ERCOT Market Services Update to TAC December 5, 2002

1. ERCOT Market Services Update to TAC December 5, 2002

2. Retail Market Update Topics • ERCOT’s Master Project Plan • GISB 1.4 Update • Texas Set Version 1.5 • Data Transparency and ETS • Move-In/Move-Out Issues/Initiatives • Quick Recovery Team Update • Market Synchronization Activities • Resettlement Update

3. Master Project Plan Update

4. Master Project Plan • 2002 Planned Projects • 46 Projects in progress • 27 Projects completed between August 1st and November 1st • 5 Projects continuing on into 2003 for completion • 5 Projects removed from the 2002 plan (require reprioritization for 2003) • 2003 Project Continuing into 2003 for completion include: • PR-20153 Amended POLR Process • PR-20117 Internal Map Testing and Verification • PR-20111 ERCOT Transaction Processing Hardening Initiative • PR-20079 Change Deployment Instructions_PRR281 • PR-20067 Simultaneous Procurement of Ancillary Services

5. Master Project Plan (cont.) • 2002 Projects removed from active status (would require reprioritization to proceed) • PR-20068 Interzonal Congestion Management: Interim Fix completed; any further effort will be a new project and go through prioritization process • PR-20071 Two Settlement System: Manual fix announced to market and ERCOT Board of Directors. If automated solution desired a new project request will be submitted and prioritized • PR-20080 Define OOME as Instructed Deviation: PRR282 withdrawn and project canceled • PIP106 Direct Load Control: Deleted from 2002 Active Project List and has been prioritized for 2003 and included in the Master Priority List • PR-20083 Ratcheting of OOME: Project withdrawn

6. Master Project Plan (cont.) • Next Steps… • Conduct Project Management Office Procedures Training in the month of November • Available ERCOT resources aligned and scheduled against Q1 2003 projects by December 6th 2002 • Start High Priority Projects identified in master priority list resources as resources are available • Monthly project prioritization adjustments and recommendations: • ERCOT Executive Steering Committee • Market Committees and Subcommittees • ERCOT IT and Business Support Teams • Finalize and distribute documentation on the project request/prioritization process

7. Bus.Align/ Scope Risk Financial Risk Staffing Risk Technical Risk Schedule Risk Overall PR-20134 GISB 1.4 Executive Summary of Status • Development of code is complete • Server build out is complete • Database configuration is complete • Working on application configuration • Working on network configuration Project Scope/Deliverables • Provide a GISB 1.4 implementation to replace FTP • Provide a migration path toward NAESB 1.6, which is a secure data transport • Deliverables • Support for HTTPS and GISB 1.4 • Roll-out to production • Migration of Market Participants to HTTPS or GISB 1.4 Financial Milestones Timeline 10/15 10/25 10/28 11/1 2/15 3/17 4/1 BudgetYTDForecastVar. Capital$0.70M $0.103M $0.140M [$0.070M] Expense $0.0M $0.00M $0M $0.0 Development Configuration Testing Sign off by ERCOT Migration of Market Participants Completed In Progress Scheduled Upcoming Milestones/Market Impacts Issues/Actions • Outbound network configuration is not complete. Working with Network group to get the port opened to proxy server. • End of Sept Labor Recorded 492hrs (Original SOW states 400hrs) • Sign off by ERCOT • Migration of Market Participants • All of these could be affected by any delays experienced in network configuration/setup.

8. GISB 1.4 Update

9. GISB 1.4 Update • RMS agreed at August meeting to move forward with implementing GISB 1.4 at ERCOT • Internal testing and implementation of a GISB 1.4 interface is underway at ERCOT, • Production Sign-off scheduled delayed to 11/18 • All production components are in place as of 10/11 • Testing uncovered errors in outbound transmission requiring a vendor software patch; will be testing the week of 11/4 • Acceptance Testing and Market Participant Testing – 10/15-11/8 • TDTWG is surveyed market participants to finalize migration readiness dates • Preliminary migration schedule reviewed at 10-4-02 TDTWG • Market Participant migration will begin week of 11-25-02; ERCOT will work individually with participants in any change of date for testing and migration. • Goal is to complete migration by April 1, 2003

10. Texas Set V.1.5

11. V1.5 Coordination Team Accomplishments/Goals • Established Timeline for V1.5 Project as a Market. Completed • Established Project Phases • Established the Solid date of 2/24/03 as Flight Test Begin Date • Established April as month of Production Implementation • Established clear understanding of V1.5 Requirements. Completed • Reviewed all functional change controls approved by TX SET • Published, circulated, and reviewed ERCOT Conceptual System Designs • Published regularly updated FAQ document

12. V1.5 Coordination Team Accomplishments/Goals (Cont.) • Established open and up-front communication. Completed • Created a dedicated web page for documentation, FAQ docs, and notes • Created email address for one central point of contact • Periodic Conference Calls and Face-To-Face meetings • Created several pieces of documentation to assist the market with research and analysis • Continuing efforts for Project Success.In Progress • Continued improvements in communication • Project Status and tracking • Production Implementation Plan • Flight Test coordination with the TTPT

13. Project Status Summary • Exolink provides EDI services for: Calpine, Entergy Disco, Entergy Retail, GEXA, Republic, STEC retail, TCE, Tara Energy, • Systrends provides EDI services for: Occidental, Sharyland, Tenaska • ESG provides EDI services for: ACN Energy, Cirro Group, Coral Energy Markets, Dynegy, Sempra Energy Solutions, Tractebel Energy Markets, UBS Warburg

14. Implementation Plan • Objectives • Ensure all parties know the status of the implementation effort • Minimize down time • Work as a team • Approach: Big Bang • All parties roll-out ALL 1.5 functionality over the same weekend

15. PROPOSED TIMELINE AND SCHEDULE STILL BEING DEVELOPED BY THE MARKET COORDINATION TEAM ERCOT processes queued 1.4 transactions Internal Testing Normal 1.5 operations Normal 1.4 operations ERCOT Upgrades Software Wednesday, April ? at 5 p.m. ERCOT stops accepting Initiating Transactions Friday, April ? at 5 p.m. ERCOT stops accepting all Transactions Sunday, April ? at 5 p.m. ERCOT begins accepting 1.5 Inbound Friday Midnight 1.4 transactions processed and ready for pickup by MPs = Conference Call

16. Next Steps • Begin Monthly Face to Face Meetings (Dates Set) for project status/issues, testing, and Production Implementation fine tuning. • Nov 21st (Thursday) • Dec 19th (Thursday) • Jan 23rd (Thursday) • Feb 20th (Thursday) • Mar 20th (Thursday) • April 14th (Monday) – tentative depending on production implementation schedule

17. ERCOT Data Transparency(ETS)

18. ERCOT Data Transparency ERCOT/Market Requirements • What do Market Participants and ERCOT need to see? • Daily update on all CR transactions • All initiating transactions received • All ERCOT responses • List of all other associated transactions • All requests sent to TDSP • All transactions returned by TDSP • Timeliness of responses • Transactions both ‘in’ and ‘out’ of protocols • Failed Transactions • Transactions without a response • Cancelled Transactions

19. ERCOT Data Transparency Existing ERCOT/Market Reports • Existing ERCOT Reports • Market Participant Transaction Report(“Dark Side”) • Daily EDI activity “in” and “out” of ERCOT (FTP) • Siebel Report • Daily ESIID transaction status by Market Participant • 997 Report • Daily EDI file receipt with 997 transactions

20. ERCOT Data Transparency Model For Improvement • Provide VISIBILITY into transactions within ERCOT Systems…. • See near “real-time” transaction data • Monitor transaction flows within ERCOT • Provide transaction status for Market Participants • Provide a mechanism to more easily identify Market Participant issues • Develop operational metrics reports • Develop Executive Summary reports • Improve speed and effectiveness of business operations • Incorporate advanced business logic to proactively identify and resolve issues

21. ERCOT Data Transparency ERCOT Interim Solution • ERCOT Interim Internal Solution • ESIID Tracking System (ETS) • Complete life-cycle view of transactional data • Near-real time updating of ETS database (every 10 minutes) • Transactions are monitored from FTP inbound to FTP outbound • Transactions are purged from database once business process is complete • Daily reporting of all ‘open’ transactions • Reports include all internal system component touch points and their respective timestamps • Reports will identify successful, failed, and out of protocol transactions • Reports are both ‘batch’ and ‘on-demand’

22. ERCOT Data Transparency ERCOT Interim Solution • ERCOT Interim Internal Solution • Daily reporting of all ‘open’ transactions • Transaction Flow Report • Identifies the last system component that the transactions hit and their corresponding timestamps by Global ID • Transaction Success Report • Identifies how successful ERCOT was in processing a response transaction • Protocol Report • Provides a view of ERCOT’s protocol compliance for each transaction type

23. ERCOT Data Transparency Project Deliverables In Place Nov 02 Q2 - 03 Future Q1 - 03 Competitive Metering Reports? Billing Summaries? CR/TDSP Summaries By Area? MTD/QTD ESIID Usage Summaries? Auto Reprocess Siebel Report 997 Report MP Report Siebel Report 997 Report MP Report Trans Flow Trans Success Protocol Siebel Report 997 Report MP Report Trans Flow Trans Success Protocol Capture MM PUC Reports Data Archive • Siebel Report • 997 Report • Portal • Trans Flow • Trans Success • Protocol • New Reports • PUC Reports • Data Archive • Summary Rpt • - Transactions • % Cancelled • % Failed • % Reprocessed • -System Avail • Component Avail • Trans Flow Rates • Volume Trending Market Reports ERCOT Visibility Market Metrics / Visibility Scorecard / Dashboard

24. RMS Update on Move-In / Move-Out Task Force November 14, 2002

25. MIMO Workshop • Progress • 32 Concepts have been discussed • 7 Concepts were dismissed for various reasons • 1 Concept was determined as solved in Version 1.5 • 3 Concepts were combined into other concepts • 21 Concepts in Task Force • 6 Concepts approved by RMS on 10/16 • 6 Concepts will be taken to RMS for vote on 11/14 • 9 Concepts are currently tabled until additional information can be obtained

26. Concepts for RMS vote • Mid-Term • Pending 814_06s • Retired ESI Ids • Invalid ESI ID Retry • Short-Term • Processing Efficiency • Canceling Move-Ins with Move-Outs. • Handling Switch after 650 Disconnect

27. RMS Approved Recommendations • Pending 814_06s - Mid-Term This concept involves ERCOT holding 814_06s until the morning of 2 days prior to the effective date (5 days on 814_06s from switches). This concept also involves ERCOT rejecting any Cancels, Date Changes, or new transactions that are dated prior to the effective date for the transaction that is scheduled. • Retired ESI Ids - Mid-Term This recommendation is intended to develop a process to retire ESI Ids when there is an active REP of Record. The volumes of these are ‘temp’ meters. When a TDSP needs to retire an ESI ID that has a REP of Record, they will send a 650_04 with a new code to the CR. The CR must use this new code to create a Move-Out on the ESI ID. After the Move-Out is complete, the TDSP will send the 814_20 retire to ERCOT. • Invalid ESI ID Retry - Mid-Term If a Move-In rejects for Invalid ESI ID, ERCOT will hold and retry the Move-In at a regular interval of time for 48 hours (only counting hours on business days, but not only business hours.) After the retry period has expired, if the Move-In is still in a reject status for Invalid ESI ID, ERCOT will send an 814_17 to the submitting CR.

28. Unapproved Recommendations The following recommendations were remanded back to the MIMO Task Force for further discussion: • Processing Efficiency - Short-Term This recommendation involves processing efficiency goals for ERCOT and the TDSPs as well as suggestions for CRs. • Handling Switch after 650 Disconnect - Short-Term Off-Cycle Switches: TDSP will use the off-cycle switch to re-energize an ESI ID if the ESI ID was de-energized with a 650 disconnect and no Move-Out has been received. For on-cycle Switches TDSPs will effectuate the switch, but will not energize the ESI ID. The CR must follow up with a Service Order re-connect. This would require a change to Tx SET 650 for option 1 CRs. • Customer Canceling Move-Ins with Move-Outs - Short-Term If a TDSP receives a backdated Move-Out with the same effective date as an already completed Move-In, and the Move-Out CR is the same as the Move-in CR, the TDSP will de-energize the premise and send a final and initial with the same read and read dates and the final would have zero consumption. (Except for IDR meters) If the Move-Out is not the same CR as the Move-In, the TDSP will reject the Move-Out for not REP of Record.

29. Next Steps • MIMO Taskforce meetings as needed • Discussions on concepts for resolving existing issues • Discussions around concepts for handling stacking • Recommendations to RMS at future RMS meetings • Additional Concepts • Follow-through on execution of approved concepts • Release of implementation timelines • Coordinating test flights with TTPT as appropriate • Development of Texas Set Change Controls, Protocol Revision Requests, and RFP (If necessary) • Deployment of Solutions • Re-Evaluation of Move-In/Move-Out processes

30. Quick Recovery Team Update

31. Quick Recovery Effort • Pursuing responses from CRs and TDSPs • ~3,657ESI Ids are awaiting more information or acknowledgment of receipt from CR • ~29,084 have been sent to TDSPs for investigation and are waiting for a transaction • All “New” issues have been addressed • 2,697“In Analysis” issues are being worked • QRE project will be transitioned back to ERCOT Registration by 12/20/02. • Transition activities are currently under way.

32. Quick Recovery Effort • QRE is transitioning processes and procedures to ERCOT Data Management and Registration teams. • QRE is providing documentation for all QRE business processes to ERCOT • QRE has hosted brown bag and individual training sessions with Data Management and Registration teams • QRE has provided CBT training modules to ERCOT for new hires. Modules have been reviewed and modified per ERCOT comments. • QRE will provide two week of “shadowing” ERCOT employees taking over responsibilities

33. QRE Transition • Transition tasks have been identified and checklist created. • Market notification of transition and survey was sent to Market on 11/12/02 and feedback was returned • Survey feedback will be used to assist ERCOT in identifying the proper owner • Survey comments will be used to determine what processes worked and what needs to be improved • QRE will provide two documents to ERCOT by 12/20 • “Lessons Learned” • “Recommendations”

34. Entity Point of Failure Current Status Quantity Quantity Quantity New Cause Not Reported TDSP 29084 0 21887 In Analysis Unexecutable QRE Team 2708 2697 81 CR CR In Progress 35449 3657 40891 ERCOT EAI Resolved Total 124157 35449 4978 Total ERCOT FTP 162303 694 ERCOT Manual Process (814_08) 3496 ERCOT Out of Protocol 20 ERCOT PaperFree 8194 ERCOT Siebel 1496 ERCOT TCH 12096 TDSP 30324 Total 124157 ESI Ids Reported to QRE (as of December 2, 2002)

35. Market Synchronization Activities

36. Market Synchronization Retailer Synchronization Project • Objective • Address market issues resulting in an out of sync “Rep of Record” between ERCOT, TDSP, and CR systems for all ESI IDs resulting from market startup/processing issues as well as subsequent workarounds • Completed • ERCOT identified “Perfect Sync” and “1 Day Perfect” – sent lists to MPs • ERCOT identified out-of-synch categories at Sept 10th design meeting • Task Force identified additional ESI IDs considered “In Sync” – sent lists to MPs • Task Force prioritized 8 categories based upon potential customer impact • ERCOT has sent priority 1 through 6 out-of-sync files to TDSPs and CRs • November 11th face-to-face meeting to resolve “how to fix” set principles to correct out-of-sync conditions • ERCOT has made corrections to ~55K ESI IDs • In Progress • ERCOT compiling and analyzing MP responses to out-of-sync files • TDSPs and CRs completing analysis and response to priority 2-6 files. Initial responses are due to ERCOT by 12-06-02 • ERCOT, TDSPs and CRs making corrections per 11-11-02 decisions .

37. Market Synchronization Retailer Synchronization (cont.) Next Steps • December 10th, 17th • Follow-up conference calls • Propose process to complete and close out this project • Establish timeline • Establish reporting mechanism

38. Market Synchronization“TDSP as LSE” Clean-up • Objective • Ensure that all ESI ID are converted from the “TDSP as LSE” by the time True-Up Settlement of February 2002 begins; which is currently scheduled for 12-07-02 • Completed • ERCOT sent TDSPs list of ESI ID affiliated with “TDSP as LSE” any time after Feb 01, 2002 • All TDSPs have responded to ERCOT original list with suggested corrective action • Approximately 34K ESI IDs had been corrected as of 12-02-02 • In Progress • ERCOT is reconciling remaining 6K ESI IDs with TDSPs and confirming suggested corrective action can be taken • All corrections to be completed by Friday, 12-06-2002 • One TDSP to confirm that it is valid to have ESI IDs with “TDSP as LSE” after 01-31-2001.

39. Market Synchronization Non Price to Beat • Objective • Make necessary corrections to ensure that >1MW Customers were switched on the correct date in January 2002 • Completed Items • Per RMS direction, ERCOT sent lists to each MP for reconciliation: • 1,134 ESI Ids (>1 MW) identified by CRs (meeting the April 30 deadline) • CR and TDSP have reached agreement of Service Instance Date for all ESI IDs • 1,035 (91%) ESI IDs are corrected • 82 (7%) ESI IDs were agreed not to fix by TDSP and CR • ERCOT provided full list to TDSPs and CRs with agreement dates on 11/13/02 • In Progress • 17 (2%) ESI IDs with action required to complete agreement • 13 – CR agreed to TDSP date (after TDSP submit usage, ERCOT will correct) • 4 – ESI ID retired (TDSP needs to submit 814_20 retire transaction) • Next Steps • ERCOT to reconcile and clean-up any outstanding issues

40. Resettlement of True-up Status Update November 1, 2002 True-Up Settlement of November 20, 2001 The date we move from the ERCOT Board resolution to the Protocols IDR Data Threshold November 14, 2003 True-Up Settlement of December 17, 2001 Drop dead date for correction of Non-PTB ESID Backdating Oct Dec Feb Apr Jun Aug Oct Dec Sept Nov Jan Mar May Jul Sep Nov 2004 2003 April 1, 2003 Date we expect to be back to six month after the trade day True-Up Settlements December 7, 2002 True-Up Settlement of February 01, 2002 The date all ESI IDs should no longer be with the “TDSP as LSE”. December 5, 2002 180 re-settlements performed to date (Operating Day 01/26/02)