October 8, 2007TPTF Meeting

Texas Nodal Program Update

Jerry SullivanProgram Director, Market Redesign

2Texas Nodal Program UpdateOctober 8, 2007 2

CostScheduleScope / Quality

Legend

Summary

Overall program status remains amber

Green

Effort being made to keep costs to $263 Million. Latest forecast as of Oct

5 is between $273 and $280 with continuing effort being made on

efficiencies and finding savings without jeopardizing quality issues.

Amber Amber

Currently fully aligned with

protocols

Red

Amber

Green Estimate at Complete = <$263m

Estimate at Complete = < $263m + 10%

Estimate at Complete = >$263m + 10%

Go-live = 12/1/08

Go-live = <30 days+

Go-live = >30 days+

Program is aligned with current protocols

Program is aligned to previous protocol version

Program is not aligned to protocols

All Early Delivery Systems (EDS) on track. EDS4 has significant risk.

Meetings being held to ensure confidence in schedule for Go-Live

Date.

Scope/Quality

Nodal

Cost

ScheduleScope/Quality

Schedule

Cost

Nodal Delivery

Amber

Current product quality is not sufficient for Nodal launch

Most Nodal products currently achieve quality standards

All Nodal products currently achieve quality standards

Loss of IDA and Integration Test

PMs poses leadership

concerns over future quality.

Actively looking at experienced leadership to

assume roles.

3Texas Nodal Program UpdateOctober 8, 2007 3

Key Program Successes – Market TrialsNodal EDS Project Teams and Market Participants

Delivery Team StatusEDS 1 97% (63,916 of 65,902) of point-to-point connections tested to date

Currently less than 4% average error rate(Goal: <3% error rate per Market Participant)

On goal

EDS 2 Nodal Telemetry Criteria (October 1, 2007 Telemetry Criteria and State Estimator Standards Workshop) amended; ROS recommended for TAC approval

On goal

EDS 3 100% (QSE w/resource) SCED Testing successfully completed for Connectivity and SCED input

Satisfies two Market Readiness Metrics

MP2: QSE’s ability to connect to the EDS Market Interfaces

MP3: QSE’s ability to create, update, cancel and query SCED inputs

TPTF approval of CRR Handbook Successful CRR kick-off EDS environment

(EDS3 R7.0 - pre-work activities)

On goal

Three of Four Trial Major Market Trials are Proceeding Successfully Against Plan

4Texas Nodal Program UpdateOctober 8, 2007 4

Key Program Successes – Nodal Project Teams

Delivery Team StatusEMS EMS team consistently releasing code on time

Returned to Program $1.6M from Baseline 1 & 2 authorization Forecasting $2.2M reduction of Areva Baseline 0 costs All requirements approved by TPTF

On goal

CRR Incorporated Baselines 1 & 2 changes into Pre-FAT version, earlier than expected

Complete traceabilityDefects Test Scripts Test Cases Use Cases Requirements Protocols

Successfully completed Pre-FAT; entered FAT with all Pre-FAT defects resolved

On goal

MMS Successful SCED calculation functionality exposure to Market ParticipantTeam delivered function early to support EDS testing

No critical errors discovered

On goal

NMMS November 2007 Transmission Service Providers market trials sign up begun on schedule

Successfully completed installation of NMMS on Citrix solution

On goal

Integration Successful end-end run through of integration for Settlement & BillingSuccessful integration with Registration Extended the number of web services deployed for Market Participant use

On goal

Projects Continue to Deliver Quality Product and Meet Major Program Milestones

5Texas Nodal Program UpdateOctober 8, 2007 5

Staffing concerns focused on employees

Attrition ERCOT, Inc. Texas Nodal Program

Annualized percentage

# employees Annualized percentage

# employees

Annualized 11% 76 32% 40

YTD Actuals 11% 63 32% 33

pre Retention Plan 10% 48 29% 24

post Retention Plan 13% 15 43% 9

NODAL attrition rates significantly higher than ERCOT in general

Role Plan & statusIntegration Testing PM 3 internal candidates identified

External search not initiated per hiring manager’s request

Integration & Design Authority PM Plan and status to be decided by hiring manager

6Texas Nodal Program UpdateOctober 8, 2007 6

ACE Calculation and Pre Conditions

Recent schedule changes

Software Drop

Baseline Forecast Key Features Rationale for delay Impact on EDS

NMMS 2a FAT Start: 10/1/2007

FAT End : 11/1/2007

FAT Start: 10/22/2007FAT End : 11/1/2007

NMMS release with all features necessary to begin Network Model Verification (EDS 2 Release 4)

Delayed FAT start due to increase time for Pre FAT and Pre-FAT defect management

None – EDS 2 Release 4 will start as planned on 11/1/2007

EMS 3 FAT Start: 10/16/2007FAT End: 11/05/2007

FAT Start: 11/30/2007FAT End: 12/7/2007

• ACE Calculation• Regulation Reduction• Reg-Up and Reg-Down allocation to QSEs • Limit Calculations• Inputs from SCADA• Centralized Dispatch

• LFC development far more complex than originally anticipated

• Development should have started at least 6-8 weeks earlier than planned

• Vendor delivery was re-planned to ensure no impact to EDS timelines

None – EDS 3 Rel 7 - LFC will start as planned in Jan 08. Delivery of LFC requirements by vendor have been phased into 2 deliveries

EMS 3 FAT Start: 2/23/2008FAT End: 3/1/2008

• Rest of Generation Subsystem• Available ancillary service capacity by resource • Responsive Reserve deployment• Responsive reserve allocation to QSEs• Ancillary Service Reserves

None – All Generation Subsystem requirements will be tested internally by Mar 01, 2008, in time for Release 6.2 - LFC EDS

EDW (reports & extracts) still under replanning

EDS 2 and 3

Oct Nov Dec Jan Feb

LFC Testing – Individual QSE

Network Model Verification

01/15

EDS 2 Rel 4

EDS 3 Rel 6

Mar Apr

7Texas Nodal Program UpdateOctober 8, 2007 7

Recent schedule changes

Software Drop

Baseline Forecast Key Features Rationale for delay Impact on EDS

MMS 2 FAT Start: 9/25/2007

FAT End : 10/31/2007

FAT Start: 12/3/2007

FAT End : 1/11/2008

Features Included: Baseline 0+ functionality– MP and Operation Interface– DAM, HRUC, DRUC, POD, SFT, DEF, SCED+ – WPIDA007, 009, 015– Partial WPIDA003, 041, 021– NPRR049, 012, 033, 016, 064, 069– Partial NPRR005, 070, 035, 065, 006– Partial CR010, 057

Currently conducting planning sessions with

various groups to ensure least impact to

EDS schedule

MMS 3 FAT Start: 1/24/2008FAT End: 2/14/2008

Features Included: Baseline 0+ CIM Importer– MP and Operation Interface update– SASM– Partial NPRR047 – CIM Importer (limited testing due to input files)

Results of re-planning with MMS vendor,

incorporating Baselines 1 and 2

MMS 4 FAT Start: 4/7/2008

FAT End: 5/28/2008

Features Included: Baseline 0/1/2 functionality– MI DC Tie, MI RMR Offers, MI VDI, WRUC,

CCT, NSLR– WPIDA013, 003, 041, 007, 021– NPRR008, 071, 005, 070, 009, 002, 035, 047,

065, 006, 014, 061, 062, 024, 057– CR067, 057, 010

OS1 FAT Start:11/19/2007FAT End:12/15/2007

FAT Start: 1/21/2008FAT End: 2/1/2008

Nodal Outage Scheduler

EDS 4

EIP deliveries for EDS 4 are being re-planned to suit vendor deliveriesEDW (reports & extracts) still under replanning

8Texas Nodal Program UpdateOctober 8, 2007 8

Budget Update

Var. (o)/u Var. (o)/uCost Budget Actual Budget Budget Forecast Budget

Internal Resource

$ 16.4 $ 18.3 $ (1.9) $ 36.7 $ 42.2 $ (5.5) External Resource

40.6 38.3 2.3 71.5 86.3 (14.8) Vendor 35.6 29.0 6.6 56.4 65.1 (8.7) Hardware / Software

39.4 48.9 (9.5) 58.8 54.9 3.9 Taxes and Other

5.2 4.5 0.7 7.6 8.7 (1.1) Subtotal

$ 137.2 $ 139.0 $ (1.8) $ 231.0 $ 257.2 $ (26.2) Facilities Allocation

2.9 1.8 1.1 6.4 4.1 2.3 Contingen

- - - 15.0 - 15.0 Total Nodal

$ 140.1 $ 140.8 $ (0.7) $ 252.4 $ 261.3 $ (8.9) Finance Charge

- 3.6 (3.6) 10.6 10.6 - Total $ 140.1 $ 144.4 $ (4.3) $ 263.0 $ 271.9 $ (8.9)

LTD as of August 2007 - to be updated for September prior to BoD meeting

ERCOT - Nodal ProgramCost Element Summary - September 2007

($ Millions)

Life to Date (LTD) Estimate at Complete (EAC)