Page 1 TAC Program and Projects Update March 6, 2003

Page 2 Shared Services to Six Sigma Three Year Program Management Plan Become Proactive Introduce Innovation Lead the Industry Beyond Result Lower priority tasks addressed and delivered Enhanced cost control and funding leverage More functionality More nimble organization Improved market participant satisfaction Naturally address architecture issues Lower total cost in market Parallel support of multiple product releases Availability of reduced-cost infrastructure Minimized market participant total cost of operation Minimized ERCOT total cost of operation Adaptable, reliable and scalable services for the market Task to Product Product to Shared Services Beyond Task to Product Product to Shared Services Shared Services to Six Sigma Action Group tasks into product groups Build product release cycle Introduce better collaboration and management tools Collaborate with market, compliance, and vendors Perfect and expand product line Group products and features into shared services Build potential/total outsourcing management capabilities Shift focus from Program Management to Process Management Institute Six Sigma continuous process improvement Process Management oversight and improvement program for market

Page 3 Today’s Task Oriented Process Market Participant Requests MR1High MR2High MR3High MR4Medium MR5Medium MR6Medium MR7Medium MR8Medium MR9Low MR10Low MR11Low MR12Low ERCOT Requests ER1High ER2High ER3Medium ER4Medium ER5Medium ER6Medium ER7Medium ER8Medium ER9Low ER10Low Project Priorities MR1In-progress MR2In-progress MR3In-progress ER1In-progress ER2In-progress MR4In-progress MR5Pending MR6Pending MR7Pending MR8Pending ER3Pending ER4Pending ER5Pending ER6Pending ER7Pending ER8Deferred MR9Deferred MR10Deferred MR11Deferred MR12Deferred ER9Deferred ER10Deferred Budget Cutoff NEW High MR2.a New Project Priorities MR1In-progress MR2In-progress MR2.aIn-progress MR3In-progress ER1In-progress ER2Paused MR4Paused MR5Pending MR6Pending MR7Pending MR8Pending ER3Pending ER4Pending ER5Deferred ER6Deferred ER7Deferred ER8Deferred MR9Deferred MR10Deferred MR11Deferred MR12Deferred ER9Deferred ER10Deferred Budget Cutoff

Page 4 Product Delivery Process Market Participant Requests MR1HighProd1 MR2HighProd2 MR3HighProd1 MR4MediumProd1 MR5MediumProd1 MR6MediumProd1 MR7MediumProd2 MR8MediumProd2 MR9LowProd1 MR10LowProd3 MR11LowProd1 MR12LowProd1 ERCOT Needs ER1HighProd3 ER2HighProd2 ER3MediumProd1 ER4MediumProd3 ER5MediumProd1 ER6MediumProd2 ER7MediumProd2 ER8MediumProd1 ER9LowProd3 ER10LowProd1 Budget Cutoff MR9 Deferred MR11 Deferred MR12 Deferred ER10 Deferred NEW High MR2.a Budget Cutoff MR9 Deferred MR11 Deferred MR12 Deferred ER10 Deferred

Page 5 Product Groupings (Sample is for Technical Operations ) Technical Operations Market Operations Enterprise Operations Energy Management SystemsClearing, Settlement and BillingPortal / PUCT Market Interface Market Management SystemsMarket Relationship Management Transaction Management Transaction ProcessingCyber Security Facilities Architecture and Maintenance Serve, Ensure, Protect and Operate Release 2.1 & 2.2 EMS front end replacement System map Customized generation monitoring Customized one line displays EMP 2.2 upgrade User interface enhancements related to resource plan and schedule changes Ability to print resource plan Additional development work with BOD approval Release 3.0 Mitigate constraint oscillation Security constrained optimal power flow Dynamic ratings Load rollover during line outage Multi-hour, multi-day outage evaluation studies Special protection schemes in contingency analysis VSAT/TSAT Interface upgrades Enhance PTI export Simultaneous A/S procurement (PRR342) Balancing energy – ramp rates (PRR349) Enhancements to BES and RPRS markets RPRS market re-design (SCUC) Association of BE bids with RPRS awards (PIP137PRR211) Resource ramp rate constraints Allow resource plan updates after adjustment period (PRR359) Automate calculation and posting of CSC Limits Handling of resources in Test Mode (PRR332) Release 4.0 Locational Marginal Pricing? FERC Standard Market Design? Automate A/S qualification testing Changes to A/S performance monitoring and frequency control algorithms Remove BE and energy schedule dependencies on resource plan Regulation service from loads (PRR307) Fleet deployment of OOME 6/0306/0412/0412/039/03 Release 2.0  Direct weather data path to EMMS  Integrate OSI PI systems  Commission alarm system  Smoothing algorithm (PRR350)  Outage sensitivity factor  Outage scheduler customization  BULs and Blocked deployment (PIP112/PIP210)  Oracle 9i upgrade  QSEMOS web enhancements  Balancing energy deployment timing improvement  Market operator interface – printing requirements

Page 6 Current Picture of ERCOT Projects Individual Projects have been Initiated Based on Market and ERCOT Prioritization Process 32 Projects Currently Active 8 Scheduled to complete in March Active Projects being bundled as Releases to Support Market and Systems Stability EMMS Releases have been defined Texas Set 1.5 with Related changes to be Released in April Remaining Prioritized Projects being Grouped as Logical Releases to Support a Predictable and Stable Market Releases will Reflect Market Priorities Releases will Include System, Architecture and Infrastructure Improvements to Support the Texas Market Going Forward

Page 7 Ability to Assess our Project Portfolio

Page 8 Gain Insight Into Our Projects

Page 9 Ability to Model What If Scenarios