© New York Independent System Operator, Inc. All Rights Reserved. New Challenges Facing System Operators Stephen G. Whitley President & Chief Executive Officer New York Independent System Operator Past Present and Future of the Power Grid A Cornell University workshop in honor of Robert J. Thomas Ithaca, NY August 9, 2012

© New York Independent System Operator, Inc. All Rights Reserved. Topics Growth of the Grid Renewable Resources Demand Response Advancing Technology Regional Collaboration 2

© New York Independent System Operator, Inc. All Rights Reserved. 3 Growth of the Grid Pearl Street Station distribution area, New York, Image 69231, Electricity & Modern Physics Collection. National Museum of American History - Smithsonian Institution 1882 Pearl Street Station 59 customers 600 kW of generation 10.5 miles of main lines 1882 Pearl Street Station 59 customers 600 kW of generation 10.5 miles of main lines 2012 New York Control Area 7 million electric utility customers 43,000,000 kW of generating capacity, transmission capability & demand-response 11,000 circuit-miles of high-voltage transmission 2012 New York Control Area 7 million electric utility customers 43,000,000 kW of generating capacity, transmission capability & demand-response 11,000 circuit-miles of high-voltage transmission

© New York Independent System Operator, Inc. All Rights Reserved. Looking Ahead Integrating Renewable Resources Empowering Consumers Advancing Technology Enhancing Collaboration 4

© New York Independent System Operator, Inc. All Rights Reserved. 5 Wind Power 2006 – NYISO exempts wind from undergeneration penalties as a variable energy resource 2008 – NYISO establishes centralized wind forecasting system established 2009 – NYISO integrates wind into Economic Dispatch system (First in nation) Growing wind in NY… Wind-powered generating capacity in NY grew from 48 MW in 2005 to 1,414 MW in 2012 Another 4,000 MW of wind projects proposed for interconnection to NY grid

© New York Independent System Operator, Inc. All Rights Reserved NYISO implements first market rules in US enabling storage systems to participate in the markets as frequency regulation providers Energy storage complements development of variable energy resources 6 Energy Storage NYs Energy Storage Firsts… First commercial grid-scale battery-based storage system to operate as a generator in the US First full-scale flywheel energy storage facility to provide frequency regulation service in the US

© New York Independent System Operator, Inc. All Rights Reserved – NYISO exempts solar power from under- generation penalties to compensate solar fully for all energy production Future – Market evolution for solar resources likely to parallel wind power initiatives 7 Solar Power Grid-scale solar in NY… The largest photovoltaic array in the eastern US is the 32-MW Long Island Solar Farm at Brookhaven National Laboratory – completed in Nov. 2011

© New York Independent System Operator, Inc. All Rights Reserved. Demand Response 8

© New York Independent System Operator, Inc. All Rights Reserved. Shaving the Peak 9 Actual Load with DR Estimated Load without DR July 2011 heat waves could have pushed demand to over 35,000 MW -- a new record peak -- had DR programs not served to reduce load by more than 1,400 MW

© New York Independent System Operator, Inc. All Rights Reserved. Dynamic Pricing NYISO/Brattle Group Study Dynamic pricing can encourage shift to off-peak usage Potential 10-14% reduction in system peak Market-based customer cost reductions of 2-5% Impact of Dynamic Pricing on Hourly Loads 10

© New York Independent System Operator, Inc. All Rights Reserved. Smart Grid Smart Grid Investment Grant (SGIG) Three-Year project -- $74 Million (DOE SGIG funding of $37 Million to cover 50% of project cost) 11 Project components Creation of a statewide Phasor Measurement Network Installation of Capacitor Banks Enhanced reliability PMU Installation one of key DOE recommendations from 2003 blackout study endorsed by FERC and NERC

© New York Independent System Operator, Inc. All Rights Reserved. NYISO Infrastructure New state-of-the-art primary control center in a facility adjacent to existing corporate center Renovation of 42- year-old power control facility to serve as alternate control center Existing Corporate Center New Primary Power Control Center 12

© New York Independent System Operator, Inc. All Rights Reserved. Regional Collaboration Broader Regional Markets Address seams between regional markets and grid operations Collaborative effort - NYISO, PJM Interconnection, Midwest ISO, ISO- New England, Ontarios Independent System Operator and Hydro Quebec More frequent scheduling can facilitate better regional integration of variable, renewable resources 13

© New York Independent System Operator, Inc. All Rights Reserved. Interregional Planning 14 Eastern Interconnection Planning Collaborative 25 electric system planning authorities in U.S. and Canada representing 95% of Eastern Interconnection Grassroots effort to integrate local planning interconnection-wide

© New York Independent System Operator, Inc. All Rights Reserved. Moving Forward 15

© New York Independent System Operator, Inc. All Rights Reserved. 16 The New York Independent System Operator (NYISO) is a not-for-profit corporation responsible for operating the states bulk electricity grid, administering New Yorks competitive wholesale electricity markets, conducting comprehensive long-term planning for the states electric power system, and advancing the technological infrastructure of the electric system serving the Empire State.