1. June 11, 2010 RPG Meeting Houston Import Study Update Jeff Billo

2. 2 RPG Meeting June 11, 2010 Approach Base Case BC + CREZ Generation BC + STP 3 & 4 BC + STP 3 & 4 BC + New Gas Gen North of Houston BC + New Gas Gen In Houston BC + Load Variation Bulk of analysis will focus on the base case. Options may be eliminated at this stage. Alternate scenarios will be used to quantify relative merit of options that pass first stage. Final recommendation will be selected. Sensitivity scenarios will be run for recommended option and results added to report. BC & $3.34M/ mile 345-kV cost BC + $4 gas/ $10 gas BC + New SGIAs

3. 3 RPG Meeting June 11, 2010 Houston Import Study Options 1Lufkin-Canal 345-kV double circuit 2Salem-Zenith 345-kV double circuit 3Fayetteville-Zenith 345-kV double circuit 3AFayetteville-Zenith 345-kV double circuit w/ 30% series comp 4Gibbons Creek-Zenith 345-kV double circuit 6Fayetteville-Obrien 345-kV double circuit 6AFayetteville-Obrien 345-kV double circuit w/ 30% series comp 9Gibbons Creek-Salem-Zenith 345-kV double circuit 12Gibbons Creek-Salem/ Fayetteville-Zenith 345-kV double circuit 19Add series comp to existing Hillje-WAP and Hillje-Holman 345-kV 22Fayetteville-Zenith 345-kV double circuit w/ 50% series comp 24Option 19 + Option 22 J1Sandow-Zenith 345-kV double circuit J1ASandow-Zenith 345-kV double circuit w/ 30% series comp J2Marion-Holman-Obrien 345-kV double circuit J3Hillje-Obrien 345-kV double circuit DCBrown-Zenith 3000 MW HVDC line DC2Scurry-Zenith 2000 MW HVDC line E1Twin Oaks-Salem-Zenith 345-kV double circuit

4. 4 RPG Meeting June 11, 2010 Houston Import Study Options To Brown Option 1 Option 2 Option 3/ 3A/ 22 Option 4 Option 6/ 6A Option 9 Option 12 Option 19 Option J1/ J1A Option J2 Option J3 Option DC Option DC2 Option E1 To Scurry

5. 5 RPG Meeting June 11, 2010 Houston Import Study Action Items from May RPG Meeting Option 1 (Southeast Loop) per mile construction cost –ERCOT will use $2.5 M/ mile cost estimate for Option 1 Option 3 scenario with generation changes to benchmark and upgraded cases –Recent retired/ mothball units removed from case –New units with SGIAs added to case –Results Production cost savings for Option 3 = $10.9 M Energy revenue savings for Option 3 = $50.4 M Energy revenue savings are still enough to pass economic criteria

6. 6 RPG Meeting June 11, 2010 Houston Import Study Action Items from May RPG Meeting Voltage stability –Two scenarios under study 2014 summer peak load case Maximum Houston import case –Measured flow on 11 345-kV lines into Houston area in UPLAN –Exported case data for hour with highest flow »Flow on interface was 7895 MW (DC powerflow) »ERCOT load was ~ 54 GW

7. 7 RPG Meeting June 11, 2010 Houston Import Study Next Steps –Complete voltage stability analysis for Option 3 –Finalize report in July pending above analysis results

8. 8 RPG Meeting June 11, 2010 Questions?