1. Update on the Western Region Resource Plan
Presented to the Community Energy Advisory Council
November 14, 2008

2. Update on the Western Region Resource Plan
Agenda
Latest load forecast for the Western Region and Dashboard update
Review of resource planning principles and objectives
Where do we stand today?
What issues remain to be addressed and where do we go from here?

3. Update on the Western Region Resource Plan Latest load forecast for the Western Region
Recent forecasts show increasing trend
DSM/EE activities cut load growth in half

4. Update on the Western Region Resource Plan Latest load forecast for the Western Region
Dashboard
Update

5. Update on the Western Region Resource Plan Review of resource planning principles and objectives
SERC
NERC
NCUC
SCPSC
FERC
System Resource
Planning
Plus:
Federal, state and Local Environmental Regulations

6. Update on the Western Region Resource Plan Review of resource planning principles and objectives
Regulatory Body Areas of Regulation
North Carolina Utilities Commission Cost, reliability, adequacy
NERC/SERC Reliability, adequacy
FERC Cost, reliability
EPA, NCDENR Environmental performance, siting
Local Authorities Zoning/siting
This list is not intended to be all inclusive or a complete representation of the authority of any given regulatory body.

7. Update on the Western Region Resource Plan Review of resource planning principles and objectives
Some of the regulatory considerations in creating the plan:
Adequacy of resources – Are there enough to meet the peak?
Reliability of resources – Are there enough to deal with contingencies?
Least Cost – Is the plan the lowest cost to customers?
Environmental Performance – Does the plan meet environmental limits?
Clean Smokestacks
CAIR, CAMR, CAVR etc.
Licensing/zoning requirements
The plan must consider planning and operating requirements.

8. Update on the Western Region Resource Plan Review of resource planning principles and objectives
The objective of the planning process is to provide an adequate, reliable supply of electricity at the lowest (least) cost to customers.

9. Update on the Western Region Resource Plan Where do we stand today?
Remember where we started
West Region Supply Resources
1,200
Marshall & Walters -
Hydro
1,000
Rockport - Purchase
2010 Winter Peak Demand
2007 Winter Peak Demand
Marshall & Walters -
Hydro
800
SEPA - Purchase
Asheville 4 -
Combustion Turbine
Megawatts
600
Asheville 3 -
Combustion Turbine
400
Asheville 2 - Coal
200
Asheville 1 - Coal

10. Update on the Western Region Resource Plan Where do we stand today?
DSM and energy efficiency activities aim to reduce peak usage
West Region Peak Day 2006 (December 8)
Morning
Peak
928 MW
(about 7-8 a.m.)

11. Update on the Western Region Resource Plan Where do we stand today?
An adequate supply meets firm demand plus reserve requirements
17000
17000
16000
16000
New Resources
New Resources
Required
Required
15000
15000
Purchases
Purchases
14000
14000
13000
13000
Existing Capacity
Existing Capacity
12000
12000
Reserves Plus Firm
Reserves Plus Firm
Demand
Demand
11000
11000
10000
10000
Firm Demand
Firm Demand
9000
9000
8000
8000
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
2012
2012
2013
2013
2014
2014
2015
2015
2016
2016
Reduction of firm demand reduces supply requirements

12. Update on the Western Region Resource Plan Where do we stand today?
So how did we address the resource shortfall in 2010?
Purchases of firm capacity (250 MW) for two years from multiple sources
Extended purchases an additional year through 2012

13. Update on the Western Region Resource Plan What issues remain to be addressed and where do we go from here?
West Region Hourly Load for 2006
Peak Demand
Daily
Load
Variation
~ 200 MW
J F M A M J J A S O N D
We are in the process of addressing adequacy.
Now we need to consider reliability.

14. Update on the Western Region Resource Plan What issues remain to be addressed and where do we go from here?
West Region Hourly Load for 2006
Amount of Resources
Must be Adequate to
Meet Peak Demand
and Provide Reserves
Reserves must be
Available to Meet
Contingencies
at any time
Reliability
J F M A M J J A S O N D
Operating reserves are required to meet contingencies

15. Update on the Western Region Resource Plan What issues remain to be addressed and where do we go from here?
What are operating reserves?
Operating reserves are resources that can quickly replace any generating resource that may be lost due to equipment failure or other cause. There are 3 sources of operating reserves:
Spinning reserves
Fast start reserves (available within 10 minutes)
Demand reduction
These reserves must be available to replace the power that is provided instantaneously by neighboring utilities.

16. Update on the Western Region Resource Plan What issues remain to be addressed and where do we go from here?
How do we provide operating reserves in the Western region today?
Unique AEP contract transmission arrangements
How will we provide operating reserves after the AEP contract expires?
Spinning reserves and reserved transmission capacity

17. How should we provide needed operating reserves?
Update on the Western Region Resource Plan What issues remain to be addressed and where do we go from here?
Issues that need to be addressed :
Spinning reserves and reserved transmission capacity burns additional fuel and increases cost (vs. fast start reserves in area)
DSM capacity, which acts like fast start, varies hourly and seasonally (2 a.m. in April)
New federal standards may require specific allocation of operating reserves
How should we provide needed operating reserves?