Update from ERCOT Market Services for TAC

October 3, 2002

Retail Market UpdateTopicsERCOTs Master Project PlanMove-In/Move-Out Issues/Initiatives GISB 1.4 Update Transaction Transparency (ETS Update)Quick Recovery Team UpdateNew Power Transfer UpdateMarket Synchronization ActivitiesConsumption Data Loading ReportsLodestar Data Loading ImprovementsResettlement Update

Master Project Plan Update

Master Project PlanAll Known In-flight & New Projects identifiedRelated project worksheet established with list of all known projectsStatus/UpdatesTargeted outcomesResources (Funding & Headcount) required identified where knownInternal reviews of projects with ERCOT steering committee completedConsolidated list of all active and planned projects distributed to TAC, subcommittees, and PUCT on August 20thPRS completed prioritization of projects originated by Market Participants on August 28th TAC approved list of priorities on September 5thList delivered to ERCOT BOD targeted for approval at October meeting Next StepsERCOT resources are being aligned with recommended prioritiesInitial hiring underwaySynchronize with the 2003 budget/plan when approved

Move-in and Move-outShort Term Solutions Update

Safety Net Move-In: First part was remanded to QRE. Second part is not being acted upon because it requires ERCOT to process all the MIMO Safety Net Spreadsheets rather than TDSPsMove-in/Move-outShort-term Solution StatusRMS has agreed to consider the following items Closed with the analysis remanded over to the Long-term MVI/MVO Working GroupProvide Visibility into ERCOTs Systems Splitting Move-In from SwitchNFI Rejection CodesExpedite ESI ID Creation (7A-ERCOT's portion)RMS is being asked to Move the following items to the Long-term MVI/MVO Working Group Cancellation of Pending SwitchCR Holding Move-In Transaction X Number of Days Expedite ESI ID Creation (7B-Oncors portion)

Move-in / Move-out Long-termRecommendations

Move-in/Move-outLong-term Solution StatusCompletedEstablished task force of market participants on September 5th Reviewed additional root cause analysis by MPs3 working sessions over the next several weeks with MPs. 1st is September 24th-25th. AEP TDSP, CenterPoint, Reliant Retail, Coral Power, GEXA Energy, and Republic PowerNext StepsDevelop comprehensive list of business scenarios not addressed by short-term solutionsDevelop detailed requirements for long-term resolution in preparation for RFP and subsequent implementation Scheduled working sessions withWeek of 9/30 - Oncor,TXU Energy, Exolink, Texas Commercial Energy, AEP Retail, Entergy Solutions, Week of 10/7 - Entergy Gulf States, EC Power, Constellation New Energy, Green Mountain, TNMP. Possibly others.

Move-in/Move-outLong-term Solution StatusWhy Root Cause Analysis?

Ensure problem resolution investments are consistent with what greatest value to market

Confirm that current market design/implementation is viableConfirm detailed understanding of causes Errors in current systems implementationProtocol/procedural gapsExecution issues at ERCOT and Market ParticipantsHow are ERCOTs systems built?Confirm TDSPs have consistent design

Confirm current systems performance and transaction sequencing

Move-in/Move-outLong-term Solution StatusTimeline 08-29-02 RMS establishes Task Force09-05-02Kickoff Meeting assignments given for MP transaction root cause analysis10-15-02Complete root cause analysis and comprehensive listof business scenarios11-01-02Develop detailed requirements document for RFP -RMS Approves MIMO requirements document -Release RFP to vendors -RFP Responses due from vendors -Summarize vendor responses for Task Force review -Recommendations to EOTF on vendor Short List -Vendor presentations to Task Forces -EOTF recommendation to ERCOT Board -Begin contract negotiationsEnd 1Q03Award contract

GISB 1.4 Update

GISB 1.4 UpdateRMS agreed at August meeting to move forward with implementing GISB 1.4 at ERCOTInternal testing and implementation of a GISB 1.4 interface is underway at ERCOT, targeting 1st full week in October for preliminary market participant tests TDTWG is surveying market participants to finalize migration readiness datesERCOT will publish preliminary migration schedule and plan by the end of October.Expecting first market participant migration in late November.ERCOT will plan to migrate 2-3 participants per week per the schedule and based on market participants readinessGoal is to complete migration off of FTP by April 1, 2003

Transaction Transparency

ESIID Tracking System (ETS)

ERCOT Visibility Phase I & IIPhase I ProgressProduction Database Server and Application Server has been orderedDevelopment Database Server and Application Server are configured and installed on the networkReport Development 95% completeString Testing is complete Testing in ITEST underwayOn schedule for November 1, 2002

Phase II ProgressBegan work on Requirements DocumentModifying initial cost estimates for PUCT Data Requirements (Scorecard)Summarized Market requirements for data contentInternal Project Kick-off meeting scheduled for October 3, 2002Seeking funding and approval from ERCOT Board for 2003

Quick Recovery Team Update

Quick Recovery EffortPeriod for Investigation Expanded January 1, 2002 July 31, 2002QRE is proactively working the Siebel extract report for all Business Processes from the period July 1- July 31 that are still showing up as Scheduled on the ERCOT report.

QRE will be working with Data Management to assist in clearing FasTrak issues prior to July 31, 2002. QRE will take direction from Data Management it is not necessary for MPs to do anything.

QRE is working to set up weekly status conference calls with each MP to review QRE progress.

Quick Recovery EffortCreated FasTrak issue for all TDSPs to provide a consolidated spreadsheet for all QRE requests for information or data

TDSP responses to request for transactions are uploaded and tracked in QRE database

Pursuing responses from CRs and TDSPs~8,761 ESI Ids are awaiting more information or acknowledgment of closure from CR~21,258 have been sent to TDSPs for investigation

Documentation is being created to outline processes used by QRE team to ensure consistency and allow for team knowledge transfer to ERCOT

Training materials are being created and assembled to pilot on ERCOT new hires

ESI Ids Reported to QRE (as of October 1, 2002)

New Power Transition Status

New Power Transition Status4-In Review25-Scheduled2-CR to Resubmit31-TOTALRemaining ESI IDs as of October 2nd

Market Synchronization Activities

Market Synchronization Retailer Synchronization ProjectObjective Address market issues resulting in an out of sync Rep of Record between ERCOT, TDSP, and CR systems for all ESI IDs resulting from market startup/processing issues as well as subsequent workaroundsCompletedERCOT identified Perfect Sync and 1 Day Perfect sent lists to MPsERCOT identified out-of-synch categories at Sept 10th design meetingTask Force identified additional ESI IDs considered In Sync sent lists to MPsTask Force prioritized 8 categories based upon potential customer impact ERCOT sent priority 1 and 2 out-of-sync files to TDSPs and CRs Sept 17th and 24th conference calls to set file analysis response timelines for TDSPs and CRs, discussion of progress and open issues In ProgressERCOT sending priority 3-6 out-of-sync files to TDSPs and CRs by October 4th TDSPs and CRs to send analysis of priority 1 files by Sept 26th and priority 2 files by Sept 30thTDSPs and CRs analyzing files received from ERCOTWeekly conference calls scheduled

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Market Synchronization Retailer Synchronization ProjectConsidered In Sync5,279,063Under Analysis859,836Non-ERCOT area Removed from Analysis945,000ESI IDs

Market Synchronization Retailer Synchronization (continued)

Next Steps

October 1st, 8th, 15th Follow-up Conference Calls Define items for immediate fix and report on progressDefine issues to raise to RMS

October 16th Present any disputed scenarios to RMS

November 7th Escalate issues to TAC (if required)

Market Synchronization Non Price to BeatObjectiveMake necessary corrections to ensure that >1MW Customers were switched on the correct date in January 2002Completed Items Per RMS direction, ERCOT sent lists to each MP for reconciliation:Full list of ESI ID in the >1MW project was confirmedStill to be fixed list (subset of the full list) was also confirmed1,133 ESI Ids (>1 MW) identified by CRs (meeting the April 30 deadline)Number increase attributed to reconciliation of lists with Market Participants 951 (84%) ESI IDs are corrected 74 ( 7%) ESI IDs were agreed not to fix by TDSP and CRIn Progress108 (9%) ESI IDs remaining to be fixed 91 where CR and TDSP agree to fix17 where CR and TDSP are not in agreement CR will have to escalate

Market Synchronization Non Price to BeatNext StepsERCOT to continue to confirm changes in Siebel and LodestarRound 2 of analysis in progress at ERCOTERCOT will provide suggested next steps to the submitting CR and TDSPScheduling conference calls with TDSP to determine next steps for those ESI IDs that still need to be fixed (ERCOT metering team included on calls)CR to escalate ESI IDs where no agreement exists

Sheet1

Distribution of ESI IDs where CR and TDSP are not in agreementCR1CR2CR3CR4CR5Total

TDSP 13----3

TDSP 2-1---1

TDSP 3--12-3

TDSP 41-1-810

Total4122817

Sheet2

Sheet3

Consumption Data Loading Reports

IDR Data Loaded into LodestarAugust 27th Report95% or better expected75%

IDR Data Loaded into LodestarSeptember 24th Report95% or better expected91%

IDR Data Status Report September 24, 2002

Non-IDR Data Status Report September 23, 2002

Lodestar IDR Data Loading Improvement Recommendations by TDSPs

IDR Data Loading Recommendations by TDSPsObjective Implement process improvements which alleviate problems loading IDR data into ERCOTs Lodestar systemCompleted ItemsERCOT and MPs met August 15th to define scope of 9 itemsConference call held on August 26th to refine scope and follow-up6 items are complete (see matrix on next page)TX SET reviewed 2 EDI related recommendations on Sept 16th (see matrix)In Progress2 items defined for immediate action (both are currently in test)4 items defined as long term fixes (project request being drafted)Next StepsSeek project funding and priority approval.

IDR Data Loading Recommendations by TDSPs.

Resettlement Update

Resettlement of True-up Status UpdateObjective Identify and track the key critical market issues needing resolution prior to the resettlement calculations of true-up statements for trade days beginning with July 31, 2001. Re-settlements started the night of September 4th . 50 re-settlements have been posted.

Six Issues/Status:IDR Data Loading 100% for market through Sept 09, 2001NOIE IDR Data Correction Completed and verified by TDSPProfile ID Corrections All TDSPs now pass the acceptable criteria Lodestar and Siebel Status Mismatches Complete for 2001 datesTNMP and AEP have completed negative consumption fixesOutstanding OOMC Disputes QSEs have submitted corrections (reduced payments apply otherwise). Statistics will continue to be monitored for compliance

Task Force consisting of Don Bender (AEP), Bill Bojorquez (ERCOT), Dave Robeson (Entergy), Lan Conn (Entergy), Vernon Pierce (Entergy); Cary Reed (AEP); Dave Farley (ERCOT), and Darrell Hobbs (Oncor). We have also solicited the help of Leanne Hayden (Republic Power) to provide some additional analysis on Conceptual Recommendation #3.