1. October 8, 2007 TPTF Meeting Texas Nodal Program Update Jerry Sullivan Program Director, Market Redesign

2. 2 2 Texas Nodal Program UpdateOctober 8, 2007 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 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 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.

3. 3 3 Texas Nodal Program UpdateOctober 8, 2007 Key Program Successes – Market Trials Nodal EDS Project Teams and Market Participants Delivery TeamStatus EDS 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

4. 4 4 Texas Nodal Program UpdateOctober 8, 2007 Key Program Successes – Nodal Project Teams Delivery TeamStatus EMS 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 traceability Defects  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 Participant Team 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 & Billing Successful 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

5. 5 5 Texas Nodal Program UpdateOctober 8, 2007 Staffing concerns focused on employees AttritionERCOT, Inc.Texas Nodal Program Annualized percentage # employeesAnnualized percentage # employees Annualized11%7632%40 YTD Actuals11%6332%33 pre Retention Plan10%4829%24 post Retention Plan13%1543%9 NODAL attrition rates significantly higher than ERCOT in general RolePlan & status Integration Testing PM3 internal candidates identified External search not initiated per hiring manager’s request Integration & Design Authority PMPlan and status to be decided by hiring manager

6. 6 6 Texas Nodal Program UpdateOctober 8, 2007 ACE Calculation and Pre Conditions Recent schedule changes Software Drop BaselineForecastKey FeaturesRationale for delayImpact on EDS NMMS 2aFAT Start: 10/1/2007 FAT End : 11/1/2007 FAT Start: 10/22/2007 FAT 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 3FAT Start: 10/16/2007 FAT End: 11/05/2007 FAT Start: 11/30/2007 FAT 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 3FAT Start: 2/23/2008 FAT 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 OctNovDecJanFeb LFC Testing – Individual QSE Network Model Verification 01/15 EDS 2 Rel 4 EDS 3 Rel 6 MarApr

7. 7 7 Texas Nodal Program UpdateOctober 8, 2007 Recent schedule changes Software Drop BaselineForecastKey FeaturesRationale for delayImpact on EDS MMS 2FAT 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 3FAT Start: 1/24/2008 FAT 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 4FAT 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 OS1FAT Start: 11/19/2007 FAT End: 12/15/2007 FAT Start: 1/21/2008 FAT End: 2/1/2008 Nodal Outage Scheduler EDS 4 EIP deliveries for EDS 4 are being re-planned to suit vendor deliveries EDW (reports & extracts) still under replanning

8. 8 8 Texas Nodal Program UpdateOctober 8, 2007 Budget Update