SERC Reliability Corporation 1 SERC RELIABILITY CORPORATION MID-AMERICA RELIABILITY CONFERENCE June 21, 2006 COLUMBUS, OHIO

SERC Reliability Corporation 2

3 SERC MEMBERSHIP 52 MEMBERS ALL SECTORS OF THE ELECTRIC INDUSTRY –INVESTOR-OWNED –COOPERATIVE –MUNICIPAL –FEDERAL/STATE –MERCHANT ELECTRICITY GENERATORS –MARKETERS –ISO-RTO/CUSTOMER

SERC Reliability Corporation 4 SERC MEMBERSHIP 560,000 SQUARE MILES ALL OR PARTS OF 16 STATES STAKEHOLDER BOARD MEETS THE REQUIREMENTS OF THE 2005 ENERGY POLICY ACT

SERC Reliability Corporation 5 Reliability Issues

SERC Reliability Corporation 6 Generation Survey -Results Survey Projected Interconnected Generating Plant Capability in Commercial Operation Prior to July 1, 2005: (Summer Net Plant Capability in MW) (228,100 MW) Total Actual Interconnected Generating Plant Capability in Commercial Operation Prior to December 31, 2005: (Summer Net Plant Capability in MW) 248,390 MW (221,373 MW) Total Uncommitted Generating Plant Capability in Commercial Operation Prior to December 31, 2005 (Summer Net Plant Capability in MW): 37,315 MW (34,732 MW) Note: Parenthetical data does not include new members

SERC Reliability Corporation 7 Generation Survey Results - Existing Capacity plus Cumulative Additions - 225,600 MW (40,900 Non- committed) 253,200 MW (62,400 Non- committed; 600 MW retired) 223,600 MW (36,000 Non- committed) 200,700 MW (26,400 Non- committed) 179,300 MW (N/A Non- committed) 423,000 MW (191,300 Non- committed) 274,000 MW (76,000 Non- committed) 268,200 MW (63,500 Non- committed) 248,400 MW (37,300 Non- committed) 285,100 MW (54,100 Non- committed; 600 MW retired)

SERC Reliability Corporation 8 Projected Capacity Additions - Cumulative Additions, Only - 27,600 MW (21,400 Non- committed; 600 MW retired) 243,700 MW (191,300 Non- committed) 73,300 MW (49,600 Non- committed) 44,700 MW (27,417 Non- committed) 36,800 MW (16,800 Non- committed; 600 MW retired)

SERC Reliability Corporation Generation Survey Summary - Existing Capacity plus Cumulative Additions - 248,400 MW (37,300 Non- committed) 184,600 MW 222,100 MW 285,100 MW (54,100 Non- committed; 600 MW retired) 63,100 MW 65,400 MW

SERC Reliability Corporation 10 Generation Survey Conclusions The decrease in proposed generation capacity additions experienced in the past few years has leveled off –Survey projects generation capacity additions over the next 10 years of about 36,800 MW (31,500 without new members) vs. 27,600 MW projected in 2005 Survey –Projected capacity additions are consistent with the expected load growth (37,500 MW) –Trends indicate that previously non-committed generation continue to enter into firm contracts to serve load

SERC Reliability Corporation 11 Generation Survey Conclusions Total projected generation capacity for Summer ’06 (250,007 MW) exceeds projected Summer ’06 load (184,569 MW) by over 65,000 MW Total connected generation capacity at the end of 2005 (248,390 MW) exceeds projections for SERC Regional load in 2015 (222,083 MW) by over 26,000 MW –Existing generation and projected capacity additions indicate sufficient generating resources over the longer-term planning horizon

SERC Reliability Corporation Survey:$6.759 Billion ($6.246 Billion) 2005 Survey:($6.254 Billion) 2004 Survey:($6.209 Billion) 2003 Survey:($6.265 Billion) Total Projected Transmission Expenditures Over the Subsequent Five Years: 2006 Transmission Survey -Results- $343 Million Amount Attributed to Direct Interconnection of Generation and Optional Upgrades: $1.258 Billion ($1.186 Billion) Actual 2005 Transmission Expenditures: Note: Parenthetical data does not include new members

SERC Reliability Corporation 13 Projected Transmission Investment - By Year -

SERC Reliability Corporation 14 Resource Assessment

SERC Reliability Corporation 15 SERC Region Summer Peak Demand Historical Actual vs Forecast

SERC Reliability Corporation 16 SERC Region Net Energy 2005 Actual & 2006 Forecast

SERC Reliability Corporation 17 SERC Region Summer Capacity Mix Forecast *Note: “Other/Unknown” category includes projected additions that do not have finalized implementation plans. *

SERC Reliability Corporation 18 SERC Region Capacity Breakdown 2006 Forecast

SERC Reliability Corporation 19 SERC Region Forecasted Capacity Additions 2006 Forecast * *Note: “Other/Unknown” category includes projected additions that do not have finalized implementation plans.

SERC Reliability Corporation 20 SERC Region Forecasted Capacity Additions by Type 2006 Forecast * *Note: “Other” category includes projected additions that do not have finalized implementation plans.

SERC Reliability Corporation 21 SERC Region Planned Capacity Resource Margin 5 Year Trend

SERC Reliability Corporation 22 Conclusions

SERC Reliability Corporation 23 In Summary Peak demand projected to continue to grow at a steady and manageable pace –Projected growth is the same as last year’s forecast (2.1%) and comparable to historical (1.9%) –2005 actual summer peak (excluding new members) was 169,506 MW 7.5% higher than 2004 actual (157,615) 5.9% higher than the forecast demand of 160,099 MW (with load management) 2.6% higher than the forecast demand of 165,144 MW (without load management)

SERC Reliability Corporation 24 In Summary Planned resources (existing and planned) are adequate for near-term and longer-term –16.6% capacity margin for 2006 summer –Capacity resource margin remains above 14% throughout the 10 year period –Amount of proposed generation reported in the 2006 survey has increased from that reported in the 2005 survey likely due to fuel prices and to preserve proposed generation additions at a level in line with the forecast demand growth –Region is not overly dependent on any one fuel type (i.e., adequately diversified)

SERC Reliability Corporation 25 In Summary Bulk transmission system in SERC is adequate to meet projected peak demand and provide contracted firm transmission services –Ability to transfer power (both intra and interregionally) above committed uses is adequate Significant transmission expansion continues within the Region –Transmission projects continue to resolve known limits to inter- Regional transfers –SERC remains a leader in both planned expenditures & mileage No projected operational issues that would adversely impact reliability