1. SPP.org 1

2. SPP, Wind, and Transmission Expansion Oklahoma Clean Energy Independence Commission February 25, 2010 Les Dillahunty, Senior Vice President, Engineering and Regulatory Policy

3. SPP.org 3 Introduction

4. SPP.org 4 Our Beginning Founded 1941 with 11 members  Utilities pooled resources to keep Arkansas aluminum plant powered for critical defense Maintained after WWII for reliability and coordination

5. SPP.org 5 3 Interconnections / 8 NERC Regions

6. SPP.org 66 Operating Region 370,000 square miles service territory 50,575 miles transmission lines: 69 kV – 16,182 miles 115 kV – 10,041 miles 138 kV – 9,284 miles 161 kV – 4,469 miles 230 kV – 3,831 miles 345 kV – 6,662 miles 500 kV – 106 miles

7. SPP.org 7 Members in nine states: Arkansas Kansas Louisiana Mississippi Missouri Nebraska New Mexico Oklahoma Texas

8. SPP.org 8 56 SPP Members

9. SPP.org 9 Quick Statistics 66,175 megawatts capacity resources 847 plants – 6,079 substations Fuel TypePercentage Capacity Coal 40% Gas/Oil 42% Nuclear 3% Hydro 4% Wind 4% Other 7% 9

10. SPP.org 10 Wind Integration and Transmission Expansion

11. SPP.org 11

12. SPP.org 12 Wind In Service: 2001 Source: NREL 2009

13. SPP.org Wind Installed by Year (2002-2009) 13 Source: SPP

14. SPP.org 14 Renewable Energy Standards By State Source: SPP

15. SPP.org

16. 16 w/ HVDC Proposals

17. SPP.org 17 Generation Interconnection Requests 17

18. SPP.org 18 Generation Interconnection Clusters and Major Cities 18

19. SPP.org 19 500 kV-DC 116’ 800 kV-DC 138’ 765 kV-AC 133’ 345 kV-AC 88’ 500 kV-AC 103’ 50m Wind Turbine 164’ 92’ 80m Wind Turbine 262’ 151’ 100m Wind Turbine 328’ 164’ To Scale Height Comparison Made by JTMade by JT Produced by Midwest ISO

20. SPP.org 20 Correlation Between Wind and Load

21. SPP.org Wind Status in Oklahoma 865 MW installed through 3Q 2009 3% wind generation in 2008 Ranks 12 th total wind installation Installed Wind Online Manufacturing 21 Source: AWEA, NREL

22. SPP.org Oklahoma Weatherford Wind Energy Center $300,000 in annual lease payments to landowners $17 million in property taxes over 20 years 147 MW 150 workers during construction peak; 6 full-time O&M positions 22 Source: NREL

23. SPP.org Oklahoma CPV – OU Spirit project Annual allocations from addition of 2.3 MW Siemens turbines  $1,057,000 in new tax dollars for two school districts  CareerTech allocation from county revenue will increase by $227,000  County general funds will increase by $190,000 –will assist with building new jail  EMS services will receive $57,000 increase  County Heal services will receive $20,000 increase 23 Source: Woodward County Assessor

24. SPP.org Oklahoma, Wind, and Economic Development 24 Source: NREL; Cole, Hargrave Snodgrass, and Associates; Oklahoma Department of Commerce Economic benefit of 1,000 MW = $1.25 billion  5,530 construction jobs, 215 permanent jobs Average wages in component manufacturing industry = $40,709 - 15% higher than average state wage Strong correlation between Western OK counties that have lost population in recent decades with counties that have significant wind resources In many cases, land suited for wind development has lower per-acre returns for agricultural use Sooner Survey of 600 registered voters:  72% of Oklahomans willing to pay more for wind-generated electricity  91% approve of further development of wind farms

25. SPP.org Component Manufacturing-Oklahoma, Kansas Bergey WindPower (Oklahoma)  Employs 42, manufactures one turbine per day DMI Industries (Oklahoma)  Employs 215 Siemens (Kansas) Broke ground September 2009 Will invest $50 million in new facility Expected to employ 400 workers by 2012 @ >$16/hour Planned annual output = 650 nacelles 25 Sources: NREL, Wichita Eagle

26. SPP.org Arkansas Becoming Manufacturing Hub LM Glasfiber  Employs 300 workers @ $12-$15/hour  Invested $95 million in Little Rock Mitsubishi Power Systems  Announced October 2009  $100 million plant will bring 400 jobs in 2011 Nordex  Sept 2009 - Broke ground on $100 million plant  Expected to employ 700 by 2014 Emergya Wind Technologies/Polymarin  Plans to invest $16 M and create 830 jobs @ $15/hour 26 Installed Wind Existing Manufacturing Announced manufacturing Sources: NREL, AR Economic Dev. Commission, Nordex, Arkansas Business

27. SPP.org 27 SPP is Building Transmission

28. SPP.org 28 Transmission Expansion - Costs

29. SPP.org 29 Transmission Expansion - Miles

30. SPP.org 30 Draft EHV Overlay 30

31. SPP.org 31 Group 2 Priority Projects

32. SPP.org 32 Quantitative Benefits Study quantified NPV benefits of $1.5 billion over 40 years B/C Ratio of 0.74 Total$$B/C Ratio APC$819 M0.41 Losses$ 26 M0.01 Wind Revenue*$266 M0.13 Fuel Diversity$399 M0.20 Reliability$ -20 M(0.01) *(Adjusted down) $1.5 B0.74

33. SPP.org 33 Qualitative Benefits Total (B/C at 20% of $$)$$B/C Ratio Taxes (table 28):$ 34 M0.00 Econ. Trans (table 27)$1,000 M0.10 Wind Earning (table 5a)$ 560 M0.06 Econ Operating (table 5a)$1,900 M0.19 Wind Earning Construct (table 5a)$ 766 M0.08 Econ Construction (table 5a)$2,300 M0.23 Total$6,500 B0.66

34. SPP.org 34 Examples of Other Transmission Benefits Fuel Diversity Market Liquidity Improvements Ability to Idle High Cost/Environmental Impact Resources Energy Capacity and Ancillary Market Facilitation Storm Hardening Increased Competition Extreme Reliability Event Mitigation (n-1) and (n-2) Weather & Wind Ability to Serve New Load Capacity Factor Improvement of Wind Resources Reserve Margin Reduction Export and Import Improvement Improved Operational Efficiencies

35. SPP.org Larger Transmission Reduces Right of Way 35

36. SPP.org 36 Cost Allocation

37. SPP.org Regional State Committee (RSC) Cost Allocation Working Group (CAWG) ArkansasChairman SuskieSam Loudenslager / Pat Mosier KansasCommissioner WrightTom DeBaun / Jim Sanderson OklahomaCommissioner CloudBob Vandewater / Bill Reid MissouriChairman DavisAdam McKinnie Nebraska Chairman SiedschlagTim Texel New MexicoCommissioner KingCraig Dunbar TexasChairman SmithermanRichard Greffe / Bridget Headrick 37 RSC and CAWG

38. SPP.org Highway/Byway Cost Allocation 38 VoltageRegionalZonal 300 kV and above100%0% 100 kV - 299 kV1/32/3 Below 100 kV0%100%

39. SPP.org 39 Current and Future Markets

40. SPP.org 40 What kind of markets does SPP have now? Transmission: Participants buy and sell use of regional transmission lines that are owned by different parties  2009 transmission market transactions = $486 million Energy Imbalance Service (EIS): Participants buy and sell wholesale electricity in real-time  Market uses least expensive energy from regional resources to serve demand (load) first  SPP monitors resource/load balance to ensure system reliability  2009 wholesale market transactions = $1.14 billion

41. SPP.org 41 Provides “one-stop shopping” for use of regional transmission lines Consistent rates, terms, conditions Independent Process > 12,000 transactions/month 2009 transmission market transactions = $486 million Transmission Service …a 1,621 page transmission tariff on behalf of our members and customers. As “Sales Agents,” we administer …

42. SPP.org 42 Transmission Service

43. SPP.org 43 Transmission Service

44. SPP.org 44 EIS Market Operation …and follows over 200 pages of market protocols. SPP’s energy market is like the “NYSE”… Monitors supply/demand balance Ensures economic dispatch while meeting system reliability Provides settlement data 2009 wholesale market transactions = $1.14 billion

45. SPP.org Benefits of current real-time energy market 45

46. SPP.org 46

47. SPP.org 47 SPP Pricing Zone Information 47

48. SPP.org Impact of Congestion on Locational Prices 48

49. SPP.org Impact of Congestion on Locational Prices

50. SPP.org 50

51. SPP.org 51

52. SPP.org 52 Why develop new markets? SPP conducts complex cost-benefit studies before beginning any new market development  Under Regional State Committee oversight  2005 Charles River and Associates (CRA) analysis of the EIS market:  Estimated benefit of $86 million for first year  Actual benefit of $103 million for first year New markets will bring estimated average additional benefits of $100 million  According to 2009 Ventyx analysis 52

53. SPP.org 53 What type of new markets is SPP implementing? Day Ahead: SPP determines what generating units should run the next day for maximum cost-effectiveness Ancillary Services: Market to buy and sell reserve energy that:  Meets emergency needs  Regulates instantaneous load and generation changes  Maintain electricity quality (keeping voltage up, etc.)

54. SPP.org Day Ahead market makes regional generation choices

55. SPP.org Day Ahead market offers regional diversity

56. SPP.org 56 Benefits of Ancillary Services market Greater access to reserve electricity Improve regional balancing of supply and demand Facilitate the integration of renewable resources

57. Perfect Storm of Complex Issues Growth in demand Aging infrastructure Rising gas prices Lack of transmission Growth in uncommitted capacity Challenges with integrating renewables into grid Political and technical challenges Greenhouse gas emissions Lengthy permitting for new generation Trade imbalance

58. SPP.org 58 Source: EPRI

59. SPP.org Summary/Recommendations/Next Steps Know the players Is it local, state, national, or international? Are you really “green”? Know the facts – take a position. 59