1. Response to Reports by Deloitte & Touche and Ernst & Young

2. www.ercot.com 1.ERCOT accepts reports as valid evaluations of the state of its business processes

3. www.ercot.com 2. We are an organization in transition to sound business practices and the necessary control consciousness and proactive security programs.

4. www.ercot.com 3.Select leadership to develop and implement both immediate actions and long- term strategies and business process improvements - CFO - RMO - Chief Security Director

5. www.ercot.com 4.Prepare detailed action plans to address each specific issue identified in the reports.

6. www.ercot.com - Auditors will prepare high level work plans (road maps) identifying Priority First Steps Key decision points Early staffing requirement 4 continued

7. www.ercot.com -ERCOT staff is reviewing every high risk item Take immediate action where possible Mitigate others as quickly as possible 4 continued

8. www.ercot.com 5.Institute a management and tracking process lead by Internal Audit for each issue identifying -Owners -Dates for Milestones Completion Follow-up reviews

9. www.ercot.com 6.Release a Request for Proposal for assistance in developing and implementing -Internal control management program -Business process improvement -Process for effectively implementing change