Transmission Expansion Kansas Wind and Renewable Energy Conference Topeka, KS September 23, 2008

3 Overview SPP Background SPP Transmission Expansion Plan 2008 EHV Overlay Study Joint Coordinated System Plan Cost Allocations in SPP

4 SPP System: 230 kV and above

5 Transmission Expansion

6 Quote from MISO RECB Order Issued July 23, 2007 We need a true nationwide transmission version of our interstate highway system; a grid of extra-high voltage backbone transmission lines reaching out to remote resources and overlaying, reinforcing, and tying together the existing grid in each interconnection to an extent never before seen.... Indeed I would tend to assume that a large multi-state 500 or 765 kV transmission line would not have much difficulty showing net benefits over a very broad region... Suedeen Kelly, FERC Commissioner

7 STEP What Is It?

8 SPP Transmission Expansion Plan SPP Transmission Expansion Plan (STEP) Everything pertaining to transmission development 1.Generation Interconnection Upgrades 2.Transmission Service Upgrades 3.Reliability Standards Upgrades 4.Economic / Sponsored Upgrades 5.Planned Upgrades 6.EHV Overlay / JCSP +

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12 SPP Generation Interconnections (KS) SPP Wind Farm statistics based on nameplate capacities (KS data) 1,800 MWs in-service (350 MW) 2,100 MWs under construction (1,405 MW) 1,600 MWs with signed IAs on suspension (549 MW) 4,800 MWs with IAs pending/Facility Studies (1,555 MW) 6,300 MWs with Impact/Feasibility Studies in process (2,953 MW) Almost 32,000 MW with Feasibility Studies requested (7,702 MW) Explosion of Generation Interconnection Requests 161 active requests (14,639 MW of Wind in KS) Significantly more wind than SPP peak demand Generation Queuing Task Force (GQTF) Limit queue ID project milestones Possible GI clustering Target MOPC/BOD October meetings for recommendations

13 Transmission Service Issues FERC 890 compliance. 3 rd party impacts, seams issues are problematic. Aggregate Study Improvement Task Force (ASITF) recommendations approved by MOPC in April to expedite and improve the Aggregate Study process. Proposing to pair AG studies to allow SPP to catch up in processing past and future requests.

14 Reliability Standards Planning NERC Reliability Standards match SPP Criteria. Projects needed for reliability are base plan funded with revenue requirement cost allocations of 33% to all loads and 67% to project benefactors as measured by MW-MI impacts. Some members have stricter standards for load pockets. Projects to meet higher standards for TOs are eligible for zonal cost recovery. Appropriate definition of reliability is being discussed to consider probabilistic metrics

15 Economic Planning Reliability and Economics are Inseparable Economic Upgrades – sponsored under existing tariff but eligible for credits based on new service sold Balanced Portfolio Postage stamp cost allocations for a portfolio of Economic Upgrades which benefit SPP as a whole, and for which each zone realizes benefits in excess of their costs Tariff language has been approved and filed at FERC Balanced Portfolio in final stages of development

16 Portfolio 3

17 Portfolio 3-A Iatan Nashua Seminole Muskogee El Dorado Longwood Chesapeake Tolk Reno Co Spearville Wichita Cleveland Sooner Anadarko XF Swissvale – Stilwel Tap Summit Knoll Axtell Potter Substation Upgrade New Transmission Circuit

18 Portfolio 3-B Iatan Nashua El Dorado Longwood Chesapeake Reno Co Spearville Wichita Cleveland Sooner Anadarko XF Swissvale – Stilwel Tap Summit Knoll Axtell Seminole Muskogee Substation Upgrade New Transmission Circuit

19 Adjusted Production Cost Results Results shown for both 345 kV and 765 kV construction (with 345 kV operation) 765 kV includes Spearville – Knoll 765 kV Seminole – Muskogee 765 kV Wind modeled at 2,600 MW (year end, 2008 levels) 2012

20 Portfolio Balance 1.0 = Balanced

21 Next Steps on Balanced Portfolio CAWG meeting tomorrow in Dallas SPP Staff recommends that Portfolio 3 and 3-A be used for future analysis Future (2017, 2023) analyses Scenarios 1.Higher Wind 2.Carbon Regulation Impact on reliability plan (negative and positive) Leading portfolio moved forward to construction

STEP SPP Transmission Expansion Plan (STEP) approved by BOD in January 2008 $2.2 B of transmission projects over 10 year horizon with almost $800M of transmission projects requiring financial commitments in and $465M of major economic upgrades primarily in KS (costed at 345 kV)

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24 Updated EHV Overlay Study Quanta Technology Report posted at D=27 D=27 Analysis of Alternative 5 from original study does not support continued grid build out at 345 kV, but demonstrates that 765 kV solution is appropriate when wind penetration exceeds 4,600 MW Soliciting input from stakeholders on results to date, issues, concerns at

25 New Wind in Updated EHV Overlay Study Kansas6,600 MW 31.9% Missouri 750 MW 3.6% New Mexico 300 MW 1.4% Oklahoma8,550 MW * 41.3% Texas4,500 MW 21.7% TOTAL 20,700 MW 100% * Includes 4,450 MW in Oklahoma Panhandle

26 Potential EHV Overlay Mid- Point Design for 13.5 GW Wind

27 Updated EHV Overlay Study Findings Focus on midpoint designs to collect / deliver 13.5 GW of new wind in SPP 5.5 GW to SPP 3 GW to WECC via HVDC 2.5 GW to northeast 2.5 GW to southeast $8 billion at $2 million / mile engineering and construction costs + $65,000 / mile for Rights-of-Way 2,250 miles of 765 and 500 kV in SPP Almost 600 miles of 765 kV in new interconnections and connectivity in neighboring systems

EHV Overlay Next Steps SPP Transmission Working Group supports further work Scope being finalized to identify alternative plans and sensitivities for economic analyses to be concluded in 4 th Quarter 2008 Review and incorporate new data, objectives, etc. as appropriate into concurrent plans e.g., see DOEs 20% Wind Energy by 2030 report released May 12 th at Nebraska entities integration into SPP Must be robust, flexible and coordinate with neighbors plans. Must demonstrate incremental value and merits of 765 vs. 345 kV overlay in SPP

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31 JCSP Next Steps Evaluate existing RPS baselines, as well as a 20% National RPS as part of 2008 NREL/DOE Eastern Wind Integration Transmission Study (EWITS) Next Meeting October 2 in Carmel, IN Studies will be used to demonstrate the value of bulk power transmission to harvest best wind resources in central plains, rather than build local wind to met local requirements. Check out

32 Wind Integration Issues Operational issues / reliability concerns warrant further investigation to address wind integration challenges Developing scopes of wind integration and penetration studies Further dynamics and reactive compensation analyses required SPP staff / members involved in numerous industry initiatives on wind integration EHV build out, regardless of drivers, will require changes to power system planning and operations

33 Cost Allocations Are Key Cost allocations can be a barrier to effective transmission expansion planning, but need not be. Witness EHV expansion by South Central Electric Companies in the 1960s. FERC Order 890 is forcing industry to address this topic SPP Cost Allocation Working Group in process of finalizing recommendations on Balanced Economic Portfolio of 345 kV transmission expansion projects, primarily, with associated postage stamp cost recovery. Power industry can not afford to undervalue transmission anymore.

34 Reliability Base Plan Funding 33% / 67% Criteria or Designated Resource Transmission 2005 Economic Balanced Portfolio Postage Stamp Benefits / Cost kV and above Filed on 08/15/08 EHV Postage Stamp 765 kV Work in Progress

35 Questions?

36 Jay Caspary Director, Engineering