1. 03/06/2008 TAC CREZ Transmission Optimization (CTO) Study Update Dan Woodfin Director, System Planning

2. 2 TAC03/06/2008 PUCT Interim Order in CREZ Docket 33672 Designates CREZs in five areas of the Panhandle and West Texas Identifies parties who demonstrated financial commitment Orders ERCOT to develop transmission plans for four different levels of installed wind in these CREZs –CREZ Transmission Optimization Study to be filed with PUCT by 4/2/2008

3. 3 TAC03/06/2008 Designated Zones and Scenario Wind Levels Capacity of New CREZ Wind by Scenario (MW) Wind Zone Scen. 1Scen. 2Scen. 3Scen. 4 Panhandle A 1,4223,1914,9606,660 Panhandle B 1,0672,3933,7200 McCamey 8291,8592,8903,190 Central 1,3583,0474,7355,615 Central West 4741,0631,6512,051 Total * 12,05318,45624,85924,419 * Assumes 6,903 MW of existing wind capacity

4. 4 TAC03/06/2008 Regional Planning Group (RPG) CREZ Task Force Subgroup of RPG focused on CTO study –Open to anyone interested in CREZ transmission planning Biweekly meetings –Development and resolution of study issues –Input and feedback on transmission options –11 meetings held since August 2007 For more information: –Sign up for RPG-CREZ distribution list at http://lists.ercot.comhttp://lists.ercot.com –See ERCOT.com calendar for RPG-CREZ Task Force meetings

5. 5 TAC03/06/2008 Scope of Study Scope of 2006 CREZ Study Scope of 2008 CTO Study 4850 MW~10,000 MW~12,000 MW~25,000 MW Number and complexity of different transmissio n options increases exponentiall y

6. 6 TAC03/06/2008 Study Approach Develop a number of significantly different core concepts and test their performance Variations on the concepts with best performance will be developed and tested The best performing plan will be selected for the scenario Scenario 2 Range of Potential Solutions Significantly-Different Plans, e.g.

7. 7 TAC03/06/2008 Study Approach May use the same core concepts as bases for significantly different plans in different scenarios Scenario 2 Scenario 1 Scenario 3 But a different core concept may provide the basis for the preferred plan for a different scenario

8. 8 TAC03/06/2008 High-level Concepts under study include: 1)Incremental 345 kV transmission system for wind in west Texas 2)Integrated 345 kV transmission system for wind in west Texas 3)Reduced number of right-of-ways using higher voltage circuits (500 kV or 765 kV) 4)Shorter wind connections with low impedance backbone or loop 5)Low impedance loop circuits (around load centers and/or around wind generation zones) 6)HVDC circuit(s) to move power to load centers or between load centers, integrated with 345kV upgrades Concepts

9. 9 TAC03/06/2008 Recommended Plan Optimized for each Scenario Optimized for Scenario 1 Optimized for Scenario 2 Optimized for Scenario 3 Optimized for Scenario 4 12 GW18 GW25 GW24 GW 1 2 3 4

10. 10 TAC03/06/2008 Staging and Expansion Will develop a preferred plan that is optimized for each of the four scenarios Will provide expansion path of what elements in each of these plans should be built first if that Scenario is selected (except for Scenario 1) –Use lower scenarios as basis Will develop an expansion path from the preferred plan for the lower scenarios, so as to allow for consideration of future expandability of those plans –Using next higher scenario as basis

11. 11 TAC03/06/2008 Staging and Expandability Optimized for Scenario 1 Optimized for Scenario 2 Optimized for Scenario 3 Optimized for Scenario 4 12 GW18 GW25 GW24 GW 1 2 3 4 1+ 2+ 2 - 3 - - 4 - - 3 - 4 -

12. 12 TAC03/06/2008 Certainty Optimized for Scenario 1 Optimized for Scenario 2 Optimized for Scenario 3 Optimized for Scenario 4 12 GW18 GW25 GW24 GW 1 2 3 4 1+ 2+ 2 - 3 - - 4 - - 3 - 4 - Collection systems, transmission from west to east, and integration into eastern portion of grid are well defined Recommended projects fit into plan for expansion to next level All relevant studies have been completed Transmission owners have agreed to feasibility of connections into existing facilities Some minor changes may be necessary as result of routing analysis

13. 13 TAC03/06/2008 Some Additional Study Optimized for Scenario 1 Optimized for Scenario 2 Optimized for Scenario 3 Optimized for Scenario 4 12 GW18 GW25 GW24 GW 1 2 3 4 1+ 2+ 2 - 3 - - 4 - - 3 - 4 - Collection systems and transmission from west to east are well defined A viable, near-optimal plan for integration into eastern portion of grid has been identified Further work and a few changes in endpoints may be necessary before finalizing integration into the eastern portion of the grid –Additional requirements to address feasibility of upgrades in east –Need to include consideration of other requirements in east

14. 14 TAC03/06/2008 Flexibility Optimized for Scenario 1 Optimized for Scenario 2 Optimized for Scenario 3 Optimized for Scenario 4 12 GW18 GW25 GW24 GW 1 2 3 4 1+ 2+ 2 - 3 - - 4 - - 3 - 4 - Collection systems in the west are well defined A viable plan for transmission from west to east and integration into eastern portion of grid has been identified, based on powerflow and stability Additional work will be needed; capacity and positioning of west to east paths may change, as well as system upgrades in the eastern portion of the grid, based on consideration of additional system requirements

15. 15 TAC03/06/2008 Current Status Developed consensus on project scope and assumptions Developed ten significantly different plan concepts –Development of each of these included consideration of many combinations of transmission projects –Several additional plans still under development, including combinations of features across plans Evaluating each of these for congestion and wind curtailment in scenarios 1 and 2 Stability analyses will be performed for scenarios 1 and 2

16. 16 TAC03/06/2008 Future Events CREZ Transmission Optimization Study (CTO) – April 2008 CREZ Docket Final Order – Later in 2008 TSP Selection Process Rule (Project 34560) – 2008 “Dispatch Priority” Rule (Project 34577) – 2008 TSP filings to begin constructing transmission – ? New Lines in Service – ?

17. 17 TAC03/06/2008 Wind Integration/Ancillary Services Requirements Study

18. 18 TAC03/06/2008 Wind Ancillary Services Study Performed by General Electric consulting group with input from ERCOT Staff and a task force of stakeholders from the Reliability and Operations Subcommittee (ROS) Studied need for additional or modified ancillary services to meet reliability requirements, based on: –2008 load level and installed thermal generation –Four scenarios of installed wind generation, distributed among potential CREZ areas 5000MW, 10,000 MW, 10,000 MW with different geographic distribution and 15,000 MW –Used actual 2006 load pattern and used 2006 weather patterns to drive simulation of wind generation that would occur if these amounts of wind generation were installed

19. 19 TAC03/06/2008 A/S Study Findings - Regulation Need to implement state-of-the-art wind power production forecast –Protects against undercommitment due to predictable changes in wind (reliability issue) –Protects against overcommitment (economic issue) –Acceleration of nodal project on wind forecasting Present ERCOT methodology for determining regulation requirement remains effective if adjusted for increasing installed wind capacity (increase is linear) Regulation requirements (average, annual) increase linearly with increase in installed wind generation, up to 20-23% for 15,000MW –Requirements vary by season and time of day

20. 20 TAC03/06/2008 A/S Study Findings – Commitment and Responsive Reserves Daily swings in net load (load-wind) increase significantly with increasing wind Occasional down regulation exhaustion will occur for >5000MW of wind generation –Several alternatives to resolve this issue, including wind curtailment –Increased flexibility in operating parameters of future generation Extreme wind power increases and decreases will occur infrequently (up to 20% within 30 mins), but are predictable with wind forecast –Increase responsive and/or non-spin reserves Localized convective events are less predictable; large concentrations of wind increases vulnerability but CREZ geographic diversity helps

21. 21 TAC03/06/2008 A/S Study Events GE presented results to ERCOT stakeholders on 2/27/2008 Draft final written report due to ERCOT in mid March Stakeholder comment period on draft report GE will prepare final report ERCOT will file final report with PUCT in Docket 33672 Wind Workshop to be held 3/17/2008

22. Questions?