1. H.B. “Trip” Doggett President and Chief Executive Officer Tab 4: Proposed 2013 – 2017 Strategic Plan – Redline Board of Directors Strategic Planning Event ERCOT Public September 17, 2012

2. 2 ERCOT PublicTab 4 ERCOT Mission & Vision Mission: –We serve the public by ensuring a reliable grid, efficient electricity markets, open access and retail choice. Vision: –Proactively communicate resource and transmission adequacy risks to our stakeholders and pursue opportunities to address those risks through leveraging emerging technologies and new market products.

3. 3 ERCOT PublicTab 4 ERCOT Core Values ACCOUNTABILITY: taking personal responsibility for doing the right things the right way. LEADERSHIP: developing a vision and ensuring its successful completion. INNOVATION: implementing and operating creative solutions. TRUST: building confidence and consistency in through reliability, truth, and ability. EXPERTISE: developing and demonstrating respected skill and knowledge.

4. 4 ERCOT PublicTab 4 Strategic Drivers Generation Resource Adequacy Transmission Adequacy Maintenance and Evolution of the Nodal Market Evolution Regulatory Uncertainty Environment Cyber Security New and Emerging Technologies Talent Development and Retention Management

5. 5 Grid Reliability Kent Saathoff VP Grid Operations and System Planning Tab 4ERCOT Public

6. 6 Tab 4 Grid Reliability Manage the grid in a manner that maintains a high level of reliability. 1.1Lead the market in the development and implementation of strategy and policy to integrate emerging technologies (such as storage, demand response, plug in hybrids, distributed generation, and renewable generation) into the planning and operations of the ERCOT grid. 1.2Study and make recommendations to develop Develop a long-term transmission strategy for the region and mechanism for incorporating that incorporate into the mid-term transmission planning framework into mid term transmission planning. 1.3Proactively work with Market Participants to ensure operational readiness Work with Market Participants to ensure the grid is positioned to effectively respond to future operational challenges that may be caused by extreme weather and system disturbances. 1.4Develop and implement a coordinated oversight process for generation resource interconnection through operation to ensure study, protocol, data and operational sufficiency. 1.54Prepare requirements, develop specifications, and facilitate installation of Install improved visualization and situational awareness tools for ERCOT’s operators.

7. 7 Market Evolution Betty Day VP Business Integration Tab 4ERCOT Public

8. 8 Tab 4 Market Evolution Effectively manage Manage the continuing evolution of the wholesale and retail markets to effectively meet the changing business environment. 2.1Study and make recommendations to maintain current capacity levels and incentivize Encourage new resource entry through the structured evolution of the wholesale market in cooperation with Market Participants and Regulatory bodies. 2.2Develop and devote expertise to recognize Recognize and remedy flaws in the market design. 2.3Evaluate opportunities for loads and other alternate technologies (such as energy storage) to participate in the wholesale market. 2.4Ensure appropriate operational changes are implemented to respond to changing regulatory requirements associated with a potential exemption from the Commodity Exchange Act (CFTC).

9. 9 ERCOT PublicTab 4 Market Evolution continued 2.54Ensure credit requirements are appropriate to support continued financial stability within of the ERCOT market. 2.65Study and make recommendations in an effort to lead Support the evolution of the retail market given advanced metering and technology deployment demand response enabled by advanced metering infrastructure. 2.7Continuously enhance the management and provision of data by partnering with Market Participants to identify, document and implement requirements. 2.86Study and make recommendations to enhance the management and flow Support the evolution of data in the Smart Meter Texas (SMT) data repository.

10. 10 Compliance Chuck Manning VP HR & Chief Compliance Officer Tab 4ERCOT Public

11. 11 ERCOT PublicTab 4 Compliance Continue to demonstrate a reputation of excellent reliability performance while meeting Meet the increasingly demanding and complex requirements for compliance. 3.1Enhance and expand a “Culture of Reliability, Security and Compliance” within ERCOT and Texas Interconnect. 3.2Ensure ownership and compliance with all ERCOT Protocol, NERC and FERC requirements and achieve the best possible Reliability Standards registration state, enforcement engagement and audit performance Deploy best practice processes and incorporate NAESB standards to meet compliance expectations. 3.3Activity participate in industry committees and in partnership with NERC/FERC and ISO industry experts to address increasing cyber security requirements, changing reliability standards, NAESB standards and business process Assist the Texas PUC in Protocol and Operating Guides compliance activities.

12. 12 ERCOT PublicTab 4 Compliance continued 3.4Collaborate with our stakeholders on Working Groups such as CIP, 693, and TOPMOU. 3.54Prioritize security initiatives to align with IT infrastructure to defend ERCOT’s ISO sensitive information and critical assets. 3.5Integrate enterprise risk management across the organization.

13. 13 External Affairs Theresa Gage Director External Affairs Tab 4ERCOT Public

14. 14 ERCOT PublicTab 4 External Affairs Develop and maintain productive external relationships through proactive, effective and comprehensive communications. 4.1Disseminate Provide timely, accurate and useful information to key messages to inform and educate external audiences, including constituencies such as the Governor’s office, members of the Texas Legislature, the PUCT, other pertinent state and federal agencies, stakeholders, market participants and consumers within the ERCOT region (Market Participants and Consumers), and the ERCOT Board of Directors. 4.2Expand ERCOT’s exposure within Texas, nationally and internationally, by providing expert testimony to “like” entities regarding ERCOT’s approach to successfully achieving its organizational mission. 4.3Develop and implement Implement effective outreach strategies for reaching all constituencies during times of grid alerts and appeals for conversation to include the use of social media in addition to media and government relations methods.

15. 15 ERCOT PublicTab 4 External Affairs continued 4.4Communicate effectively during Texas Legislative and Congressional sessions on issues of importance to ERCOT and the Market by providing timely, accurate and useful resource information regarding how ERCOT serves the public interest of Texas as a trusted and objective independent system operator. 4.5Enhance our understanding, mitigation and communication of risks and their potential impact to ERCOT, its operations and its markets.

16. 16 Talent Management Chuck Manning VP HR & Chief Compliance Officer Tab 4ERCOT Public

17. 17 ERCOT PublicTab 4 Talent Management Attract, develop and retain highly skilled technical and operational professionals capable of managing ERCOT’s complex systems the right people with the right skills in the right position to develop a culture of excellence that empowers, incents, recognizes and celebrates our achievements. 5.1Continuously review the organizational structure and skills required to implement needed changes to ensure ERCOT is providing services in the most efficient and cost effective manner. 5.21Drive Develop effective and consistent performance management and talent identification processes. 5.32Provide training that addresses Focus on career development and growing skills needed skills for advancing technologies and changing business drivers.

18. 18 ERCOT PublicTab 4 Talent Management continued 5.43Enhance the current Implement a succession planning process for Executive/ and Director level positions that looks at the long-term direction of the organization and evaluate the benefits of expanding the process to other positions within the organization. 5.54Capitalize Expand recruiting by capitalizing on ERCOT’s image as industry leader in Retail, Wholesale and Grid Operations. 5.65Celebrate achievement through reward, recognition and incentive programs Recognize and celebrate individual and team accomplishments.