FERC, NERC, FRCC, FPSC An Update Florida Electric Cooperative Association Engineers Conference June 13, 2012 Glenn Spurlock Manager of Transmission Planning Seminole Electric Cooperative, Inc. Good Afternoon Welcome to a discussion of Transmission System Planning For those that do not know me, my name is Glenn Spurlock I am a transmission planning engineer at Seminole Electric Cooperative where I have worked for two years. I have 22 years of industry experience including 12 years of planning … 2 years of transmission planning at Seminole 8 years of T & D planning at Florida Power (now Progress Energy) 2 years of telecommunications network planning at Progress Telecom

FERC, NERC, FRCC, FPSC Major Components of the electric Industry Generation Resources Transmission System Distribution System The major components of the electric system are … Power plants The Transmission System The Distribution System

FERC, NERC, FRCC, FPSC 1935 Congress Federal Power Act Public Utility Holding Company Act FPC (the predecessor to FERC) now had responsibility to provide effective federal regulation of the expanding business of transmitting and selling of electric power in interstate commerce. Nov. 1965 - N. E. US & Canada Black Out Nov. 1965 - NERC Founded Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

2003 N.E. U.S. and Canada Blackout FERC, NERC, FRCC, FPSC 2003 N.E. U.S. and Canada Blackout August 14, 2003 61,800 MW of load lost 55 Million people affected Cost estimates between $7-14 bn Led Congress to pass EPAct 2005 Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

FERC, NERC, FRCC, FPSC Cleveland – August 14, 2003 Without proper planning, engineering, and maintenance … Operation of the electric system can be difficult … As seen here … a major U.S. city in the dark.

FERC, NERC, FRCC, FPSC July 2006 - FERC certifies NERC as the ERO Sept. 2006 - FERC Issues NOPR to adopt Reliability Standards 1st Qtr 2007 - FERC Approves Reliability Standards Order 693 June 2007 - NERC Begins ERO Operations Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

NERC is the Electric Reliability Organization (ERO) FERC, NERC, FRCC, FPSC NERC is the Electric Reliability Organization (ERO) Organizations were responsible to register and comply with Reliability Standards based on their functions The ERO delegated registration and compliance monitoring and enforcement to the Regional Entities (Florida Reliability Coordinating Council - FRCC) (Southeastern Electric Reliability Council – SERC) Regional Entities maintain Compliance Registries listing Entities in their Regions performing various functions Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

FERC, NERC, FRCC, FPSC 2003 N.E. U.S. and Canada Blackout 2008 S.E Florida Blackout 2011 S.W. US Blackout Reliability Legislation ERO and Regional Entities Bulk Electric System Definition Compliance Registry Joint Registration Future of Reliability Standards Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

FERC, NERC, FRCC, FPSC Why Plan? Three Reasons to plan … Congress Energy Policy Act of 2005 FERC Establishes ERO NERC Drafts Policy FRCC / SERC Enforces Policy Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

Reliability Prior to June 18, 2007 FERC, NERC, FRCC, FPSC Reliability Prior to June 18, 2007 NERC Standards were good industry practice NERC Standards were not mandatory NERC Standards were not enforceable Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

Reliability After June 18, 2007 FERC, NERC, FRCC, FPSC Reliability After June 18, 2007 Mandatory compliance with Electric Reliability Organization (ERO) Standards Monetary fines, non-monetary sanctions, operational restrictions are allowed penalty actions by RE, ERO, or FERC Due process at the RE, ERO, then FERC Standards apply to 15 different functional entities Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

Seminole’s Registration FERC, NERC, FRCC, FPSC Seminole’s Registration BA Balancing Authority DP Distribution Provider GO Generator Owner GOP Generator Operator IA Interchange Authority LSE Load Serving Entity PA Planning Authority PSE Purchase Selling Entity RP Resource Planner TO Transmission Owner TOP Transmission Operator TP Transmission Planner Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis TSP Transmission Service Provider

Future of Reliability Standards FERC, NERC, FRCC, FPSC Future of Reliability Standards FERC and NERC have developed an aggressive plan for the drafting and adoption of new and revised Standards Penalties are now well-established The “courtship” period has ended; all registered entities are to have well-established compliance programs Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

FERC, NERC, FRCC, FPSC 2008 S.E Florida Blackout February 26, 2008 3,650 MW of load lost 1350 MW of Direct Load Loss 2300 MW of UFLS Load Loss 3 Hours to Restore all Load 4,399 MW of Generation Lost 22 Transmission Lines Lost 24 Recommendations To Industry Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

FERC, NERC, FRCC, FPSC 2011 S.W. US Blackout September 8, 2011 7,835 MW of load lost 2.7 Million people affected 12 hours to Restore All Load 6,681 MW of Generation Lost 87 hours to Restore All Generation 13 Hours to Restore All Transmission 27 Recommendations to Industry Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

FERC, NERC, FRCC, FPSC 2011 S.W. US Blackout Finding 3: TOPs and RCs should ensure that their next day studies include all internal and external facilities (including those below 100 kV) that can impact BPS reliability. Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

FERC, NERC, FRCC, FPSC 2011 S.W. US Blackout Finding 6: TOPs should expand the focus of their seasonal planning to include external facilities and internal and external sub-100 kV facilities that impact BPS reliability. Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

FERC, NERC, FRCC, FPSC 2011 S.W. US Blackout Finding 17: WECC RC and affected TOPs and BAs do not consistently recognize the adverse impact sub-100 KV facilities can have on BPS reliability. As a result sub-100 kV facilities might not be designated as part of the BES, which can leave entities unable to address the reliability impact they can have in the planning and operations time horizons. If, prior to September 8, 2011, certain sub-100 KV facilities had been designated as part of the BES and, as a result, were incorporated into the TOPs’ and RC’s planning and operations studies, or otherwise had been incorporated into these studies, cascading outages may have been avoided on the day of the event. Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

FERC, NERC, FRCC, FPSC 2011 S.W. US Blackout Recommendation 17: WECC, as the RE, should lead other entities, including TOPs and BAs, to ensure that all facilities that can adversely impact BPS reliability are either designated as part of the BPS or otherwise incorporated into planning and operations studies and actively monitored and alarmed in RTCA systems. Why Plan? Three Reasons to plan … Organized System Expansion Long term planning – 1-10 years into the future Reliability & operational flexibility of the future system Future Growth Reliable System Operations Planning for transmission & generator maintenance Switching options for re-configuration of the system Options for fast & safe outage restoration “Anything that can go wrong, will” Contingency analysis

FERC, NERC, FRCC, FPSC NERC Standards Under Development COM-003 Operating Personnel Communications Protocols VAR-002 Interpretation PRC-005 Protection System Maintenance & Testing PRC-001 & PRC-027 System Protection Coordination Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC NERC Standards Under Development COM-001, COM-002 and IRO-001-3 Reliability Coordination BAL-001-1, BAL-002-2, BAL-012-1, & BAL-013-1 Balancing Authority Reliability-based Controls: Reserves Cost Effective Analysis Process (CEAP) for NERC ERO Standards Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC NERC Standards Under Development MOD-025-2, MOD-027-2, & PRC-019-1 Generator Verification Frequency Response CIP-002-5 through CIP-009-5, CIP-010-1, and CIP-011-1 Cyber Security CIP-001 & EOP-004 Disturbance Sabotage and Reporting Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC PRC-023 Transmission Relay Loadability NERC Standards Under Development Protection Systems (Misoperations) PRC-023 Transmission Relay Loadability EOP-03, PRC-006, PRC-007, & PRC-009 Underfrequency Load Shedding TPL Table 1, Footnote B Asses Transmission & Future Needs Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC FAC-003 Vegetation Management NERC Standards Under Development FAC-003 Vegetation Management Definition of Bulk Electric System – Rules of Procedure Modifications to Support BES Exceptions PRC-006 SERC Regional Reliability Standard PRC-006 NPCC Regional Reliability Standard Etc., Etc., Etc. Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC FERC Activities FPL Energy Imbalance Filing Seminole has Intervened PEF Wholesale CWIP Rate Case Filing Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC FERC Activities FERC Order 1000 Applies to entities with OATT filed at FERC Requires Regional Planning Requires Inter-Regional Planning Requires a non-discriminatory open, transparent, stakeholder involved process Must allow for non-incumbent transmission developers (removes ROFR for regional cost sharing projects) Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC FERC Activities FERC Order 1000 (continued) New Regional Cost Allocation methodology is applicable to the following categories of regional projects: Reliability Economic Public Policy Multiple Categories Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC FPSC Activities Proposed FPSC Workshop – 6/21/2012 Rule 25-6.019 - Notifications of Accidents Rule 25-6.0345 - Safety Standards for Construction of New Transmission and Distribution Facilities Rule 25-6.0346 - Quarterly Reports of Work Orders and Safety Compliance Rule 25-6.060 – Meter Test – Referee Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC 25-6.019 Notification of Certain Events Involving Electrical Systems Accident ….. As soon as practicable, but by the end of the next business day after it learns of the occurrence, each investor-owned electric utility, rural electric cooperative, and municipal electric utility shall notify the Director of the Division of Safety, Reliability and Consumer Assistance Commission, in writing, using Form PSC/SCR 159 (XX/XX) of any event involving an accident occurring in connection with any part of the electrical system which: (a) Involves death or injury requiring hospitalization of non-utility persons, or (b) Is significant from a safety standpoint in the judgment of the utility even though it is not required by paragraph (a). Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC 25-6.019 Notification of Certain Events Involving Electrical Systems Accident .....Each investor-owned electric utility, rural electric cooperative, and municipal electric utility shall report, in writing, to the Director of the Division of Safety, Reliability and Consumer Assistance using Form PSC/SRC 158 (XX/XX) Commission within 30 days of any event malfunction of or accident involving any part of the electrical system, fire, or explosion, that: Involves damage to the property of others for an amount in excess of $10,000 or, (b) Causes significant damage, in the judgment of the utility, to the utility's facilities. (3) Unless requested by the Commission, [Reports are not required with respect to personal injury, death, or property damage resulting from vehicular equipment striking poles] Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC 25-6.0345 Safety Standards for Construction of New Transmission and Distribution Facilities. Proposed The Commission adopts and incorporates by reference the 2012 edition of the National Electrical Safety Code (ANSI C-2) [NESC], as the applicable safety standards for transmission and distribution facilities subject to the Commission's safety jurisdiction. Existing For electrical facilities constructed on or after February 1,2007, the 2007 NESC shall apply. Electrical facilities constructed prior to February 1,2007, shall be governed by the edition of the NESC specified by subsections 013 .B.I, 013.8.2, and 013 .B.3 of the 2007 NESC. Each investor-owned electric utility, rural electric cooperative, and municipal electric system shall, at a minimum, comply with the standards in these provisions. Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC 25-6.0346 Quarterly Reports of Work Orders and Safety Compliance ….(1) Each investor-owned electric utility, rural electric cooperative and municipal electric utility shall report all completed electric work orders, whether completed by the utility or one of its contractors, at the end of each quarter of the year. The report shall be electronically filed with the Director of the Division of Safety, Reliability and Consumer Assistance no later than the 30th working day after the last day of the reporting quarter using Form PSC/SRC 157 (xxI12), …… (2) In its quarterly report, each utility shall identify all transmission and distribution facilities subject to the Commission's safety jurisdiction, and shall certify to the Commission that they meet or exceed the applicable standards. Compliance inspections by the Commission shall be made on a random basis or as appropriate. Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC 25-6.060 Meter Test - Refereed Dispute Referee (1) In the event of a dispute, upon request written application to the Commission by any customer, a test of the customer's meter will be made by the utility as soon as practicable. Said test will be supervised and witnessed by a representative of the Commission. (2) A meter shall in no way be disturbed after the utility has received notice that application has been made for such referee test unless a representative of the Commission is present or unless authority to do so is first given in writing by the Commission or by the customer. (3) A report of the results of the test will be made by the Commission to the customer. (4) For equipment tested under this rule, any previous accuracy test result on record at the time the meter test is requested must be retained in accordance with Rule 25-6.022, F.A.C. Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC Large Generator Interconnection Procedures (LGIP) Generation = 20MW + Complete LGIA Application w/site control Feasibility Study $10 k deposit 45 days to complete study System Impact Study $50 k deposit 90 days to complete study Facility Study $100 k deposit 90 days (+/- 20%) or 180 days (+/- 10%) to complete study Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC Small Generator Interconnection Procedures (SGIP) Generation = 0 – 20 MW Complete SGIA Application w/site control Feasibility Study $1 k deposit System Impact Study Facility Study Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC Small Generator Interconnection Procedures - Fast Track (SGIP Fast Track) Generation = 0 – 2 MW Complete SGIA Application w/site control Evaluate Project Against Screening Criteria $500 Processing Fee Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

Transmission Industry Oversight FERC, NERC, FRCC, FPSC Transmission Industry Oversight Business/Commercial Standards North American Energy Standards Board NAESB Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC Rice Rule On May 22,2012, the Environmental Protection Agency proposed amendments to the National Emissions Standards for Hazardous Air Pollutants (NESHAP) for stationary. Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC Rice Rule EPA published its proposed revisions to the RICE NESHAP in the June 7th’s Federal Register. The deadline for comments is July 23, 2012, or 30 days after the date of a public meeting if later. The schedule for completing this rule is part of a settlement agreement with EnerNOC, which requires the EPA Administrator to issue a final rule by December 14, 2012.     Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

Emergency Demand Response and Peak Shaving FERC, NERC, FRCC, FPSC Emergency Demand Response and Peak Shaving • In an emergency demand response situation, RICE may be used to assure the stability of electrical service. RICE could be called upon to provide power to a facility and/or to the electrical grid to assure available power at peak times also known as peak shaving. • EPA proposes to allow emergency engines to operate for 100 hours per year without meeting emission limits for the following purposes: o monitoring and testing, o demand response for Energy Emergency Alert Level 2 situations, and o responding to situations when there is at least a five percent or more change in voltage. • This amendment would allow emergency engines to participate in demand response programs with regional electricity wholesale markets operated by independent system operators and regional transmission operators. Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

Emergency Demand Response and Peak Shaving FERC, NERC, FRCC, FPSC Emergency Demand Response and Peak Shaving • This amendment would allow emergency engines to participate in demand response programs with regional electricity wholesale markets operated by independent system operators and regional transmission operators. • Demand response programs vary in their requirements and engines may need to be available for 100 hours per year to participate in the programs. • As part of the 100 hours allowed for monitoring and testing, demand response, and voltage change situations a temporary allowance of 50 hours per year would be provided for any purpose, including peak shaving, and may be used until April 2017. This would apply to units at area sources of hazardous air pollutants. Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

Emergency Demand Response and Peak Shaving FERC, NERC, FRCC, FPSC Emergency Demand Response and Peak Shaving • If an emergency engine operates for more than 100 hours per year for non-emergency purposes, the engine will need to meet emission limits required for non-emergency engines for the life of the engine. • The amendments restate that in a true emergency there is no time limit on use of the engines.  Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC Rice Rule EPA Webinar – Thursday 6/14/12 – 1:00-3:30 PM EPA Air Quality Regulations for Reciprocating Internal Combustion Engines Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols

FERC, NERC, FRCC, FPSC Transmission Industry Oversight Regulatory Oversight Market Structure Seek even Playing Field IOUs Munis Cooperatives Merchants Open Access – Remove hurdles to new entrants Remove Market Power Domination Reliability Oversight Keep the lights on – short term & long Term Business/Commercial Standards Standardized Business Practices & Procedures Standardized Communications Protocols