Midwest ISO Market Readiness Update October 27, 2004

Page 2 Seams Agreements Created “Safe Operation Mode” with PJM –Response to lessons learned during AEP and DPL integration –Provides framework for efficient management of all seams Agreements with MAPP, SPP and TVA expected in December –MAPP, SPP and MISO working together to achieve a consistent congestion management process

Page 3 Parallel Operations I Parallel Operations Phase I is intended to simulate an end-to-end market experience –Internal capability testing in progress –Market Participant Interaction scheduled for November 8 through December 17 –Participants submit day-ahead and real- time bids/offers and schedules and reliability commitment offers

Page 4 Parallel Operations I, cont. –Clear day-ahead and real-time markets –Provide LMP data, unit commitment and schedules to participants –Bind constraints to relieve congestion –Produce daily settlement statements and weekly invoices

Page 5 System Operations and Parallel Operations II During System Operations, Midwest ISO will send target basepoints and Net Schedule Interchange to Market Participants and Control Areas –Generators will adjust generation levels in response –Tests are scheduled for December Parallel Operations Phase II, scheduled for January 3rd through 30 th, will test FERC GFA and JOA functionality Final system integration scheduled for February

Page 6 Participant Readiness 76% of eligible Market Participants participated in some aspect of Day in the Life Enhanced Market Trials 53% of Control Areas have completed open and closed loop tests –An additional 32% of Control Areas are expected to complete testing prior to the start Parallel Operations I –The remaining 15% are expected to complete testing during Parallel Operations I

Page 7 Stakeholder Participation Twelve items recently identified to increase stakeholder participation including –Reach out and create targeted training for smaller market participants –Include stakeholder personnel in MISO control room during Parallel Operations –Involve stakeholders in simulator training –Provide forum for additional interaction with Readiness Advisor on metrics

Page 8 Regional Operating Model Footprint Oversight Team will be responsible for –Centralized system-wide dispatch –Seams management –Overall control of the MISO footprint Remaining reliability coordinators and generation dispatchers assigned in teams to one of three discrete regions in order to –Increase in-depth knowledge of footprint –Provide better customer service