1. Texas Panhandle Synchronous Condenser Solution
Presented to ERCOT Regional Planning Group
April 22, 2014

2. Outline DATC Introduction Problem Description DATC Proposal
DATC Advantages

3. Duke-American Transmission Company (DATC)
DATC is a 50/50 joint venture, formed in April 2011 to pursue transmission development on a national scale
Founded on a vision of transmission as the key to efficient power markets
Committed to developing projects that deliver a strong portfolio of reliability, economic and public policy benefits
Publically announced projects and assets:
DATC Midwest Portfolio – new transmission line projects in Iowa, Wisconsin, Illinois, Indiana and Ohio
Zephyr Power Transmission – planned 500 kV HVDC transmission line from Wyoming to California
Path 15 – DATC owns 72 percent of the transmission service rights the 500 kV transmission line in central California
Strategic focus on ERCOT, Texas and SPP as areas of high potential
Interest in pursuing a variety of platforms for transmission development including partnerships, greenfield, and acquisitions

4. Overview of Duke Energy Corporation (NYSE: DUK)
Headquartered in Charlotte, NC
150+ years of service
~ 30,000 employees
$50 Billion market cap
57,200 MW of generating capacity
85% regulated franchise utilities and 15% commercial enterprises

5. Infrastructure Development
Duke Energy Regulated and Non-Regulated Operations Mix
Commercial Businesses
Franchise Electric & Gas
Midwest Generation
Ohio generation (~4,000 MW)
Midwest gas-fired generation
(~3,600 MW)
Solar
50MW
Wind – 1,900 MW
Infrastructure Development
Commercial Transmission
Wind Solar
Guatemala
283 MW
El Salvador
296 MW
Fuel Type
Natural Gas
Hydro
Wind
Coal / Oil
Solar
Ecuador
162 MW
Peru
825 MW
Brazil
2,113 MW
DEI
Latin American assets
National Methanol
Argentina
523 MW

6. Duke Energy Texas Presence
Offices in Houston and Austin
Over 100 employees in Texas
950 MW operating generation
Sweetwater Windpower Project, Nolan County
283 MW 2003 (2007)
Ocotillo Windpower Project, Howard County
59 MW (2008)
Notrees Windpower Project, Ector & Winkler Counties
153 MW (2009)
Blue Wing Solar Power Project, San Antonio
14 MW (2010)
Notrees Battery Storage Project, Winkler County
36 MW (2012)
Los Vientos I Windpower Project, Willacy County
200 MW (2012)
Los Vientos II Windpower Project, Willacy County
202 MW (2012)
Wind Solar Battery Office

7. Overview of American Transmission Company
First multi-state stand alone transmission utility in U.S.
Formed in 2001
Privately held with diverse ownership made up of investor- owned utilities, municipalities and cooperatives
Tremendous growth since formation
Over $3.3B in assets in 2012
Largest transmission owner in MISO

8. ATC Municipalities, IOUs, and Co-ops
ATC has 29 owners, including several cooperatives

9. PREZ Problem Statement
Original CREZ plan called for ~5.5 GW of capacity in Panhandle, but reactive support equipment initially installed for ~2.4 GW.
Panhandle transmission, remote from ERCOT load and synchronous generation, is stability constrained.
Panhandle Renewable Energy Zone (PREZ) study has determined additional transmission upgrades are required to support generation located in the panhandle when GI queue reaches 3,000 MW financial commitment.
PREZ study (phase 1) recommends additional transmission and 200 MVAR of reactive support be installed initially (1,650 MVAR ultimately) in the panhandle area in the form of synchronous condensers1 due to their superior inertia and fault current characteristics.
1 Synchronous Condensers are generators that operate like a motor to supply inertial response, reactive support, and frequency response - synchronized with the grid, requiring no fuel, and produce zero emissions.

10. PREZ Upgrade Requirements
Synchronous condensers located at Windmill and Ogallala stations in all 3 PREZ planning scenarios
Synchronous condensers and linear upgrades required concurrently

11. PREZ Upgrade Plan

12. DATC Solution
Project Phoenix is the DATC response to ERCOT’s identified need for reactive support in the Texas panhandle to facilitate wind generation interconnection currently in the queue with confirmed financial commitment to build.
DATC proposes to install repowered generators from the Duke fleet operated as Synchronous Condensers at Windmill Substation and/or other ERCOT locations to supply the needed reactive power.
DATC is eligible to offer and own this solution to ERCOT under ERCOT Nodal Protocol (3) which states, “ERCOT shall attempt to meet these reliability criteria as economically as possible and shall actively identify economic projects to meet this goal.”
If endorsed by ERCOT, a PUCT CCN application will follow.

13. Duke Preferred Synchronous Condenser Inventory
Unit
Manufacturer
MVA Capability
MVAR Capability
Retirement 1
Westinghouse
192
155 / -116
March 2014 2 GE
288
205 / -125
May 2015 3
512
379 / -256 4
105
103 / -76
April 2016 5
145
115 / -67 6 7
156
144 / -94 8*
496
320 / -250
October 2013 9*
128
101 / -59
April 2013
10*
297
250 / -130
September 2012
11*
150
100 / -65
April 2012
12*
160
110 / -80
October 2012 *
Recently rewound

14. DATC Proposal Proposal Units to be Repowered Capability MVAR Cost A
DATC is also amenable to collaborating with ERCOT on ERCOT’s preference of available Duke units.
Proposal
Units to be Repowered
Capability MVAR
Cost A
#10
#12
Total
250 / -130
110 / -80
360 / -210
$39M B #8
320 / -250
570 / -380
$41M

15. DATC Solution Advantages
DATC provides a cost advantage over all other incumbent providers due to full depreciation ($0 book value) of Duke generators to be repowered.
Anticipate 20-30% savings over new Synchronous Condenser equipment.
Duke retired generator inventory is immediately available providing a time advantage over new equipment long lead time delivery.
DATC Proposal B can satisfy PREZ Phase 2 reactive reinforcement requirements at Windmill thereby avoiding approximately $88M additional cost.
DATC Synchronous Condenser solution is “repeatable” at other ERCOT locations requiring reactive support.

16. Duke / ATC Strengths Applicable To the TX Panhandle
Large fleet of retired and soon to be retired units and spare parts inventory
History of operating generation and transmission providing a unique skill set in ERCOT when considering synchronous condensers as transmission assets
Supply chain economies of scale
Expert in planning, designing, and constructing transmission lines, substations, generating plants, and related infrastructure
History of reliable interconnection and operations in the ERCOT system
History of meeting stakeholder expectations

17. Contact Information
Jeff Peterson
Bob Burner
Mark Bruce