RMGRR 042 – Mass Transition Process Necessary for PUCT Rule Review of ERCOT Comments Retail Market Subcommittee October 11, 2006 Adam Martinez Mgr, Market Operations DPO

Key Points for Transport Implementation Proven Technology –NAESB provides a transport method for ERCOT and the Market that has already been proven in daily support of transaction processing Maximum Speed Support –ERCOT business supports the Market decisions to reduce the overall timeline during a mass transition event. NAESB improves overall timeline for sending outbound Customer billing contact information. Higher chance of lengthening the timeline if information is sent via courier –NAESB provides greatest ability for ERCOT and the Market to respond to Mass Transition event in expeditious manner Minimal Security Risk –ERCOT must follow security guidelines to ensure a minimal level of security against risks, threats, and vulnerabilities –ERCOT Security has identified the NAESB option as the option that best meets security guidelines for transmission of customer data Minimal Risk of Confidentiality Breach and Liability –ERCOT Legal has indicated that ERCOT liabilities are minimized by using NAESB to send outbound the Customer billing contact information. Higher liabilities risk when data placed onto a CD/DVD-R and sent out for delivery

Changes Proposed by ERCOT Clarification of the functional components and associated files –Flight Testing Submission of Customer Billing Contact Information –Submission of Customer Billing Contact Information during Mass Transition Event –Semi-annual Submission of Customer Billing Contact Information Inclusion of File Transport Method Matrix Clarification that ERCOT will transmit outbound Customer billing contact information only using NAESB Deletion of Appendix F7: File Layout for Reporting of POLR Customer Class –Removed due to a change in the delivery method for providing Market Participants with the POLR Customer Class assignment for ESI IDs –Instead of receiving a report from ERCOT, Market Participants will retrieve this information through the Find ESIID functionality on TML, as well as the TDSP ESIID Report (monthly and weekly)

Data Transport Options – ERCOT Clarification File Transfer EventCDSecure FTPNAESB Mass Transition – Customer Billing Contact File from exiting CR to ERCOT Mass Transition – Customer Billing File to POLR CR from ERCOT Semi-Annual – Customer Billing File from CR to ERCOT Flight Testing – Customer Billing File from new CR to ERCOT All ERCOT Response Files to submitting CR Market to ERCOT File Transmissions –ERCOT prefers NAESB transport method but will support any of the three options proposed –If the Market decision is to support only one or two methods, ERCOT’s proposed language would need to be updated to reflect that decision ERCOT to Market File Transmissions –ERCOT will only use NAESB to transmit outbound Customer Billing Contact Information –All other response files will be sent from ERCOT to Market will utilize transport methods used for Semi-Annual

Data Transport Options – ERCOT Security Comparison NAESB Pro – Current market standard Pro – Proven solution for infrastructure’s application, maintenance, and management Pro – Strong authentication/encryption Secure FTP Pro – Strong pipe encryption – Neutral – Partially existing server infrastructure & mgmt infrastructure for static pswds  Con – No existing management infrastructure for ssh-keys  Con – Use of static pswds for authentication creates possibility pswd recovery via brute-force or disclosure at endpoints  Con – Reduced visibility from network security monitoring platform  Con – Additional implementation risk; Additional management/maintenance risk CD-R / DVD-R Pro – Easy  Con - Transportation via licensed/bonded couriers  Con – Still need to address encryption of data in transit  Con – Physical media destruction becomes an issue  Con – Need to develop operational procedures and physical infrastructure for media accept/process/store/destroy processes

Data Transport Options – CBA / IA Overview Implementation Cost: $250k – $500k Additional implementation costs –NAESB: no additional cost. –Secure FTP: $100k to $250k –CD: $50k to $100k Ongoing support –NAESB: no additional staff impact –Secure FTP: additional staff impact to the following groups Retail Market Testing (1 FTE 30% utilization) Commercial Operations (1 FTE 10% utilization) System Engineering & Admin (1 FTE 25% utilization) –CD: additional staff impact to the following groups Retail Market Testing (1 FTE 50% utilization) Commercial Operations (1 FTE 10% utilization)

Summary Mass Transition Event –Due to security and legal concerns ERCOT will only support NAESB transport method for customer file going from ERCOT to POLR All other events –ERCOT prefers NAESB; however, ERCOT will support any combination of the 3 options proposed by Market in RMGRR042 Key Points –Proven Technology –Maximum Speed Support –Minimal Security Risk –Minimal Risk of Confidentiality Breach and Liability

Questions / Contact Adam D. Martinez Mgr, Market Operations Divisional Projects Organization ERCOT (512)