ERCOT IT Update Ken Shoquist VP, CIO Information Technology Board Meeting January 2004

Page 2 Agenda  Project update  Operations update  2004 – A Look Ahead  Summary

January 2004 Page 3 IT Project Performance Project Process Improvements In 2003  63 completed  21 in progress  19 in planning  Building release schedules  Senior PMs added in 1Q  Control Processes and Reporting by 2Q  Planning and Development Methods in 3Q  MS Project Server in 4Q Quarterly Activity Project Performance 2003 Year-End Projects

January 2004 Page 4 IT Project Performance  Original project list had 100 priority 1 and priority 2 projects  63 projects complete 41 of 46 priority 1s 21 of 54 priority 2s 26 market priority 1s and 2s 36 PUC and ERCOT priority 1s and 2s  44 “high-priority” projects added during the year  All high-priority projects being addressed Quarterly Completions 2003 Year-End Projects

January 2004 Page 5 SW & Production Changes 2003 Metrics

January 2004 Page 6 Metrics  Transaction Production Retail processing steady Processing time reduced 90% from Jan - Dec Settlement volume continues to be high 57,452 Settlements completed for year  EMMS One interval missed  Transaction Processing Processing times decreased million transactions for 2003  Settlements 7,009 in Dec Posting improvement made  Project Management 10 projects deployed in Dec 20 in process 18 in planning

January 2004 Page 7 EMMS 2003 Mission Critical Unplanned EMMS Outages Ceiling Target EMS and MUI 45 minutes (99.9%) Outage Minutes Intervals Missed Ceiling Target 3 RTB Intervals System Reliability Results and Challenges Action Items 746  Missed interval pointing to additional monitoring opportunities  Increase real-time monitoring activity to include storage capacity thresholds built into the monitoring tools

January 2004 Page 8 Transaction Processing Processing Time (hrs) Transaction Volume (MM) 2003 Retail Transaction Processing Average 814 transaction processing times exclude maintenance (type 20). Results and Challenges Action Items  530 million transactions for 2003  Continued decrease in average processing time  1-½ year captured metrics will lend to transaction predictability  Assess capacity constraints for continued improvements  Support CSR project for new architecture initiatives

January 2004 Page – A Look Ahead  Implement industry-accepted software development life cycle methodology  Implement data warehouse for PUC and ERCOT  Continued progress on the Commercial Systems Rearchitecture project in context with TNT Refine architecture for performance, quality and agility improvements Task Descriptions  Responsive, agile testing environment  Improve test environment for market participant testing  Change management process improvements Improve quality of delivery  Embed monitoring tools in applications and infrastructure  Reduce server to admin ratio for reduced total cost of ownership (TCO) Improve monitoring, recoverability and scalability

January 2004 Page – A Look Ahead (cont.) Task Descriptions  Implement Release 3 resulting in enhancements to monitoring market operations, market performance, and power system security  Replatform of EMMS product accepting new vendor release EMMS improvements  Improved project management delivery with new enterprise tool  Continue to focus the vendors, internal business, and IT on solid, timely requirements, rigorous testing, and careful evolution to new architecture Project management  Formalize ERCOT role in supporting market with external security agencies  Develop CIRT (Computer Incident Response Team) Security

January 2004 Page 11 Summary  Many successes in 2003 Built a good foundation of people and management Good process improvements made in project management and operations support Vendor relationships (cost, quality, delivery) moving in a positive direction Communication with technical resources within market participant organizations improved Major performance gains in applications accomplished Established formal security programs  Some challenges remain Operational processes and staffing in QA and Production areas Maturity of project disciplines and tools for ERCOT company-wide Testing environments to facilitate market and ECOT testing System architecture (CSR Project) remains key to resolve versioning, production, operational efficiency, and support cost issues for retail applications