1. EDS 2 Early Delivery Systems Release 3 – WebEx Conference July 10, 2007

2. Page 2 2 EDS 2 – Release 3 July 2007 EDS 2 – Early Delivery Systems Agenda –Overview Timeline Context Setting –EDS 1 – Release 1 (ERCOT Alarm Processing) –EDS 1 – Release 2 (Point to Point Verification) –EDS 2 – Release 3 (Data Quality) –EDS 2 – Release 4 (Network Model) –EDS 2 Release 3 Organization Chart Protocol References and Standards Key Activities Procedures Metrics –Next Steps and Questions

3. Page 3 3 EDS 2 – Release 3 July 2007 Texas Nodal Program Timeline EDS 2 – Release 3 TimelineContextMetricsProceduresOrganizationActivitiesProtocols

4. Page 4 4 EDS 2 – Release 3 July 2007 EDS 2 - Release 3 Timeline Protocols Standards Zonal Procedures Trans Plan Use Cases Inputs Nodal Procedures MP Extracts Completed Metrics Verified Protocols Activities Timeline Deliverables Nodal TPTF Tele & SE TimelineContextMetricsProceduresOrganizationActivitiesProtocols EDS 2 Starts

5. Page 5 5 EDS 2 – Release 3 July 2007 EDS 2 – Early Delivery Systems EDS 2 – Context Setting –EDS 1 Release 1 Activities (started April 1, 2007) ERCOT Alarm Processing – verify that SCADA alarm status and limits are configured correctly –Largely an internal ERCOT activity with limited involvement by MPs –EDS 1 Release 2 Activities (started June 1, 2007) Nodal Point-to-Point Verification of ICCP mapping and refresh rates –Each market participant has been scheduled to provide ERCOT with Nodal ICCP point data, and after their data is loaded into the Nodal ICCP/EMS system, they will provide operators to verify each station (point by point) with ERCOT operators. –This activity has a 4 month duration (June 1 thru Sept 30) –Approximately 100,000 points need to be loaded and verified –Progress-to-date »7,000 CenterPoint Energy points have been verified »17,000 of 23,000 Oncor (TXU) points have been verified »1,200 NRG points have been verified TimelineContextMetricsProceduresOrganizationActivitiesProtocols

6. Page 6 6 EDS 2 – Release 3 July 2007 EDS 2 – Early Delivery Systems EDS 2 – Release 3 –EDS 2 Release 3 Activities (scheduled to start September 2007) Measure Telemetry performance –accumulates data over a quarter Verify, tune and measure State Estimator performance –accumulates data over a month Verify the Network Security Analysis functions Generate and post Telemetry and SE performance reporting –New EMS tool and with reporting via Enterprise Data Warehouse –October / November 2007 timeframe Provide access to Telemetry and SE performance reporting (MIS / TML) –November / December 2007 timeframe Implement Telemetry and SE performance data issue resolution process –Working jointing with each market participant –November 2007 timeframe TimelineContextMetricsProceduresOrganizationActivitiesProtocols

7. Page 7 7 EDS 2 – Release 3 July 2007 EDS 2 – Early Delivery Systems EDS 2 – Release 4 –EDS 2 Release 4 Activities (scheduled to start November 2007) Verify Network Model Management System (NMMS) Verify NOMCR (Network Operations Modeling Change Request) process –Detailed plan to follow that schedules the verification of each TSP –Submit and process NOMCR –Receive confirmation and verification Verify model export process Begin “Single Entry Process” TimelineContextMetricsProceduresOrganizationActivitiesProtocols

8. Page 8 8 EDS 2 – Release 3 July 2007 EDS 1 – Release 1 Configuration TimelineContextMetricsProceduresOrganizationActivitiesProtocols

9. Page 9 9 EDS 2 – Release 3 July 2007 EDS 1 – Release 2 Configuration TimelineContextMetricsProceduresOrganizationActivitiesProtocols

10. Page 10 10 EDS 2 – Release 3 July 2007 EDS 2 – Release 3 Configuration TimelineContextMetricsProceduresOrganizationActivitiesProtocols

11. Page 11 11 EDS 2 – Release 3 July 2007 EDS 2 – Release 4 Configuration TimelineContextMetricsProceduresOrganizationActivitiesProtocols

12. Page 12 12 EDS 2 – Release 3 July 2007 EDS 2 – Early Delivery Systems EDS 2 Release 3 - Organization TimelineContextMetricsProceduresOrganizationActivitiesProtocols

13. Page 13 13 EDS 2 – Release 3 July 2007 EDS 2 – Release 3 Scope Ref #Name 3.10.7.4 Telemetry Criteria 6.5.7.1.1 SCADA Telemetry 6.5.7.1.2 Network Topology Builder 6.5.7.1.3 Bus Load Forecast 6.5.7.1.4 State Estimator 6.5.7.1.5 Topology Consistency Analyzer 6.5.7.1.6 Breakers/Switch Status Alarm Processor and FOD 6.5.7.1.7 Real-Time Weather and Dynamic Rating Processor 6.5.7.1.8 Overload Alarm Processor 6.5.7.1.9 Contingency List and Contingency Screening 6.5.7.1.10 Network Security Analysis Processor and Security Violation Alarm 6.5.7.1.13 (4) Data Inputs and Outputs for Real-Time Sequence Hourly Reports Nodal Protocols References TimelineContextMetricsProceduresOrganizationActivitiesProtocols

14. Page 14 14 EDS 2 – Release 3 July 2007 EDS 2 – Release 3 Scope Telemetry Standard – TAC Approved for Nodal –General Telemetry Performance Criteria The sum of flows into any telemetered bus must be less than the greater of 5 MW or 5% of the largest line rating at each bus 98% of all telemetry must be available at least 80% each quarter –Critically Important Telemetry Performance Criteria ERCOT shall identify 10% of MW / MVar pairs that are critically important ERCOT shall identify 20 voltage points that are critically important –Telemetry Restoration Lost data / signals must be restored –Calibration, Quality Checking & Testing –ICCP Links Data Quality (quality codes = Valid, Manual, Suspect, Invalid, Comm-Failure) Links must be available 98% each month (excluding planned outages) Server failover must be restored within 5 minutes Communications failover must be restored within 30 seconds –ERCOT Requests for New Telemetry –ERCOT Requests for Redundant Telemetry TimelineContextMetricsProceduresOrganizationActivitiesProtocols

15. Page 15 15 EDS 2 – Release 3 July 2007 EDS 2 – Release 3 Scope State Estimator Standard – TAC Approved for Nodal –State Estimator Performance Requirements State Estimator converges 97% of runs during a monthly test period. Each month for transmission elements, causing 80% of congestion cost (latest year) –the residual difference between State Estimator and Power Flow for critically monitored transmission element MW flows shall be less than 3% of the associated emergency rating on at least 95% of samples measured –the MW telemetry value and the MW SE value shall be less than 3% of the associated element emergency rating on at least 95% of samples measured Each month for the 20 most voltage critical buses –telemetered bus voltage minus state estimator voltage shall be within the greater of 2% or the accuracy of the telemetered voltage measurement involved for at least 95% of samples measured On all transmission elements greater than 100kV; the difference between state estimator MW solution and the SCADA measurement will be less than 10 MW or 10% of the associated emergency rating (whichever is greater) on 99.5% of all elements during a 30 day period. –To meet these objectives ERCOT will: Work with TSP to resolve problem in accordance with Telemetry Standard Direct additional telemetry be installed on elements contributing most to 80% of congestion costs for the latest year for which data is available Alarm any sum of flow around a bus the greater of 5% of the largest line rating connected to the bus or 5MW, and requesting that the applicable TSP or QSE correct the failure Utilize quality codes sent by data provider in assigning confidence factors for data used in SE Post monthly results TimelineContextMetricsProceduresOrganizationActivitiesProtocols

16. Page 16 16 EDS 2 – Release 3 July 2007 EDS 2 – Early Delivery Systems ActivityERCOTMP Develop and Test Procedures  Restructure Load Model  Verify and Tune State Estimator  Verify Network Security Analysis  Generate and Test Hourly Reports  Generate and Post Telemetry and SE Performance Reports  Review and Analyze Performance Reports  Access Performance Reports via the MIS Portal  Submit & Process Service Requests for Performance Issues  EDS 2 Release 3 – Key Activities TimelineContextActivitiesProtocolsMetricsProceduresOrganization

17. Page 17 17 EDS 2 – Release 3 July 2007 EDS 2 – Early Delivery Systems EDS 2 Release 3 – Key Activities –Telemetry Verification Accumulate and calculate monthly and quarterly availability data Generate reporting per Telemetry Standards –Highlight and verify availability issues –Provide on MIS for market participants Develop ERCOT Operations Procedures to address and resolve issues –State Estimator Verification Topology build Forecast bus load Nodal SE solution and compares to Zonal Accumulate and calculate monthly performance data Generate reporting per SE Standards –Highlight and verify data issues –Provide on MIS for market participants Develop ERCOT Operations Procedures to address and resolve issues TimelineContextMetricsProceduresOrganizationActivitiesProtocols

18. Page 18 18 EDS 2 – Release 3 July 2007 EDS 2 – Early Delivery Systems EDS 2 Release 3 – Key Activities –Topology Consistency Analyzer Identify and report on status errors –Forced Outage Detection Identify and report on unplanned outages EDS 4 integrates with the outage scheduler –Network Security Analysis Verify dynamic ratings are correctly calculated Verify overload notification Verify constraints and contingency list Verify Special Protection Schemes (SPS) / Remedial Action Plans (RAP): –Triggering conditions are defined and can be executed –Post-SPS and post-RAP results are correct and can be reported Verify load rollover modeling Verify transmission constraint management (calculate shift factors) Develop Nodal NSA operating procedures Benchmark results against Zonal real time operations TimelineContextMetricsProceduresOrganizationActivitiesProtocols

19. Page 19 19 EDS 2 – Release 3 July 2007 EDS 2 – Early Delivery Systems EDS 2 Release 3 – Key Activities SCADA Telemetry Dynamic Ratings EDWMIS Network Security Analysis State Estimator Topology Consistency Analyzer Transmission Constraint Management Forced Outage Detector TimelineContextMetricsProceduresOrganizationActivitiesProtocols

20. Page 20 20 EDS 2 – Release 3 July 2007 EDS 2 – Release 3 Scope Enterprise Data Warehouse Reports –Telemetry Performance Reports Electrical Buses Not Meeting Telemetry Accuracy Requirements –SE Performance Reports MW Residuals SE Vs Telemetry for Congested Transmission Element SE Convergence Rate Voltage Residuals SE Vs Telemetry for Critical Buses MW Residuals SE Vs Telemetry for Major Transmission Elements MW Residuals SE Vs RTCA Base case for Congested Transmission Element TimelineContextMetricsProceduresOrganizationActivitiesProtocols

21. Page 21 21 EDS 2 – Release 3 July 2007 EDS 2 – Release 3 Scope Nodal Procedures OrganizationAreaExistingNewTotal Operations SupportSCADA314 SE347 NSA112 EMMS ProductionSCADA123 OperationsSCADA11415 SE336 NSA61016 TOTAL183553 TimelineContextMetricsProceduresOrganizationActivitiesProtocols

22. Page 22 22 EDS 2 – Release 3 July 2007 EDS 2 – Release 3 Scope Nodal Procedures –Operations Support SCADA –SCADA Tagging Procedures –SCADA Manual Replacement Maintenance –SCADA Calculation and Maintenance –Telemetry and State Estimator Performance Monitoring and Reporting State Estimator –Real Time corrections to meet SE/Telemetry and LMP standards (through SE and Topology Consistency Analyzer results) –New Metering Proposal –Handling of SCADA/SE non-compliance issues –State Estimator Load Modeling Maintenance –SE Procedure - Data Model Issues –State Estimator measurement weights maintenance and Tuning –Unit Reactive Curve Update and Maintenance Procedure Network Security Analysis –Contingency Definition and Maintenance Procedure –Manual Constraint Definition and Maintenance TimelineContextMetricsProceduresOrganizationActivitiesProtocols

23. Page 23 23 EDS 2 – Release 3 July 2007 EDS 2 – Release 3 Scope Nodal Procedures –Production Support SCADA –New ICCP points verification procedure –Site Failover –Alarm Processor Maintenance Procedure –Operations SCADA –Respond to Overloaded Equipment Alarm –Respond to SPS Proximity Alarm –Respond to Under or Over Voltage condition Alarm –Approval to Energize –Respond to Incorrect Telemetry Alarm –Respond to Communication Link Failures –Send Base Points to QSE –Store an Operator Entered Value in the Real-Time Database –Display Summary Displays –Establish Communication on Communication Link Failover –Establish Communication on Failed Link Recovery –Establish ICCP Communications –Establish Communications on ERCOT Site Failover –Add a Real-Time Database Point On-Line –Process stored value TimelineContextMetricsProceduresOrganizationActivitiesProtocols

24. Page 24 24 EDS 2 – Release 3 July 2007 EDS 2 – Release 3 Scope Nodal Procedures –Operations State Estimator –Process Topology –Identify Bad Measurements –Resolve unavailable SE Solution –Build Real-Time Power Flow Cases –Build Off-Line Power Flow Cases –Respond to Poor SE Results, including cases of Large Residuals Network Security Analysis –Resolve Real-Time Overload Violations –Analyze Look Ahead Security and Stability –Resolve Actual Voltage Limit Violation –Resolve Contingency Voltage Limit Violation –Respond to Unresolved Contingency –Respond to Cascading Contingency –Manage VSS Savecases –Establish RTCA Base Case –Process Security Violations –Establish VSS Base Case –Respond to VSS Failure –Respond to RTCA Failure –Study VSA –Study TSA –Study CA –Establish Plans to Alleviate Voltage Violations TimelineContextMetricsProceduresOrganizationActivitiesProtocols

25. Page 25 25 EDS 2 – Release 3 July 2007 EDS 2 – Data Issue Resolution Process TimelineContextMetricsProceduresOrganizationActivitiesProtocols

26. Page 26 26 EDS 2 – Release 3 July 2007 EDS 2 – Release 3 Metrics Reporting IDMetricTarget Completion MP6 QSE and TSP Telemetry / ICCP availabilityEDS 2 Release 3 + 14 days MP14 MP EDS 2 Trials ParticipationStart of EDS 2 Release 4 + 14 days E1 ERCOT Staff Completed TrainingGo Live Activities less 14 days E3 Validate Telemetry / SE EDW is accessible via MISEDS 2 Release 3 complete E9 Develop Texas Nodal ProceduresGo-Live less 60 days EM01 Network Security AnalysisEDS 2 Release 3 complete + 60 days EM09 Validate Zonal and Nodal Common ConstraintsSCED Testing EDS Trial N3 Validate SE Performance and AccuracyEDS 2 Release 3 complete C3 Contingency Plan for ICCP Data FailureGo Live Activities less 60 days C6 Develop Plan for SE FailureGo Live Activities less 60 days Metrics TimelineContextMetricsProceduresOrganizationActivitiesProtocols

27. Page 27 27 EDS 2 – Release 3 July 2007 EDS 2 – Release 3 Next Steps –Schedule WebEx to review EDW reports in detail –Schedule additional WebEx conferences as needed –Complete Nodal Procedures for EDS 2 Release 3 –Begin planning for EDS 2 Release 4 Questions…