System OperationsReport To The

Board Of Directors

September 21, 2004

Sam Jones, COO

Grid Operations

Peak Loads• New peak observed in 2004, only it was for 2003 and was

determined during true up settlement– 60,095 MW on August 7, 2003 in place of 59,992 MW

• 2004 peak load to date – 58,590 MW on 8/3• During cooler than normal days peak loads have been

about 10-12,000 MW below normally observed peaksLoad Reductions• Maintenance outages at Sandow resulted in the need to

reduce load in the immediate area on order to prevent overloading an autotransformer

Grid Operations

The Northeast Special Protection Scheme has experienced “incidents” since its inception that resulted in the trip or reduction of generation

• Maintenance tone injection event on microwave channel• Breaker auxiliary contact incident• Alarm indication eventThis is the newest and most complex SPS in ERCOT. These

incidents have not resulted in reliability concerns for overall grid operations

Transmission Services

RMR Activity – AEP has informed ERCOT of some transmission project schedule slippages that will delay previously announced RMR exit dates

Plant Original Date New DateFort Phantom Dec. 2004 Mar. 2005La Palma Dec. 2005 June 2006B M Davis Dec. 2004 Dec. 2005

Technology Services

Security Activity RebuildDyonyx, an electric utility industry recognized security

consulting firm, has been working with ERCOT Security for a month and the rebuild project is on schedule– Organization design – the rollout process for the new organization

is underway– Security employee recruiting - the positions are advertised and

recruiting firms are assisting in locating the needed employees– Staff Augmentation – Dyonyx is providing support where needed

until ERCOT staffing is in place and trained– Support with ongoing audits and assessments - underway– Identification and execution of required projects - underway