Coordinated Planning Concept (For Discussion Only) revised 11/30/04 07/01/04

2 Coordinated Planning Reliability Expansion Plan Determine Expansion Options Driven by Reliability Objective: Provide reliable transmission service for network loads Oversight by OSC Market Access Plan Determine Expansion Options Driven by Market Access Objective: Develop transmission options for obtaining resources from the market with appropriate balance between costs, benefits and risk. Oversight by OSC

3 Coordinated Planning Process Reliability and Market Access Expansion Plan OSC Provides Direction PWG Develops Models Inputs PWG Identifies Reliability Problems PWG develops solutions that best balance cost and risk Reliability Plan Outputs Market Access Plan Outputs Complete Regional Plan Develop Market Access Expansion Options Integration Of Reliability And Market Access Planning Process Determine Transfer Capability Analyze Market Access Requests Inputs LSE Resource Plans OATT

4 Coordinated Planning Process Reliability Expansion Plan Inputs:Identify Reliability Problems:Outputs: Load forecasts* Normal/Contingency studies:* Reliability Expansion plan with Resource projections - Voltage cost estimate for years 1-3 and New deliveries - Thermal expansion plans for projects New projects - Stability requiring long lead times for Load transfers years 4-10 VST/MMWG models* Alternatives for years 4-10 Past summer peak model Inputs shared electronically (September – October?) The OSC and PWG will meet as needed to: 1. Discuss data and modeling issues; review 2005 plan, if desired (November?) 2. Share problems identified from reliability studies (February?) 3. Share consolidated expansion plans for years 1-3 and projects requiring long lead times (June?) 4. Share proposed alternatives for years 4-10 (August?)

5 Coordinated Planning Process Market Access Plan Inputs:Determine TransferCapabilities: Outputs: LSEs identify resources * Share import/export capabilities * Expansion options with they wish to have * Share the “limiting elements” cost estimates and lead access to, both inside and * Determine interaction between times outside the control areas reliability and market access options. LSEs identify the years and interfaces and internal flow gates needed to access the resources -Expansion options do not necessarily become part of the reliability expansion plan. Each LSE determines whether its project should be incorporated in the future reliability expansion plan by making an OASIS request through the existing OASIS process.

6 PWG Responsibility: September - December Data Collection - from all control area LSE’s, provide updated data for the models representing the next 10 years Load data update New projects & deliveries update Resource projections Model Development – incorporate new LSE data, and the transmission provider’s planned projects and upgrades into the system models

7 PWG Responsibility: January Each Transmission Provider with PWG oversight screens the updated internal models versus NERC Planning Standards/Planning Criteria and OSC approved criteria; including appropriate dispatch and transmission contingencies from neighboring control areas. Results of screening studies (problems) will be shared with OSC

8 PWG Responsibility: February - May PWG develops best transmission solutions and shares proposals with OSC. * Joint meetings are expected to be required with OSC

9 PWG Responsibility: June - August PWG formalizes detailed expansion/upgrade plans and cost estimates for next 3 years Evaluate/study proposed alternatives for years 4 – 10 (e.g. resource alternatives, generation siting, load shifts between delivery points, substation siting, transmission projects,…) * Joint meetings may be required with OSC.

10 Coordinated Planning Process Market Access Analysis The OSC and PWG are expected to meet as follows:: 1. September PWG shares the import capabilities on each interface and internal flow gates. Duke/Progress Energy describe the facilities that limit the imports in respective control areas and internal flow gates. The LSEs identify the locations of the resources (both internal and external) they wish to have access to, the desired MW levels, and the year in which the increased MW level needs to be available 2. November PWG reviews options for increasing the import/export capability Note: VST models become available around the middle of June. During July and August, VST does a joint study which will provide the models we need to perform these studies. Therefore, we propose the first meeting each year be held in September. The model(s) will be made available to all members of the PWG.

11 Assumptions Confidentiality and Standards of Conduct issues can be resolved This process will address long-term expansion plans for the bulk transmission system. Future year plans are always subject to change. Rollover or LSE resource projections assumptions used for base plan. Undesignated resources assumed to be built on system. Planning policy and criteria determined in accordance with the coordinated planning process.. PWG develops model(s) based on planning criteria established in accordance with the coordinated planning process.