Actions Affecting ERCOT Resulting From The Northeast Blackout ERCOT Board Of Directors Meeting April 20, 2004 Sam Jones, COO

Actions Affecting ERCOT Resulting From The Northeast Blackout NERC Near term actions – October, 2003 Six immediate Regional actions items from early blackout findings NERC Actions to prevent and mitigate the impacts of future cascading blackouts – February, 2004 Fourteen recommendations approved by the NERC Board NERC Actions to “crispen” its compliance templates - March Thirty-eight revised and new compliance templates US – Canada final blackout report recommendations – April Forty-six recommendations related to numerous entities

NERC Near Term Actions October, 2003 Immediate actions for the Regions to investigate and report the results to NERC – Letter from Mike Ghent 1.Voltage and reactive management 2.Reliability communications 3.Features of system monitoring and control systems 4.Emergency action plans 5.Training for emergencies 6.Vegetation management ERCOT reported to NERC that it was compliant with all of these requirements on December 5, 2003

NERC Actions To Prevent And Mitigate The Impacts Of Future Cascading Blackouts February 10, a – Each Regional Council shall report NERC compliance violations 2c – NERC committees shall review and update compliance templates 3a – All Reliability Coordinators and Control Areas shall be audited 4a – All bulk electric line trips resulting from vegetation shall be reported to the Regions and through the Regions to NERC 4c – Each transmission owner shall make available its vegetation management procedure 5a – Regions shall document completion of recommendations 6 – Certain operators shall receive 5 days of training by 6/30 8a – All transmission owner shall evaluate Zone 3 relays by 9/30 8b – Regions shall evaluate feasibility of under-voltage relays

NERC Actions To Prevent And Mitigate The Impacts Of Future Cascading Blackouts February 10, 2004 (Continued) 9 – The OC shall review the NERC Operating Policies for Reliability Coordinators and Control Areas 12a & b – Regions shall define regional criteria for synchronized recording devices and include GPS time synchronization 14 – Regions shall establish criteria for validating data used in power flow and dynamic modeling

NERC Actions To Prevent And Mitigate The Impacts Of Future Cascading Blackouts February 10, 2004 – Recommendation 2c The NERC committees shall review and update (“crispen”) the NERC compliance templates The CCMC reviewed all of the compliance templates and prepared drafts as needed to update and “crispen” them The CTTF was formed to finalize these revisions and present a full compliance template package to the NERC Board by 3/31/04 The Board approved the templates on 4/02 Entities will be required to have and follow –Vegetation management plans –Protective relay maintenance programs –Under-voltage relay scheme maintenance program –Special protection schemes maintenance program

NERC Actions To Prevent And Mitigate The Impacts Of Future Cascading Blackouts February 10, 2004 – Recommendation 9 9- Clarify Reliability Coordinator and Control Area Functions, Responsibilities, Capabilities and Authorities NERC Operating Policies 5, 6 and 9 were reviewed and clarified, where necessary, by the NERC RCWG and ORS groups The revisions were posted and reviewed by the NERC community They are being voted on by the ballot body at this time for adoption ERCOT was represented on these work groups and is already compliant with the revised requirements A “Best Practices” working group is now formed to review control system and training requirements

US – Canada Final Blackout Report Recommendations Make reliability standards mandatory – legislation – ERO - penalties Develop regulator approved funding for NERC and Regions Obtain independent review of an appropriate long term ERO structure Examine the future role of the Regions – scope – structure – etc Require any entity operating as a part of the bulk system to be a member of the Region in who’s footprint it is in Shield operators who initiate load shedding from liability Commission an independent study of the relationships among industry restructuring, competition and reliability Develop enforceable standards for vegetation management and penalties for failure to comply – PUCT

US – Canada Final Blackout Report Recommendations (continued) Strengthen NERC compliance – violation reporting and compliance audits – public release of results Strengthen NERC’s reliability readiness audit program – public reports Improve near and long term training – planners – operators – IT support personnel Make more effective and wider use of system protection measures Reevaluate NERC’s existing reliability standards development process and accelerate the adoption of enforceable standards Implement NERC IT standards – physical and cyber Provide NERC guidance on employee background checks Establish clear authority in corporations for physical and cyber security

?