Texas Nodal Program Implementation TPTF June 26, 2006 Agenda

1. Texas NodalProgram ImplementationTPTF June 26, 2006Agenda 1 Texas Nodal

2. Agenda • Rational Unified Process training: 10 mins • Status …….request for action • Nodal Market Implementation Status Report: 15 mins • Information • Qs and As • TPTF Submission Schedule (Gantt): 15 mins • Information • Timeline negotiation, principles identified • Key Dates for Planning: 30 mins • Information • Discussion 2 Texas Nodal

3. Texas NodalMarket Participant RUP TrainingJune 26, 2006 3 Texas Nodal

4. TPTF RUP Training Overview Summary – 10 attendees confirmed to date • Provide overview of RUP (Rational Unified Process) • Basics to writing Use Cases • Two 16-person classes • One day in length • All classes at IBM Austin – downtown • July 12th (Wednesday) • August 9th(Wednesday) • Email: raldridge@ercot.com to register 4 Texas Nodal

5. Status Report • Nodal Market Implementation Status Report: 15 mins • Information • Qs and As 5 Texas Nodal

6. Texas Nodal Market ImplementationERCOT Board of Directors MeetingProgram status briefing - June 20,2006TPTF June 26, 2006 6 Texas Nodal

7. Overall Status Overall program status remains red • The size, complexity and risk of the program is not yet contained: • The common network model and CRR are subject to significant uncertainty • Expectations for extensive fork-lifting must be tempered by the fact of unique Texas Nodal Protocols • Budgetary implications are not firm • Enlisting TPTF to expedite resolution of key issues • Scenario analyses will inform options for substantial de-risking “green” software and integration • ERCOT will confirm the budget – and its risk-based contingencies – on September 1 (to coincide with the go-live date determination) • Staffing is not yet fixed: • Mobilization and productivity levels are behind expectations • Resources for business requirements are the priority • A comprehensive staffing model is now being deployed, utilizing ERCOT staff, short-term staff augmentation, contractors and consultants • Business requirements are the short-term critical path challenge: • The scale of effort required to achieve the necessary quality and approval is not yet understood • Mobilization and productivity levels are behind expectations • NPRRs have not been impacted through the Nodal Change Control • The combined NODAL team is driving to complete business requirements by October 30 Low confidence in the feasibility of 1/1/09 (<5%): ERCOT and the Market Participants will confirm the go-live date by September 1 (Results delivered at the 9/13/06 BOARD meeting) 7 Texas Nodal

8. Texas Nodal Team achieved a major milestone:- selected preferred vendors (RFP’s issued April 14) • Vendor selection completed on schedule: • ERCOT selected preferred vendors for the critical Nodal systems • Rigorous selection criteria have been applied, consistent with the Nodal Charter: • No “green” software – code in production will have fewer bugs, more robust, with proven integration • Consistent with ERCOT’s technology roadmap/footprint – to minimize total cost of ownership • Risk mitigation – minimized integration risks having schedule and cost implications • Proven track record of delivery – client references have been leveraged to validate predicted performance • Strength of vendor team – demonstrate adequate commitment of skills and experience, particularly project management • The results of selection are strictly confidential, pending explicit advice to the contrary Note - Commercial Systems (including Billing and Settlement) to be developed internally). 8 Texas Nodal

9. A strategy for integration has been established – requiring additional procurements • The strategy – messaging through web services with specialized solutions e.g. for real time and bulk data: • Focus on information architecture – applications need common definitions to communicate • Applications are loosely coupled through web services – insulating each application from changes in other applications. Changes center on messages, not the implementation of messages • Applications need not be “aware” of the web services, transforming interfaces into messages • Adhere to widely adopted open standards (i.e. xml, soap, wsdl, uddi) to reduce the technology implementation issues • Preferred vendors can all support this strategy • The strategy for integrating information addresses a number of risks: • Applications must communicate with each other, an EDW and presentation layer • Avoids the risk of point solutions without incurring the cost and effort of a major EAI implementation • ERCOT will issue an RFP to specialist IT integration vendors 9 Texas Nodal

10. Spending year to date • O&M • Internal labor $ 1452K • Equipment, tools, supplies $ 19K • Outside services $ 878K • Facilities and Utilities $ 91K • Employee expenses $ 19K • Interest and fees $ 21K • Total O&M: $2,480K • Capital • Total Capital $ 473K • Total spending through May $2,953K 83%  since April 10 Texas Nodal

11. TPTF Submission Schedule • TPTF Submission Schedule (Gantt): 15 mins • Information • Timeline negotiation, principles identified 11 Texas Nodal

12. Integrated timeline to September – as of 6/22/06 Changes/additions in blue 12 Texas Nodal

13. Planning Dates • Key Dates for Planning: 30 mins • Information • Discussion 13 Texas Nodal

14. Preliminary Key Dates • 6/7/06 Preferred vendors selected • 7/5/06 Start joint requirements, use cases, test cases was 6/30/06 • 7/6/06 EDW Roadmap complete • 7/10/06 Market Participant readiness activities list • 7/30/06 MIS & Integration Roadmap complete • Scenario Development and Choices 6/7-9/1 • 9/13/06 ERCOT Board of Directors meeting (commitment: date and dollars) • 10/30/06 Rqmts complete and approved *requires TPTF approval • 3/31/07 Market Participant interface specs complete • 4/1/07 EMS FAT begins • 1/1/08 Market Participant SCED offers begin (EDS3) • 7/1/08 Market systems, Market Participant offers (EDS4) 14 Texas Nodal