1. Nodal Program Update Technical Advisory Committee 2 September 2010

2. 2 Technical Advisory Committee2 September 2010 Agenda Program Status LFC Test Overview Certification Updates Cut-Over Certification – Primer for Remaining Systems

3. 3 Integrated Nodal Timeline – Go-Live December 1, 2010 Technical Advisory Committee2 September 2010

4. 4 2010 Market Trials Timeline – Go-Live December 1, 2010 Technical Advisory Committee2 September 2010

5. 5 2010 Cut Over Timeline – 4 month outlook 2 September 2010Technical Advisory Committee

6. 6 89 Days to Go-Live Technical Advisory Committee2 September 2010 Market Trials has been running for 31 weeks Upcoming Milestones for Market Trials: LFC Tests 168 hour Test will include 48 hrs of closed loop testing between Sept 12 th – Sept 14 th Special NATF on September 17 th to discuss exit criteria successes and issues Additional 36 Hr LFC Test dates is scheduled for late September Additional 24Hr LFC Test dates is scheduled for mid-October 168 Hour Test: DAM/RUC/ SASM DAM will run continuously for 7 consecutive days starting on 9/8/2010 through 9/15/2010 HRUC ran 24x7 all 7 days DRUC run after each DAM all 7 days WRUC ran twice to exercise internal ERCOT processes ERCOT’s focus for DAM and RUC going forward will be on the quality of solution An October CRR Monthly auction will begin in mid-September REP Training/Panel discussion hosted at the MET center in Austin on October 6, 2010 System Cut-Over / Go-Live Sept/Oct 2010 – Network Modeling, Outage Scheduling October 19, 2010 – Board of Directors Sign Off November 2010 – Go-Live CRR Auction November 30 th DAM December 1 st – First Operating Day

7. 7 168-Hour Test Breakdown of Activities: Objective / Participation Requirements Objective Conduct a full rehearsal of the Nodal Day-Ahead Market (DAM), Reliability Unit Commitment (RUC), Real Time Market and Load Frequency Control (LFC) Continuous seven day period of Market Systems and 48 hours of Closed Loop LFC Components required and to be exercised during the 168-Hour test: –The Day Ahead functions including DAM, DRUC, HRUC and WRUC –The Real Time systems performing SCADA, Network Security Analysis, Transmission Constraint Management, SCED, and LFC –The Nodal support systems including Network Model Management, Outage Scheduler, Outage Evaluation tools –Credit Monitoring and Management (CMM) –Settlements and Billing –Posting of applicable Reports and Extracts Technical Advisory Committee2 September 2010

8. 8 168-Hour Test Breakdown of Activities: Objective / Participation Requirements Participation Requirements: –The value of the 168-Hour Test is dependent on participation by the Market. –The 168-Hour Test is required by all registered Market Participants intending to be involved in the Nodal Market –Participation data and metrics will be published and made readily available to the ERCOT Board, Independent Market Monitor and the related Market Participant Forums (NATF, TAC) –Metrics will also include comparisons of Zonal Resource Plans to Nodal COPs. –Participation should be reasonably reflective of post Go-Live behavior Technical Advisory Committee2 September 2010

9. 9 168-Hour Test Breakdown of Activities: Entry / Exit Criteria Entry Criteria for the 168-Hour test will be as follows : –All defined Market Trials Testing up until the 168-Hr test has been completed in accordance with the Market Trials Handbooks published to the Nodal Readiness Center –ERCOT declares readiness for initiating the 168-Hour test to TAC and the Board and obtains director level sign off from ERCOT management. Exit Criteria : –168 hours of continuous Nodal systems testing have been completed without encountering any major system issues that would prevent the Nodal Market from going live while maintaining system security and reliability as required by the ERCOT Protocols, Operating Guides, other binding documents, and NERC Reliability Standards. –ERCOT provides a test summary report to TAC and the Board outlining the successful testing processes. Technical Advisory Committee2 September 2010

10. 10 Full System Market and Reliability Test The following tests have been completed: –2-Hour Test – Completed May 20, 2010 –8-Hour Test – Completed June 17, 2010 –5-Hour Test – Completed July 21, 2010 –24-Hour Test #1 – Completed August 5, 2010 –24-Hour Test #2 – Completed August 20, 2010 –40-Hour Test – Completed August 28, 2010 Technical Advisory Committee2 September 2010

11. Kenneth Ragsdale Market Trials August 26 th 40 Hr LFC Test Overview

12. 12 40-Hour Test Update 40 - Hour Full-System Market and Reliability Test Very few issues encountered during the test Non-Spin deployed from 16:30 – 18:00 on 8/26/2010 –This being the first non-spin, ERCOT has requested all deployed QSEs confirm their deployment receipt Low prices in Zonal –02:30 AM – 04:15 AM –Incorrect offset used in Zonal –Prices as low as -999.99 for 3 intervals (3:30, 3:45, 4:00) –Prices will be adjusted prior to settlements per Zonal price correction procedures 2 September 2010Technical Advisory Committee

13. 13 Approximate 40-Hour Test Timeline – Aug 26 DateTime (CDT) Event 8/267:30Pre-test meeting for Nodal Support Staff 8:00Hotline call by ERCOT Operators to announce the 12:00 test start time Kick-off of the Market WebEx Market Notice to be sent out with the test start time Operators to start using OC3s to manage congestion Start troubleshooting period with QSEs 10:00Hotline call to QSEs/TOs to announce the start of the test ERCOT Operators begin switching QSEs to Nodal control 10:02First participating QSE completed switching to Nodal control 10:38Final participating QSE switched to Nodal control Hotline call to announce that all participating QSEs are on Nodal control 18:00-18:30ERCOT nodal staff transition to night staff 2 September 2010Technical Advisory Committee

14. 14 Approximate 40-Hour Test Timeline – Aug 27 – 28 DateTime (CDT) Event Aug 2706:00-06:30ERCOT nodal staff transition back to day shift 18:00-18:30ERCOT nodal staff transition back to night shift Aug 28Hotline call to announce that ERCOT will begin switching QSEs back to Zonal control ERCOT Operators begin switching QSEs back to Zonal control 01:14First participating QSE switched back to Zonal control 01:46Final participating QSE switched back to Zonal control 02:00All QSEs on Zonal control Hotline call to QSEs/TOs to announce that the test has concluded 2 September 2010Technical Advisory Committee

15. 15 40-Hour Test Completion Criteria – Initial Assessment Overview – Completion Criteria ERCOT will communicate an initial assessment of the following completion criteria upon conclusion of the test : –The rolling CPS1 one minute average score must equal or exceed 100% during the test period Note that the CPS1 average will not take into account the periods where ERCOT is transitioning to Nodal and then back to Zonal Note that the CPS1 average will not take into account the periods where ERCOT is performing system tuning –Hourly CPS1 Scores: »Max: 180, Min: 84, Average: 146 –There was only one hour in which the CPS1 score was less than 100 (HE 0100 on Aug 28 th ) –Zonal Commercially Significant Constraints (CSCs) and Closely Related Elements (CREs) managed below thermal limits. –West-North stability constraint was active in nodal during final 1 ½ hours of testing and was active in zonal during the transition period from nodal to zonal control –Local Congestion managed below thermal limits –Yes –Stability limits managed below transfer limits –No NERC Disturbance Control Standard (DCS) failure if applicable. –No DCS failures during the test –No LFC-SCED system issues that result in termination of the test. –No LFC / SCED failures –Procedural and software fixes have been verified to address lessons learned from previous rounds of testing 2 September 2010Technical Advisory Committee

16. 16 Full System Market and Reliability Test Update: CP1 Score Update 08/28/2010 CPS1 scores dropped to 84 due to Generators not following the process for shutting down 2 September 2010Technical Advisory Committee

17. Nodal Go-Live Update Certified Systems Kenneth Ragsdale Market Trials

18. 18 NMMS Overview Technical Advisory Committee2 September 2010 ERCOT NATF TAC BOD Recommendation of Certification Open Defects: Sev 1 Sev 2 Sev 3-5 0 Status / Other Issues: Stability issue resolved as of July 1 (ERCOT continues to monitor production) Navigation performance issues improved Aug 1st (43% reduction in response time measured) Validation performance improvement patch was added on Friday, August 27 th (expected a 20-40% reduction in validation time). Improvement on validation times were tested as follows: Average : 45.18% Median:66.41% Max:97.46% Deferred Defects: Deferred 11 0 0

19. 19 OS Overview Technical Advisory Committee2 September 2010 ERCOT NATF TAC BOD Recommendation of Certification Open Defects: Sev 1 Sev 2 Sev 3-5 0 Status / Other Issues: No defects reported in the Outage Scheduler –Outage Scheduler transition tasks were completed on 8/13 and the system was ready for dual entry and validation on 8/16 –Market Notice for dual entry and validation was sent on August 16 th All Outage scheduler issues within the TSP Issues list have either been addressed or are resolved Deferred Defects: Deferred 119 0 0

20. 20 CRR Overview Technical Advisory Committee2 September 2010 ERCOT NATF TAC BOD Recommendation of Certification Open Defects: Sev 1 Sev 2 Sev 3-5 0 Status / Other Issues: Working with Siemens on automated processor fix. Expectation is to receive fix before Go-Live –Incorrect Loadzone Designation from Topology Processor Output file –Resource Nodes missing from Settlement Point output file produced by Topology Processor –Topology Processor cannot consume outages information for CRR modeling –CRR MUI requires a system reboot for Bid Limit to take effect (internal to ERCOT) workaround is nuisance - targeting 09/13/2010 resolution Deferred Defects: Deferred 4 0 4

21. Nodal Go-Live Update Review of Full Nodal Operations Go-Live Items Kenneth Ragsdale Market Trials

22. 22 Nodal Program Communications Readiness Signoff Schedule Network Operations Modeling 06/30 07/01 07/20 07/30 09/01 ERCOT Management Readiness Signoff TAC Approval Board of Directors Approval 30 Day Market Notice sent Nodal Protocol Section 3.10 goes into effect Congestion Revenue Rights 08/04 08/05 08/17 09/13 10/13 ERCOT Management Readiness Signoff TAC Approval Board of Directors Approval 30 Day Market Notice sent Nodal Protocol Section 7 goes into effect Outage Scheduling 08/04 08/05 08/17 10/01 11/01 ERCOT Management Readiness Signoff TAC Approval Board of Directors Approval 30 Day Market Notice sent Nodal Protocol Section 7 goes into effect Full Nodal Operations 10/01 10/07 10/19 10/23 11/23 ERCOT Management Readiness Signoff TAC Approval Board of Directors Approval 30 Day Market Notice sent Nodal Protocol Sections 3,4,5,6 go into effect as well as all other unimplemented Protocol Sections 2 September 2010Technical Advisory Committee

23. 23 Nodal Cutover Communications – Zonal Protocol 21.12.3 21.12.3 Notice to Market Participants of Effective Date for Nodal Protocol Provisions and Retirement of Zonal Protocol Provision No part of the nodal market design may start operation until all the Market Readiness Criteria for that part of the nodal market design have been met. Certification that all Market Readiness Criteria have been met must be made at least by each of the following: the Technical Advisory Committee (TAC), ERCOT and the ERCOT Board. Upon such certification, ERCOT shall issue two Notices alerting Market Participants to the effective date of Nodal Protocol sections and the retirement of Zonal Protocol sections, as applicable. ERCOT shall issue the first Notice no less than thirty (30) days prior to the effective date or retirement date, as applicable, and the second Notice no less than ten (10) days prior to the effective date or retirement date, as applicable. The Notice shall include: (1)The Nodal Protocol Sections to become effective; and (2)The Zonal Protocol Sections to be retired, if any 2 September 2010Technical Advisory Committee

24. 24 Readiness Methodology ERCOT will measure readiness by the following categories: System Readiness – an evaluation of a particular system needed to support identified market activities Process Readiness – an evaluation of the Processes and Procedures necessary to support identified market activities People Readiness – an evaluation of ERCOT and Market Participant capabilities to support identified market activities ERCOT plans to review the Market Readiness Criteria at NATF and subsequently request a vote from TAC per Section 21.12.3, Notice to Market Participants of Effective Date for Nodal Protocol Provisions and Retirement of Zonal Protocol Provision 2 September 2010Technical Advisory Committee

25. 25 Readiness Methodology System Readiness – evaluation of the Nodal system to support the market design –Core system functionality delivered Protocol required system functionality available for market testing –System Integration delivered System to system integration delivered to support Market Timeline and Business Processes –Known defects resolution plan All ‘Must fix prior to go-live’ defects have a resolution plan in place –Active Readiness Metrics Current status of Readiness Metrics 2 September 2010Technical Advisory Committee

26. 26 Readiness Methodology Process Readiness – evaluation of the Processes and Procedures necessary to support the market design –Procedures complete ERT project procedures to support business processes complete –System cutover transition plan established ERCOT and Market Participant business activities required for transitioning into Go-Live have been established and communicated. –Market rules transition communicated Nodal and Zonal Protocol effective / retirement dates identified and communicated for Market Participant review 2 September 2010Technical Advisory Committee

27. 27 Readiness Methodology People Readiness – evaluation of ERCOT employee readiness and Market Participant knowledge to support the market design –ERCOT staff supporting Market Trials ERCOT Business teams supporting system execution, problem resolution, and market questions –ERCOT staff trained on System and Processes ERCOT Business teams training status based on identified ERT training metrics –Market Participant Training delivered ERT external training classes and web based training provided by the Nodal training project 2 September 2010Technical Advisory Committee

28. 28 MMS – Day Ahead, Adjustment Period, RT Market Overview Technical Advisory Committee2 September 2010 ERCOT NATF TAC BOD Recommendation of Certification Open Defects*: Sev 1 Sev 2 Sev 3-5 0 Status / Other Issues: DAM performance issue concerning CRR PTP options being investigated MMS currently has 58 Open defects in Test targeted to be fixed by September 3. MMS currently has 24 Open defects in development targeted to be fixed by October 1. 6 DAM, 4 RUC, 4 SCED, 3 MI, 7 GUI MMS remaining 13 (7 performance, 3 MOI, 3 MI) defects are being reviewed by business for final disposition Deferred Defects*: Deferred 44 43 52 * As of August 31, 2010

29. 29 MMS – Day Ahead, Adj. Period, RT Market – Readiness Update System ReadinessPlanned Completion Status MMS System release to Market Trials2/1/10Complete Market Submission Connectivity Qualification (MP3)OngoingGreen Real-Time Market Daily Participation (MP15A)OngoingGreen Generate LMP’s for 6 months (MO5)OngoingGreen Verify SCED Price Validation (MO4)OngoingGreen DAM Participation (MP16)OngoingAmber Generate Day-Ahead LMPs (MO9)OngoingGreen Verify DAM Price Validation (MO8)OngoingGreen DRUC Execution (MO10)OngoingGreen Verify Supplemental Ancillary Services Market (MO3)OngoingGreen Process Readiness Day Ahead, Adjustment Period and RTM Procedures 8/31/10In Process MMS Day Ahead & Real Time Price Validation Procedures8/31/10In Process Nodal Protocol Transition Plan Updated for DAM, RUC, SASM, SCED7/29/10Complete People Readiness ERCOT Staff Support of Market Trials2/1/10In Process ERCOT Staff Trained on System and Processes8/27/10Complete Market Participant Training DeliveredOngoingIn Process 2 September 2010Technical Advisory Committee

30. 30 CRR PTP Offers: ERCOT’s Action Plan For Go-Live: Immediate Mitigation Potential software based improvements : Make changes to the software which could allow the NSM processes to run faster by enabling parallelization –DAM - Network Analysis Module –Three to four weeks are required to determine the performance improvement of this option –Additional time will be required to fully verify the functional results Utilize newer math libraries in the software that may improve performance –DAM – Unit Commitment, Dispatch and Pricing –At least four weeks are required to determine the performance improvement of this option –Additional time will be required to fully verify the functional results Potential hardware based improvements : Upgrade to faster processors. This is being tested at ERCOT this week to determine the magnitude of performance improvement –Six to eight weeks required to migrate the ERCOT production environments to this processor se t if this option is pursued Post Go-Live: Long Term Solution Potential long term software based improvement Further enhance parallel computation capability of Network Analysis Module (NSM) –Design change: Allow network analysis for each hour of the study period to be done in parallel Introduce new process controller that manages these parallel network analysis modules Manage the interface of passing transmission constraints after network analysis for all 24 hours back to the unit commitment engine –Long term option, not viable before go live 2 September 2010Technical Advisory Committee

31. 31 CRR PTP Offers: Going Forward Current Resources represented by NOIEs translates into 157 unique source-sink pairs ERCOT is vigorously investigating the possible software and hardware solutions prior to Go-Live NOIE allocation eligibility due to ERCOT on September 8, 2010 NOIEs to submit expected CRR offer paths on or before September 8, 2010 ERCOT to analyze expect offer path to current CRR capabilities Follow up meeting with NOIEs during the week of September 13, 2010 to discuss allocation results and possible actions 2 September 2010Technical Advisory Committee

32. 32 EMS – Real-Time Operations Technical Advisory Committee2 September 2010 ERCOT NATF TAC BOD Recommendation of Certification Open Defects*: Sev 1 Sev 2 Sev 3-5 0 Status / Other Issues: EMS currently has 20 Open defects in development targeted to be fixed by October 1. 1 EMS Interface, 1 CIM Importer, 1 PSSE export 6 STNET/SMTNET/OE 1 VSAT 3 RLC 1 SE 2 TCM 3 LFC/Generation Deferred Defects*: Deferred 321 12 8 * As of August 31, 2010

33. 33 EMS – Real-Time Operations Readiness Update System ReadinessPlanned Completion Status EMS System Release to Market Trials2/1/10Complete Verify ACE Performance (EMO5)4/21/2008Complete Individual LFC Testing (EMO6)5/31/2010Green Telemetry / ICCP System Failover (N2)OngoingGreen Telemetry Compliance (MP6)6/2/2010Green Validate Telemetry / SE ISM / Data Accuracy (E3)Planned State Estimator Standards Performance (EMO9)OngoingGreen RTCA Zonal to Nodal Modeling Differences (EMO9)OngoingAmber RTCA CSC Zonal to Nodal Comparison (EMO9)OngoingGreen Verify Voltage Support Functionality (EM02)9/8/2010Planned Anomalous/Auto-Disabled Telemeted Points (EMO10)OngoingGreen Verify Load Forecast Accuracy (EMO7)Planned Process Readiness RT Operations Business Procedures8/31/10In Process Nodal Protocol Transition Plan Updated for RT Operations7/29/10Complete People Readiness ERCOT Staff Support of Market Trials9/30/10In Process ERCOT Staff Trained on System and Processes9/3/10In Process Market Participant Training DeliveredOngoingIn Process 2 September 2010Technical Advisory Committee

34. 34 COMS – Settlement & Billing, Metering, and Data Aggregation - Overview Technical Advisory Committee2 September 2010 ERCOT NATF TAC BOD Recommendation of Certification Open Defects*: Sev 1 Sev 2 Sev 3-5 0 Status / Other Issues: There are only 5 Open defects related to Core Systems at this time that are scheduled to be resolved by 09/03/2010. -Adjustment to queries in Appworx Scheduling Job -IDR Staging Performance Enhancement -Adjustment to DAM Start Logic -Adjustment to Data Aggregation to prevent file aborts from missing data -Adjustment for AIEC calculation logic when RTPERFIP missing There are 11 Commercial System Integration (CSI) defects related to transfer of data Deferred Defects*: Deferred 45 6 9 * As of August 31, 2010

35. 35 S&B – Settlements and Billing, Metering, and Data Aggregation Readiness Update System ReadinessPlanned Completion Status S&B System release to Market Trials5/1/10Complete Verify RTM Settlement Statements (CO5)OngoingGreen Verify RTM Settlement Invoices (CO6)OngoingGreen Verify DAM Settlement Statements (CO3)OngoingGreen Verify DAM Settlement Invoices (CO7)OngoingGreen Verify CRR Auction Invoices (CO8)OngoingGreen Settle Market for 7 days and provide appropriate extracts (CO1)8/25/2010Planned Verify Dispute Process (CO2)9/22/2010Planned Zonal/Nodal Coordinated Settlement Operations (CO4)8/25/2010Planned Process Readiness Settlements and Billing Procedures8/24/10Complete Nodal Protocol Transition Plan Updated for Settlements and Billing7/29/10Complete People Readiness ERCOT Staff Support of Market Trials9/30/10In Process ERCOT Staff Trained on System and Processes7/30/10In Process Market Participant Training DeliveredOngoingIn Process 2 September 2010Technical Advisory Committee

36. 36 CMM – Credit Overview Technical Advisory Committee2 September 2010 ERCOT NATF TAC BOD Recommendation of Certification Open Defects*: Sev 1 Sev 2 Sev 3-5 0 Status / Other Issues: Open issues related to an intermittent performance issue and reporting and notifications. All items are internal ERCOT fixes targeting a 09/03/2010 resolution date. –NPRR 241 - CMM:FCE Detail reports runs long –Exposure calculation engine processes hanging (intermittent) –EAL Detail Report - In the OIA Section the corresponding Invoice data display –Efactors- Email notification about e-factors values to the counter-parties is not working correctly –Entity Name field is missing from the Enter CP Estimates screen –AIL Report- if the RTM Estimated data is missing for an Operating Date the report is not displaying data correctly Deferred Defects*: Deferred 45 5 1 * As of August 31, 2010

37. 37 CMM – Credit Management and Monitoring – Go Live System ReadinessPlanned Completion Status Credit Management Integrated in Market Trials5/3/10Complete Verify Credit Calculations (CO10)9/8/2010Planned Process Readiness Credit Management Procedures8/24/10Complete Nodal Protocol Transition Plan Updated for Credit Management7/29/10Complete People Readiness ERCOT Staff Support of Market Trials 9/30/10In Process ERCOT Staff Trained on System and Processes8/13/10Complete Market Participant Training DeliveredOngoingIn Process 2 September 2010Technical Advisory Committee

38. 38 MIS – Market Information System Overview Technical Advisory Committee2 September 2010 ERCOT NATF TAC BOD Recommendation of Certification Open Defects*: Sev 1 Sev 2 Sev 3-5 0 Status / Other Issues: MIS defects of highest priority are around Extract Subscriber and LMP Contour Map and are targeting a resolution date by 10/11/2010. Fixes for most of these are already developed and will be tested during the MIS reconfiguration downtime. Examples are: –Extract Subscriber – No choice to select the extract format –Extract Subscriber – Unable to unsubscribe the subscribed extract. –Extract Subscriber – ‘Help’ icon is not being displayed in Extract Subscriber application –LMP Contour Map Dashboard does not allow for alternate dates Deferred Defects*: Deferred 7 9 3 * As of August 31, 2010

39. 39 MIS – Market Information System – Go Live System ReadinessPlanned Completion Status MIS System release to Market Trials2/1/10Complete MIS Compliance Test (E12)9/8/2010Planned Process Readiness MIS Procedures8/25/10Complete Nodal Protocol Transition Plan Updated for MIS7/29/10Complete People Readiness ERCOT Staff Support of Market Trials 9/30/10In Process ERCOT Staff Trained on System and Processes8/20/10Complete Market Participant Training DeliveredOngoingIn Process 2 September 2010Technical Advisory Committee

40. 40 Questions ? 2 September 2010Technical Advisory Committee

41. 41 Appendix 2 September 2010Technical Advisory Committee

42. 42 Defects, Issues, Quality of Solution: Definitions 2 September 2010 Defects: –A technical error or problem between ERCOT’s internal system or between ERCOT and the market –Deferred defects are Severity 3 defects, that have been deferred until after Go- Live, but have a confirmed workaround in place Quality of Solution: –Data Issues: Heavily dependant on inputs No significant software issues On-going analysis of results and inputs –Performance Issues: ERCOT is constantly looking to improve performance Monitoring in place to detect issues Known Issues / Market Facing Issues –Issues uncovered during internal or market trials that impact Market Participants Technical Advisory Committee

43. 43 Nodal Program Risks & Issues: Definitions 2 September 2010 Definitions for Category, Probability and Severity of Risks & Issues: Category –Scope : Will require a scope change –Schedule: Will require a schedule change –Budget: Will require a budget change Probability –High : Probability to occur is ≥ 90%; perceived impact would require a Change Request over the next 1-3 months –Medium: Probability to occur is between 31 – 89%; perceived impact would require a Change Request over the next 4 -10 months –Low: Probability to occur is ≤ 30 %; not expected to require a Change Request Severity –High: Milestone impact, or budget impact >$250,000 –Medium: Milestone impact - but expected to be mitigated, or budget impact between $0 - $250,000 –Low: No milestone impact, or no budget impact Technical Advisory Committee

44. 44 Readiness Criteria – Metrics by Area (Planned, Active, or Complete) 75 metrics are considered to be Readiness Criteria for TAC, BOD Go-Live votes All of these metrics are considered as “Readiness Criteria” that will be included in TAC/BOD Go-Live votes. Once a Readiness Area is approved for Go-Live, metrics falling within that Readiness Area will be considered complete * 26 Complete include the 19 newly completed metrics on Slide 3 AreaActiveCompletePlannedTotal Credit 11 CRR 3 3 EMS15 6 MIS 11 MMS9 110 Network Model 3 3 OS 2 2 Readiness361120 Readiness (Cutover) 31214 Readiness (Quality)5218 Settlements52 7 Grand Total2326 75 Technical Advisory Committee2 September 2010

45. 45 Metric IDMetric NameAreaApplies ToComments MP14B MP EDS-2, Release 4 Trials Participation (NOMCR Trials)Network ModelTSPsReviewed as Complete at NATF on 1/5/2010 MP14CNetwork Model ValidationNetwork ModelTSPsNetwork Model Validation confirmations from TSPs received in April/May 2010. N4Network Modeling Single EntryNetwork ModelERCOTReviewed as Complete at NATF on 1/5/2010 CRR2Develop TCR to CRR Transition PlanCRRERCOTPlan completed on 11/3/2008. Reviewed as Complete at NATF on 6/1/2010 CRR3 Operation of CRR Auctions and AllocationsCRRERCOT, CRRAHs Complete as of Outage Scheduler BOD approval on 8/17/2010. However, will be tracked until the September Auction is complete (final Market Trials auction). MP15BCRR Connectivity QualificationCRRERCOT, CRRAHsSame as CRR3 MP20 Outage Scheduler Connectivity QualificationOS ERCOT, QSERs, TSPsComplete as of Outage Scheduler BOD approval on 8/17/2010. EMO3 Verify Outage Evaluation System FunctionalityOSERCOTComplete as of Outage Scheduler BOD approval on 8/17/2010. MP6(SCED)Telemetry Compliance 3.10.7.5EMSQSERsTelemetry outreach for missing telemetry was completed in June of 2010. MP6(SE)Telemetry Compliance 3.10.7.5EMSQSERs Telemetry outreach for telemetry in the network model, but with no ICCP being received was completed in June of 2010. EMO6Individual LFC TestingEMSQSERsIndividual LFC tests were conducted in May in preparation MP6 (TSP)Telemetry Compliance 3.10.7.5EMSTSPsSame a MP6(SCED) CO4 Zonal/Nodal Coordinated Settlement OperationsSettlementsERCOT 1st Zonal/Nodal Coordinated Settlement test performed in I-Test from End of June to End of July. Defects were raised in data aggregation and in Appworx jobs. 2nd Zonal/Nodal Coordinated Settlement test began on 8/9/2010 and completed on 08/27/2010. All previous defects were resolved and no new defects were raised. CO1 Settle Market for 7 Days and provide appropriate extractsSettlementsERCOT The Day-Ahead Market was run consecutively form 8/10/2010 through 8/21/2010. DAM statements have already been posted for all of those days. RTM Initial Statements for were posted on 8/25/2010. MP11Resource RegistrationReadinessREs Include RARF registration, submission of decision making authority, and Genmap validation. Effort completed in July 2010. MO7 ERCOT Operating Personnel and Facilities Readiness Readiness (Cutover)ERCOTDAM control room already setup with Nodal equipment. EMO13 Operating Personnel and Facilities Readiness Readiness (Cutover)ERCOTTaylor and Austin control rooms already setup with Nodal equipment. E8 ERCOT Staffed for Texas Nodal Operations Readiness (Cutover)ERCOT Market Reform report completed in June. ERCOT management has implemented an action plan to address recommendations. MP18 Mapping of Resource and Loads in Private Area NetworksReadiness (Quality)QSERsAll Resource and Load PUNs mapped in the model. Readiness Criteria – Completed Metrics ERCOT has 19 newly completed nodal metrics - 7 Metrics related to TAC/Board have signed off (NMMS, OS, and CRR). - 5 EMS metrics - 7 Metrics for general readiness 2 September 2010Technical Advisory Committee

46. 46 Readiness Criteria – From now to Go-Live Metric IDMetric NameAreaApplies ToComments EM02 Verify Voltage Support FunctionalityReadinessERCOT, QSERsIf Operations decides this is an operational scenario to be tested, this metric would be fulfilled. E15 Verify TSP Performance Monitoring Test PlanReadinessERCOT Plan exists in Nodal Operating Guide Section 9. Updates added by NOGRR25 and approved by TAC. Differing expectations between TAC/Market and ERCOT on what's in scope for Nodal Go-Live. Need an update on the status of the grey boxes. E14 Verify QSE Performance Monitoring Test PlanReadinessERCOT Plan exists in Nodal Operating Guide Section 9. Updates added by NOGRR25 and approved by TAC. Differing expectations between TAC/Market and ERCOT on what's in scope for Nodal Go-Live. Need an update on the status of the grey boxes. E2 Verify ERCOT Performance Monitoring Test PlanReadinessERCOT Plan exists in Nodal Operating Guide Section 9. Updates added by NOGRR25 and approved by TAC. Differing expectations between TAC/Market and ERCOT on what's in scope for Nodal Go-Live. Need an update on the status of the grey boxes. R1 ERCOT Nodal Readiness DeclarationReadinessERCOTCovered in Readiness Criteria/Go-Live presentations to TAC/BOD R3168-Hour Test CompletionReadinessERCOTUse exit criteria from the 168 Hour Test Hand Book. E6 Develop Nodal Operating GuidesReadinessERCOT Operating guides reviewed and approved by stakeholder groups including TAC. Meeting tomorrow to get a completion justification E10 Validate ISM, CDR, and Lodestar Source Reporting Access & Accuracy for internal ERCOT useReadinessERCOTGroup this into the EMIL Reports Nodal Readiness Sign-off. EMO8Conduct EECP TestReadinessERCOTIf Operations decides this is an operational scenario to be tested, this metric would be fulfilled. R0 Market Participant Nodal Readiness DeclarationReadinessERCOT, MPCovered in Readiness Criteria/Go-Live presentations to TAC/BOD IMM1 Market Monitor Systems CapabilityReadinessIMMTo be included in the IMM declaring Readiness for Go-Live. C10 Verify Single Point of Failure Recovery EMS/MMS/NMMS/CRR/C OMS Readiness (Cutover)ERCOTERCOT has been performing regular site failovers throughout Market Trials. C9 Contingency Plan for Site Unavailability Readiness (Cutover)ERCOTSame at C10 24 Metrics not yet active, but still planned to be measured before Go-Live. Technical Advisory Committee2 September 2010

47. 47 Readiness Criteria – From now to Go-Live (continued) Metric IDMetric NameAreaApplies To Readiness Criteria?Comments E5 Nodal SAS 70 Preparedness Readiness (Cutover)ERCOTYes PwC has completed an assessment of new control objectives. Internal Audit is going to sample the control objectives and do audit testing around the 168 hour test. Metric will be completed once ERCOT addressed an issues raised by the Internal Audit group. C8 Contingency Plan for Portal/API Failure Readiness (Cutover)ERCOTYesPart of cutover scope. C6 Develop Plan for SE Failure Readiness (Cutover)ERCOTYesPart of cutover scope. C5 Contingency Plans for Key Settlement and Financial Transfer Processes Readiness (Cutover)ERCOTYesPart of cutover scope. C4 Contingency Plan for SCED Failure Readiness (Cutover)ERCOTYesPart of cutover scope. C3 Contingency Plan for ICCP Data Failure Readiness (Cutover)ERCOTYesPart of cutover scope. C2 Contingency Plan for DAM / LMP Failure Readiness (Cutover)ERCOTYesPart of cutover scope. C1 Contingency Plan for Weekly, Daily and Hourly RUC Failure Readiness (Cutover)ERCOTYesPart of cutover scope. R2 Develop Texas Nodal Market Launch Plan Readiness (Cutover)ERCOTYes Planned completion when the final cutover plan is released after the last Market Readiness Seminar in September. EMO7 Verify Load Forecast Accuracy Readiness (Quality)ERCOTYesBring more in line with performance reporting requirement in Section 8.2 (2)(c). E12MIS Compliance TestMISERCOTYes 7/14/2010 - March 2010, Security Compass did a pen test to verify the integrity digital certificates to access MIS public, secure, certified. Small # of vulnerabilities were found that have been addressed. Security Compass is coming back in July 2010 to make sure all items have been addressed. Need final agreement that this metric is complete. CO10 Verify Credit CalculationsCreditERCOT, MPYes Through MT5, we have posted credit and have calculated credit limits throughout Market Trials. Full justification needed. E7 Validate ISM Access & Accuracy of Postings Required by the IMMMMSERCOT, IMMYesTo be included in the IMM declaring Readiness for Go-Live. Metrics will be closed as TAC/BOD signoff is garnered for various systems and readiness areas Technical Advisory Committee2 September 2010

48. 48 Next 60-days of Nodal Classes/Workshops Technical Advisory Committee2 September 2010 Course Start DateLocation Economics of LMPSeptember 13ERCOT Met Center (Austin) ERCOT 101 for Wind GenerationSeptember 13Optim Energy (Dallas) ERCOT Nodal 101September 14StarTex Power (Houston) Generation 101September 15Hilton Austin Airport (Austin) Basic Training ProgramSeptember 20LCRA (Austin) Load Serving Entity 201September 27ERCOT Met Center (Austin) Congestion Revenue RightsSeptember 29Suez Energy (Houston) ERCOT Nodal 101October 5RBS Sempra (Stamford, CT) Basic Training ProgramOctober 18Suez Energy (Houston) Enrollment at: http://nodal.ercot.com/training/courses/index.htmlhttp://nodal.ercot.com/training/courses/index.html

49. 49 RED/AMBER Metrics Summary – Market Participant Metrics Technical Advisory Committee2 September 2010 Market Participant Metrics Metric Name Current Score Applies to WeightGreen %Yellow %Red % Not Scored % Primary CriteriaNotes Market Participant Metrics MP15(B) CRR Connectivity Qualification RedCRRAHs Even weighting 89%0.0%11%0.0% Successful submission CRR transactions 80/90 CRRAHs qualified. Greater than 5% RED. MP16 DAM Participation AmberQSEs Even Weighting 67.4%13.9%16.0%2.7% Participation in 50% of the Day-Ahead Market runs 126/187 QSEs w/o Resources MP21 WGRs ICCP Meteorological Telemetry Amber REs (only WGRs) Registered MW Capacity Ratio Share 66.0%32.31.7N/A WGRs must meet reasonability tests for MET ICCP < 5% RED, so the metric is currently listed at AMBER MP15(B) 10 CRRAHs working towards qualification * Minimal risk to running the December 2010 Auction MP16 QSEs w/o Resources DAM participation between 65%-80% since measurement started in April. These QSEs represent 1% of Load. Minimal risk to Go-Live MP21 67 WGRs – 55 passed reasonability test, 9 working with ERCOT to resolve, 3 with no response 55 up from 42 from the previous two-week measurement * 5 new CRRAHs added prior to 8/13 deadline. Not included in MP15B because they have a 30 day window before ERCOT publishes their CRRAH qualified status.

50. 50 CRR Metrics Technical Advisory Committee2 September 2010 Metric Name Current Score Applies to WeightGreen %Yellow %Red % Not Scored % Primary CriteriaNotes Market Participant Metrics MP15(B) CRR Connectivity Qualification RedCRRAHs Even weighting 89%0.0%11%0.0% Successful submission CRR transactions 80/90 CRRAHs qualified. Greater than 5% RED. CRR3 Operation of CRR Auctions and Allocations GreenCRRAHs Even weighting 81.2%0%18.8%0.0% Participation in at least 1of the last 2 auctions or allocations. > 80% total participating 63/77 CRRAHs with adequate participation in June or July auction or allocation ERCOT Metrics CRR3 Operation of CRR Auctions and Allocations GreenERCOTN/A Auction results distributed to participants per schedule in CRR Handbook 8/10/2010 Annual Auction results posted (delayed 1 day due additional validation needed) Green ERCOTN/A100%0% Allocated Revenue Rights in statistical sample = 100% accurate Source – Sink price/clearing prices quality check performed successfully by CRR team after each auction CO8 Verify CRR Auction Invoices Green ERCOTN/A100%0% CRR Auction Result for MP(n) – CRR Auction Invoices for MP(n) = 0$ S&B validated invoices reflected awards for each CRRAH in the March, April, May, June, July, and August auctions,. Green ERCOTN/A100%0% System Generated CRR Auction Invoices not posted = 0 Annual CRR auction invoices submitted to all 40 CRRAHs who participated

51. 51 Real-Time Metrics Technical Advisory Committee2 September 2010 Metric Name Current Score Applies to WeightGreen %Yellow %Red % Not Scored % Primary CriteriaNotes Market Participant Metrics MP3 Market Submissions Connectivity Qualification GreenQSERs Generation Ratio Share 99.0%1.0%0.0% Successful submission of RT and DAM transactions 79/81 QSERS qualified GreenQSEs Even weighting 97.3%0.0%0.5%2.2%182/187 QSEs qualified. EMO6 Individual LFC Testing GreenQSERs Generation Ratio Share 93.0%0% 7.0% 80% of generation has completed individual test LFC prior to the system-wide LFC tests 69/79 QSERs completed their individual LFC test or provided attestation MP15-A Real-time Market Participation GreenQSERs Generation Ratio Share 98.8%1.2%0.0% Weekly average of daily SCED submissions 78/79 QSERs above 95% weekly average for SCED submissions. ERCOT Metrics MO3 Verify SASMGreenERCOTN/A100%N/A Multiple SASMs are successfully executed during Market Trials and the 168 hour test. SASMs successfully run on 4/28, 4/30, 5/4, 5/6, 5/7, 5/12, 5/14, 6/9, and 6/10. No issues reported. MO4 Verify SCED Execution Quality GreenERCOTN/A100%0% All successful SCED executions passed the post-execution price validations. 7/27 – 8/9 period – 4,027 Price Validation runs with no rule violations MO5 Generate 6 Months of LMPs GreenERCOTN/A99.5%.0%.5%0% 95% of SCED executions completed with LMPs posted on MIS. 7/27 – 8/9 period, 4,015 out of 4,037 SCED runs with LMPs posted. CO5 Verify RTM Settlement Statements/CO6 Verify RTM Settlement Invoices GreenERCOTN/A100%0% System Generated RT Statement Dollars- Independently Generated RT Calculation Dollars =$0 7/1 – 7/30 RTM Statements and Invoices validated $$ = system generated (with some rounding differences) GreenERCOTN/A100%0% System Generated RT Statements/Invoices not posted = 0 7/1 – 7/30 RTM Statements and Invoices All posted on time

52. 52 Day-Ahead Market Metrics Technical Advisory Committee2 September 2010 Metric Name Current Score Applies to WeightGreen %Yellow %Red % Not Scored % Primary CriteriaNotes Market Participant Metrics MP16 DAM Participation GreenQSERs Generation Ratio Share 98.6%1.4%0.0% Participation in 50% of the Day-Ahead Market runs 77/80 QSEs with Resources AmberQSEs Even Weighting 67.4%13.9%16.0%2.7% 126/187 QSEs w/o Resources ERCOT Metrics MO9 Generate DAM LMPs GreenERCOTN/A 95 percent DAM execution as evidenced by DAM LMP postings 7/27 – 8/9 – 10/10 DAM runs execute(doesn’t measure quality) MO10 DRUC Execution GreenERCOTN/A 95 percent DRUC execution 7/27 – 8/9 - 7 out of 7 DRUC runs executed (DRUC was not scheduled for everyday) CO3 Verify DAM Settlement Statements/CO7 Verify DAM Invoices GreenERCOTN/A100%0% System Generated RT Statement Dollars- Independently Generated RT Calculation Dollars =$0 7/1 – 7/30 DAM Statements and Invoices All validated $$ = system generated (with some rounding differences) GreenERCOTN/A100%0% System Generated RT Statements/Invoices not posted = 0 7/1 – 7/30 DAM Statements and Invoices All posted on time 1.MP16 – Metric is based on a 2 week rolling average (8/9 – 8/20 12 runs). 2.MP16 – 96% Load participating.

53. 53 Network Modeling Metrics Technical Advisory Committee2 September 2010 Metric Name Current Score Applies to WeightGreen %Yellow %Red % Not Scored % Primary CriteriaNotes Market Participant Metrics MP6 Telemetry Compliance with Nodal Protocols 3.10.7.5 GreenQSERs Generation Ratio Share 100%0.0% Expected State Estimator telemetry submitted. 78/78 complete. 3502 total SE points provided GreenQSERs Generation Ratio Share 100%0.0% Expected SCED telemetry submitted. 78/78 complete. 7629 SCED points provided GreenTSPs Ownership Ratio Share 99.3%0.0%.7% Expected TSP telemetry per ICCP Handbook submitted 14/17 TSPs above 98% threshold for GREEN. 143 points outstanding N2 Telemetry ICCP System Failover 9/1/2010QSERs Generation Ratio Share 89.5%0% 10.5% ICCP Failover test completed successfully prior to the 8-hour LFC test. 64/79 QSERs completed ICCP telemetry failover test. MP21 WGRs ICCP Meteorological Telemetry Amber REs (only WGRs) Registered MW Capacity Ratio Share 82%13.5%4.5%N/A WGRs must meet reasonability tests for MET ICCP < 5% RED, so the metric is currently listed at AMBER 1.MP6 does not include 405 QSE CB and DSC points from TSP outreach. ERCOT is determining whether these rollback into the QSER MP6 measurement.

54. 54 Network Model Metrics Technical Advisory Committee2 September 2010 Network Modeling Metrics Metric Name Current Score Applies to WeightGreen %Yellow %Red % Not Scored % Primary CriteriaNotes ERCOT Metrics EMO9(A) State Estimator Standards Performance GreenERCOTN/A State Estimator converges 97% during monthly test period 98.4% Convergence for State Estimator for the month of July. EMO9(B) RTCA Modeling Differences GreenERCOTN/A96.8%N/A 95% of impedance values matched between Zonal/Nodal 97.9% match for impedances for lines and transformers. 6718 lines and transformers in Nodal. GreenERCOTN/A96.8%N/A 95% of dynamic line ratings matched between Zonal/Nodal 99.2% match for ratings for lines. 5288 lines in Nodal. GreenERCOTN/A 98.6%N/A 95% of load tap setting values matched between Zonal/Nodal 98.6% Match for transformer tap settings. 1430 xfrms in Nodal. EMO10 Anomalous / Auto-Disabled Telemetered Points GreenERCOTN/A1.91%N/A The % of Anomalous and Auto-Disabled Measurements < 2% of Total Measurements April Nodal 2.58% May Nodal 1.92% June Nodal 1.91% July Nodal 1.44% EMO9(C) RTCA CSC Comparison GreenERCOTN/A99.6%N/A CSC Pre-contingency SE Flows within 5% (Hourly snapshot) Measurement establishes baseline flows on Commercial lines between Zonal and Nodal (7/27 – 8/9)

55. 55 Other Readiness Metrics Technical Advisory Committee2 September 2010 Metric Name Current Score Applies to WeightGreen %Yellow %Red %Not Scored %Primary CriteriaNotes Market Participant Metrics MP20 Outage Scheduler Connectivity Qualification GreenQSERs Generation Ratio Share 98.9%0.0% 1.1% Successful submission of OS transactions 78/79 QSERS qualified. GreenTSPs Ownership Ratio Share 99.7%0%.3%20/23 TSPs qualified. MP11 Resource Registration GreenREs Registered MW Capacity Ratio Share 99.6%0.0%.4%0.0% Decision Making Authority form submitted, and GENMAP validated 154/157 Resources completed. ERCOT Metrics E1 ERCOT Staff Completes Training GreenERCOTN/A100% N/A Training plans must be adhered to for highly impacted departments 15 out of 15 highly impacted departments are up to date with their training plans. E9 Develop Nodal Procedures GreenERCOTN/A100% N/A Procedures developed 1 month prior an exercised in the appropriate Market Trials Phase All MT5 procedures exercised as scheduled in MT5. EMO3 Verify Outage Evaluation System Functionality GreenERCOTN/A A test of the Outage Management Process is completed OS to OE integration tested throughout Market Trials and reviewed at 6/23 NATF