Duke Energy Carolinas Quarterly Stakeholder Meeting Independent Entity Services Tuesday, July 21, 2009 2:00 to 3:00 p.m. EDT

Agenda Follow-up Action Items from April 21, 2009 Business Practice Clarification – Rollover Rights Yearly TTC and Yearly ATC Offering Horizon Review Designated Network Resource Form Coordination of Transmission Service Queues FERC NOPRs NAESB Practices NERC Standards NAESB Wholesale Electric Quadrant Update Accessing NAESB to View Business Practice Standards Wrap-up 2 2

Action Items Follow-up from April 21, 2009 No Action Items

OASIS Business Practice Clarification – 3.J. Rollover Rights Revised for clarification on July 17th, 2009 Yearly requests profiled by increment may be eligible for Rollover Rights The MW value eligible for rollover will be the capacity granted in the last profiled segment 4

Yearly TTC & Yearly ATC Offering Horizon Discontinue posting of yearly ATC offerings No consistent methodology for Yearly ATC calculation No regional studies for Yearly TTC/ATC calculation Not required by FERC, NERC or NAESB Yearly transmission service can still be requested Submission timeline for yearly requests is unchanged Yearly transmission service request evaluation is unchanged Post 13 months TTC & ATC data Code of Federal Regulations, NERC, & NAESB require 13 months (current month + 12) of posted TTC & ATC data 5

Review Designated Network Resource Form Facilitates the collection of information required by FERC Used to fulfill the Customer Attestation requirement The Network Customer who has an OASIS certificate may be an agent to or acting as an authorized officer of the Network Customer When the individual checks the boxes on the form they are attesting to fulfilling the requirements in the Tariff 6

Coordination of Transmission Service Queues Customer requested Duke coordinate with other TPs on the acceptance of transmission service requests Items that affect the timing of Transmission Provider’s responses Queue time (higher queued requests) Level of transmission congestion (System Impact Studies & Facilities Studies) Number of requests in the queue Reservation priority Coordination is not required or facilitated by the FERC, NERC, & NAESB TPs must follow the timing requirements set forth in their OATT’s and NAESB Business Practices Standards. Service Requests are processed in the order that they are received 7

FERC NOPRs NAESB Business Practice Standards (RM05-013) Duke Comments (link) Request additional time for implementation Request FERC not adopt standards that conflict with Order 717 Request the effective date for posting the ATC Information Link to coincide with the effective date for implementation of the NERC ATC standards Request FERC not adopt Version 2.1 standards for Rollover Rights for Firm Redirects No Final Order 8 8

FERC NOPRs NERC ATC Standards (Docket Nos. RM08-19-000, RM08-19-001, RM09-5-000, RM06-16-005) Duke Comments (link) FERC should not direct NERC to perform audits unrelated to the reliability of the bulk-power system FERC should not require the disclosure of implementation documents to parties who do not have a reliability need for the information Clarification on modeling of designated network resources in ATC calculations FAC-012 and FAC-013 should be retired or withdrawn No Final Order 9 9

NAESB Update: Wholesale Electric Quadrant NAESB Request & Standards Development Activity Applicable to WEQ (link to web page) Rollover Rights on Redirect on a Firm Basis (Approved by WEQ EC and Membership) Permits customers to decide whether to transfer rollover rights to a qualifying firm redirect or to retain them on the parent reservation Establishes parameters to track rollover rights on OASIS Order 717, Standards of Conduct (Approved by WEQ EC, Membership ballot due 7/27/09) Removes requirements for posting standards of conduct information on OASIS Retains option to keep OASIS templates if transmission provider wishes to post standards of conduct information Duke IE will continue to post acts of discretion (e.g., annulment of reservation) on OASIS even though not required 10 10 10

NAESB Update: Wholesale Electric Quadrant WEQ Executive Committee (EC) (link WEQ EC page) May 12 meeting (link) 2009 WEQ Annual Plan item 3.d – “FERC Order No 717 Standards of Conduct” – Revised recommendation and passed by supermajority vote Approved recommendation to restructure to WEQ subcommittees with the following changes: Collapse the WEQ Electronic Scheduling Subcommittee and Information Technology Subcommittee into a single subcommittee named the OASIS Subcommittee. Move the Joint Interchange Scheduling Working Group to a subcommittee named the Joint Electric Scheduling Subcommittee Move the Seams Subcommittee to the Inactive Subcommittees and Task Forces Rename the WEQ Joint BPS/ESS/ITS Meetings on ATC/AFC to the WEQ Joint BPS/OASIS Meetings on ATC to be consistent with merging the ESS/ITS into the OASIS subcommittee. Next meeting is August 18. 11 11 11

Accessing NAESB Standards NAESB Business Practices Standards (BP) are incorporated in the Code of Federal Regulations NAESB BP Standards are under copyright Full text is not viewable in the CFRs Link to Version 1.4 (Duke Business Practices 2.E.) Link to Version 2.1 (FERC NOPR – slide 8 and 17) NAESB Contact Home Page: http://www.naesb.org/pdf/homepage.pdf Contact Page: http://www.naesb.org/contactus.asp NAESB phone: 713-356-0060 12 12

Wrap-up Proposed Next Quarterly Stakeholder Meeting Thursday, November 5, 2009 – 2 p.m. to 3 p.m. ET Customer Suggested Topics? This is the forum for discussing emergent topics (Upcoming changes, stakeholder input) Questions and Comments 13 13

Appendix Slide 15 - Reference points Designated Network Resource Form Slide 16 - Reference points Designated Network Resource Attestation Slide 17 - FERC NOPR NAESB Business Practice Standards Slide 18 - FERC NOPR NERC Reliability Standards 14 14

Designated Network Resource Form 18 CFR 37.6 vi - The Transmission Provider shall post a list of its current designated network resources and all network customers' current designated network resources on OASIS. The list of network resources should include: the name of the resource its geographic and electrical location its total installed capacity the amount of capacity to be designated as a network resource. The posting of DNR’s pursuant to 18 CFR 37.6 vi is created from gathering information from several steps in the process Information required by 29.2 of the OATT NITSA initiates the process to become a network customer OASIS request A statement signed by an authorized officer from or agent of the Network Customer attesting that all of the network resources listed pursuant to OATT Section 29.2(v) Attestation in Customer Comment field (OATT Section 29.2 viii) DNR form Accompanies every OASIS request for Designated Network Resources 15

Designated Network Resource Attestation Section 29.2 of the Duke OATT is the Application Process for Network Service 29.2 viii - Accompanying an application for a new DNR A statement signed by an authorized officer or agent of the Network Customer attests Networks Customer owns or has committed to purchase a generation under an executed contract Network Resources do not include any resources, or any portion thereof, that are committed for sale to non-designated third party load or otherwise cannot be called upon to meet the Network Customer's Network Load on a non-interruptible basis Agent/Network Customer Relationship with respect to the Attestation and OASIS posting If through Contracts your Company has been enabled to acquire Network Service then our software will not fail your access to Network Service The Network Customer who has an OASIS certificate may be an agent to or acting as an authorized officer of the Network Customer When the individual checks the boxes on the form they are attesting to fulfilling the requirements in the Tariff. FERC Order 890-B P182 “In Order No. 890, the Commission adopted the attestation requirement as the means by which the network customer can make this demonstration” “We affirm this requirement, consistent with the network customer’s obligations under section 30.7” 16

FERC NOPR NAESB Business Practice Standards NAESB Business Practice Standards (Docket RM05-5-013) http://elibrary.ferc.gov/idmws/common/OpenNat.asp?fileID=11969248 (FERC filed Document) Official Version NAESB NOPR in the Federal Register Proposal to incorporate the latest version (Version 002.1) of certain business practice standards adopted by NAESB Wholesale Electric Quadrant This version includes Standards in response to Order 890, 890-A & 890-B NAESB booklet version 2.1 NAESB link (requires login to view booklet) ATC related reforms New business practices include rules for treatment of requests with no value for bid price, treatment of pre-confirmed STF & NF requests, customer rebid of capacity, treatment of competing bids when insufficient ATC is available, treatment of rollover rights, conditional firm reservations, and other items Issued March 19, 2009 17

FERC NOPR NERC Reliability Standards NERC Reliability Standards (Docket Nos. RM08-19-000, RM08-19-001, RM09-5-000, RM06-16-005) http://www.ferc.gov/whats-new/comm-meet/2009/031909/E-5.pdf (FERC filed Document) Official Version NERC NOPR in the Federal Register Proposal to approve 6 Modeling, Data and Analysis Reliability Standards submitted by NERC Available Transmission System Capability http://www.nerc.com/files/MOD-001-1.pdf Capacity Benefit Margin http://www.nerc.com/files/MOD-004-1.pdf Transmission Reliability Margin Calculation Methodology http://www.nerc.com/files/MOD-008-1.pdf Area Interchange Methodology http://www.nerc.com/files/MOD-028-1.pdf Rated System Path Methodology http://www.nerc.com/files/MOD-029-1.pdf Flowgate Methodology http://www.nerc.com/files/MOD-030-2.pdf Consistency and Transparency of ATC and AFC Calculations Issued March 19, 2009 18