 - Time Standards and DST  WPIDA004 - Power Flow Consistency Requirements  WPIDA007 - Load Rollover  WPIDA008 - State Estimator Maintenance  WPIDA009 - SPS and RAP Modeling  WPIDA013 - Seasonal/Temperature/Hydrogen Pressure based Reactive Capacity Curves and MW Capability Curve  Cost Drivers: see next slide  Risks  Coordination between projects needed for majority of items in this group.  Time standards and DST (WPIDA002) has program wide implications.  Business processes related to CI0057 have not yet been fully defined. *ERCOT and vendor are aggressively working to minimize any impact to schedule

15 Texas Nodal Program UpdateJune Group 2 – Multiple Projects with impact category of 1 Group No.2 Detail Cost Drivers:  MMS –  Handling of new object in CIM model for net metering (NPRR035);  Handle credit processing in DAM (NPRR047); SPS/RAP (WPIDA009 and CI0010) and load rollover (WPIDA007) processing in DAM and RUC;  Accepting resource parameters directly from Market Participants into MMS with reasonable validation (CI0057);  Implement distributed load reference for shift factors in DAM (WPIDA004);  Change displays and queries to reflect IDA proposed time display format – assumes no GMT (WPIDA002);  Vendor standard product does not support generator MVar capability curve (WPIDA013).  EMS  A new requirement for power flow (WPIDA004)  NMMS – Net metering scheme (NPRR035); load rollover scheme (WPIDA007); and RAP/SPS (WPIDA009 and CI0010) to be added to CIM model. Power flow consistency (WPIDA004) requires additional validation.  CRR – Coordination with CMM to handle credit processing in CRR auction (NPRR047).  EIP – Additional net meter (NPRR035); available, allocated and remaining credit limit information flows (NPRR047); and resource parameter source system information flow (CI0057 and Group 10 NPRR008).  INT – Additional testing.

16 Texas Nodal Program UpdateJune Group 3 – Generation Subsystem Changes Group No.3 Characteristics No. of items NPRR1Total $ impact range$500K - $1M Change Item1Schedule Impact (weeks) None * White Paper 4EDS (1/2/3/4) 4 Total items6Essential for Go-Live (E/D/N)E Detail Item description:Cost Drivers / Risks / Dependencies:  NPRR049 – Generation subsystem Changes to Incorporate approved Whitepapers  CI 67 – Non-spin Deployment (resulting from TAC approved process)  WPEMS1 – Ancillary Service Schedules and Deployment Telemetry  WPEMS2 – Base Point above HASO Flags  WPEMS7 – Non-Spin Deployment Notification and  Availability  WPEMS8 – SCED Base point Dispatch  NPRR049 incorporated CR0067, WPEMS1, WPEMS2, WPEMS7, and WPEMS8.  Cost Drivers:  Revisions to MMS to accommodate Non-spin deployment, load resource RRS deployment, COP format change.  Revisions to EIP to pass ancillary service resource responsibility data from EMS to MIS dashboard.  Risks  EIP - No timescale impact if funding available to increase staff to support EDS timeline; otherwise, current end date to be extended 4 to 5 weeks. *ERCOT and vendor are aggressively working to minimize any impact to schedule

17 Texas Nodal Program UpdateJune Group 4 - Congestion Revenue Rights Changes Group No.4 Characteristics No. of items NPRR1Total $ impact range$100K-$250K Change ItemSchedule Impact (weeks) None * White Paper EDS (1/2/3/4) 4 Total items1Essential for Go-Live (E/D/N)E Detail Item description:Cost Drivers / Risks / Dependencies:  NPRR005 – CRR – PCRR Allocation Terms and Conditions *ERCOT and vendor are aggressively working to minimize any impact to schedule  Cost Drivers: Revisions to MMS to accommodate DAM SFT related processes and functions for reallocation of MCFRI. This is an additional process for MMS  Risks  CRR – Major impact if this NPRR is NOT implemented. CRR modifications can be implemented independently of the MMS modifications.  Dependency  MMS – Assumption is made that the proposed NPRR to change the MCFRI reallocation timeline from “by 0600 prior to DAM” to “prior to the execution of DAM clearing” will be approved. MCFRI reallocation will be performed as part of the SFT post-processing functions (no optimization).

18 Texas Nodal Program UpdateJune Group 5 - Impact category of 1 or 2 to MMS and EMS Group No.5 Characteristics No. of items NPRR3Total $ impact range$100K-$250K Change ItemSchedule Impact (weeks) None * White Paper EDS (1/2/3/4) 4 Total items3Essential for Go-Live (E/D/N)E Detail Item description:Cost Drivers / Risks / Dependencies:  NPRR004 – Section 8, Zonal PRR Synchronization and ERCOT Staff Clarifications  NPRR009 Section 6, PRR Synchronization and ERCOT Staff Clarifications  NPRR016 TPTF Cleanup items for Sections 2, 3, and 16  Cost Drivers: Revisions to MMS to accommodate changes to SCED, Registration System, and COP validation. *ERCOT and vendor are aggressively working to minimize any impact to schedule

19 Texas Nodal Program UpdateJune Group 6 – Impacts to individual systems - MMS Group No.6 Characteristics No. of items NPRR8Total $ impact range$250K-$500K Change Item Schedule Impact (weeks) None * White PaperEDS (1/2/3/4)4 Total items8Essential for Go-Live (E/D/N)E Detail Item description:Cost Drivers / Risks / Dependencies:  NPRR002 – Section 3, Zonal PRR Synchronization and ERCOT staff clarifications  NPRR006 – Section 4 ERCOT Staff Clarifications  NPRR012 – CRR Granularity in CRR Auction  NPRR014 – Zonal PRR Synchronization for Section 16  NPRR022 – MIS Posting for Area Trades  NPRR039 – Ancillary Service Offers for the Supplementary Ancillary Service Market  NPRR051 – Removal of the Pseudo Resource Requirement in the Real Time SCED Process  NPRR052 – Settlement for Non-Modeled Generators  Cost Drivers: revisions to MMS to accommodate changes to Day Ahead Operations, QSE Registration and Qualification, derated CRR settlement quantity using the DAM SPP, AS offers for the AS Market, removal of pseudo resources.  Risks  MMS – There is greater risk in not implementing this change. *ERCOT and vendor are aggressively working to minimize any impact to schedule

20 Texas Nodal Program UpdateJune Group 7 - Impacts to individual systems - EIP Group No. 7 Characteristics No. of items NPRR 3Total $ impact range $0 Change ItemSchedule Impact (weeks)None White PaperEDS (1/2/3/4)4 Total items3Essential for Go-Live (E/D/N)E Detail Item description:Cost Drivers / Risks / Dependencies:  NPRR031 – Correction of Voltage Support Bill Determinants  NPRR032 – Correction of Black Start Bill Determinants  NPRR044 – Corrections to Section 6, Adjustment Period and Real-Time Operations  Cost Drivers: These two information flows were not included in original costs estimates. However, costs will be absorbed by EIP current scope. This includes revisions to EIP and MMS to correct adjustment period and real-time operations, and bill determinants.  Dependencies – EIP is dependent on source system to provide data for voltage support and black start attributes (*presently assumes MMS is the source system).

21 Texas Nodal Program UpdateJune Group 8 - Settlement of CRRs When DAM Does Not Execute Group No. 8 Characteristics No. of items NPRR2Total $ impact range$50K-$100K Change ItemSchedule Impact (weeks) None * White PaperEDS (1/2/3/4)4 Total items2Essential for Go-Live (E/D/N)E Detail Item description:Cost Drivers / Risks / Dependencies:  NPRR033 – Settlement of CRRs When DAM Does Not Execute  NPRR034 – Conforming Section 10 to Nodal Format  Cost Drivers: Revisions to COMS and MMS to accommodate changes to S&B and CMM.  Dependency – None *ERCOT and vendor are aggressively working to minimize any impact to schedule

22 Texas Nodal Program UpdateJune Group 9 - Transmission Security Analysis and RUC Group No. 9 Characteristics No. of items NPRR1Total $ impact range$0 Change ItemSchedule Impact (weeks)None White PaperEDS (1/2/3/4)3 Total items1Essential for Go-Live (E/D/N)E Detail Item description:Cost Drivers / Risks / Dependencies:  NPRR042 – Corrections to Section 5, Transmission Security Analysis and RUC  Cost Drivers: revisions to protocols to detail business process on verifiable start up cost; no software change.

23 Texas Nodal Program UpdateJune Group 10 – Controllable Load Resources Group No. 10 Characteristics No. of items NPRR1Total $ impact range$1M-$2M Change ItemSchedule Impact (weeks) None * White PaperEDS (1/2/3/4)4 Total items1Essential for Go-Live (E/D/N) Detail Item description:Cost Drivers / Risks / Dependencies:  NPRR008 – Inclusion of PRR307 in Nodal  Cost Drivers:  Revisions to NMMS, EMS, EIP and MMS to include provision of controllable load resources to provide regulation services.  EMS and EIP are impacted in the ancillary service monitoring function.  MMS major changes in market infrastructure and market applications to support this new type of load resources in DAM, SASM, and DEF (Deliverability Evaluation Function). Controllable load resources is not in the MMS vendor’s standard product.  Dependencies: EIP dependency on GROUP 2: CI0057. *ERCOT and vendor are aggressively working to minimize any impact to schedule

24 Texas Nodal Program UpdateJune Group 11 - Network Model Testing Group No. 11 Characteristics No. of items NPRR1Total $ impact range$250K-$500K Change ItemSchedule Impact (weeks)None White PaperEDS (1/2/3/4)4 Total items1Essential for Go-Live (E/D/N)E Detail Item description:Cost Drivers / Risks / Dependencies:  NPRR 029 – Network Model Testing Clarification  Cost Drivers:  Stand-alone, dedicated system to test the new network model in EMS and MMS.  Cost is comprised of software and hardware.  The licensing cost is associated with the third party  software licensing

25 Texas Nodal Program UpdateJune Go-Live Baseline NPRR #Title ERCOT essential for Go-Live Position (E/D/N) PRS/TPTF essential for Go-Live Position (E/D/N) SponsorOwner 24Synchronization of PRRs 627 and 640ETPTFTrip Doggett 36 Market Operations Test Environment in Nodal ENDSWG ROSDavid Grubbs 37 Conforming Section 13 to Nodal Format and Changing Frequency of Transmission Loss Base Case Calculations. UFETFChuck Moore 40 Emergency Electric Curtailment Plan (EECP) Event Realignment (PRR682) OGRTF Stephen C. Knapp 45Wind Power ForecastingE The Wind Coalition Walter J. Reid 53 Creation of a New Trading Hub at Venus Switching Station Constellation Commodities Group Clayton Greer 54 Update of Nodal Protocols to Comply with NERC Name Change – Companion to PRR711 EERCOTAnn S. Boren 55 Correction of Voltage Support QSE Total Bill Determinants ETPTFTrip Doggett 57 Posting Requirements Pursuant PUC Subst. R ETPTFTrip Doggett

26 Texas Nodal Program UpdateJune Go-Live Baseline NPRR #Title ERCOT essential for Go-Live Position (E/D/N) PRS/TPTF essential for Go-Live Position (E/D/N) SponsorOwner 58 Clarification of Standard Form Market Participant Agreement ETPTFTrip Doggett 59Reconfiguring the Annual CRR AuctionETPTFTrip Doggett 60Draft Hub ClarificationETPTFTrip Doggett 61 Scarcity Pricing Mechanism (Companion to PRR709) ETPTFTrip Doggett 62Constraint Competitiveness TestETPTF Trip Doggett Xingwang Ma 63Electrical Bus ClarificationETPTFCurtis Crews 64 Modeling of Generic Transmission Constraints ETPTFTrip Doggett 65 Companion to PRR647, Gross and Net MW/Mvar Data Reporting. ETPTFJohn Dumas

27 Texas Nodal Program UpdateJune Go-Live Baseline NPRR #Title ERCOT essential for Go-Live Position (E/D/N) PRS/TPTF essential for Go-Live Position (E/D/N) SponsorOwner TBD Corrections to Section 9 – Settlements Clean-up NPRR ETPTFRaj Chudgar TBD Calculation of RRS Deployment by SCED (resulting from TPTF Approved White Paper 5) ETPTFJohn Adams TBD Section 5: Settlements Clean-up NPRR (Decommitment) ETPTFRaj Chudgar TBDTelemetered Resource StatusETPTFRaj Chudgar TBDExternal Transmission NetworksETPTFTrip Doggett TBD Trade validation by matching identical Trade Submissions ETPTFTrip Doggett TBD Synchronization of PRR 698, Remove Default QSE Provisions ETPTFCheryl Yager CI - TBDRegistration scope from NMMS to MMSE CI - TBDMarket Participant Identity ManagementE WPIDA 3Combined Cycle modelingEIDA

28 Texas Nodal Program UpdateJune Go-Live Baseline NPRR #Title ERCOT essential for Go-Live Position (E/D/N) PRS/TPTF essential for Go- Live Position (E/D/N) SponsorOwner WPIDA 21Load ModelsEIDA WPIDA 31 Behind the Meter Facilities and Non-Utility Transmission Equipments EIDA WPIDA 38 Bids and Offers at load zones and Trading Hubs EIDA WPIDA 41 Joint-Owned Unit Modeling (a.k.a. Split Generation Resources - doc IDA041 White Paper for JOINT OWNED UNIT MODELING EIDA WPIDA TBD Outage equipment list coordination between NMMS and outage scheduler EIDA