2Outline DATC Introduction Problem Description DATC Proposal DATC Advantages
3Duke-American Transmission Company (DATC) DATC is a 50/50 joint venture, formed in April 2011 to pursue transmission development on a national scaleFounded on a vision of transmission as the key to efficient power marketsCommitted to developing projects that deliver a strong portfolio of reliability, economic and public policy benefitsPublically announced projects and assets:DATC Midwest Portfolio – new transmission line projects in Iowa, Wisconsin, Illinois, Indiana and OhioZephyr Power Transmission – planned 500 kV HVDC transmission line from Wyoming to CaliforniaPath 15 – DATC owns 72 percent of the transmission service rights the 500 kV transmission line in central CaliforniaStrategic focus on ERCOT, Texas and SPP as areas of high potentialInterest in pursuing a variety of platforms for transmission development including partnerships, greenfield, and acquisitions
4Overview of Duke Energy Corporation (NYSE: DUK) Headquartered in Charlotte, NC150+ years of service~ 30,000 employees$50 Billion market cap57,200 MW of generating capacity85% regulated franchise utilities and 15% commercial enterprises
5Infrastructure Development Duke Energy Regulated and Non-Regulated Operations MixCommercial BusinessesFranchise Electric & GasMidwest GenerationOhio generation (~4,000 MW)Midwest gas-fired generation(~3,600 MW)Solar50MWWind – 1,900 MWInfrastructure DevelopmentCommercial TransmissionWind SolarGuatemala283 MWEl Salvador296 MWFuel TypeNatural GasHydroWindCoal / OilSolarEcuador162 MWPeru825 MWBrazil2,113 MWDEILatin American assetsNational MethanolArgentina523 MW
6Duke Energy Texas Presence Offices in Houston and AustinOver 100 employees in Texas950 MW operating generationSweetwater Windpower Project, Nolan County283 MW 2003 (2007)Ocotillo Windpower Project, Howard County59 MW (2008)Notrees Windpower Project, Ector & Winkler Counties153 MW (2009)Blue Wing Solar Power Project, San Antonio14 MW (2010)Notrees Battery Storage Project, Winkler County36 MW (2012)Los Vientos I Windpower Project, Willacy County200 MW (2012)Los Vientos II Windpower Project, Willacy County202 MW (2012)Wind Solar Battery Office
7Overview of American Transmission Company First multi-state stand alone transmission utility in U.S.Formed in 2001Privately held with diverse ownership made up of investor- owned utilities, municipalities and cooperativesTremendous growth since formationOver $3.3B in assets in 2012Largest transmission owner in MISO
8ATC Municipalities, IOUs, and Co-ops ATC has 29 owners, including several cooperatives
9PREZ 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.
10PREZ Upgrade Requirements Synchronous condensers located at Windmill and Ogallala stations in all 3 PREZ planning scenariosSynchronous condensers and linear upgrades required concurrently
12DATC SolutionProject 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.
14DATC 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.ProposalUnits to be RepoweredCapability MVARCostA#10#12Total250 / -130110 / -80360 / -210$39MB#8320 / -250570 / -380$41M
15DATC 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.
16Duke / ATC Strengths Applicable To the TX Panhandle Large fleet of retired and soon to be retired units and spare parts inventoryHistory of operating generation and transmission providing a unique skill set in ERCOT when considering synchronous condensers as transmission assetsSupply chain economies of scaleExpert in planning, designing, and constructing transmission lines, substations, generating plants, and related infrastructureHistory of reliable interconnection and operations in the ERCOT systemHistory of meeting stakeholder expectations
17Contact InformationJeff PetersonBob BurnerMark Bruce