1. Houston Region Import Capacity Project August 27, 2013 Regional Planning Group Meeting

2. Background  Tie line capability limited to approximately 6500 MW currently  Generation ‾Previously or currently mothballed units: 1367 MW ‾Additional units approaching 50 years old: 1174 MW ‾Recent generation additions have been relatively small ‾Houston is a non-attainment zone ‾Proposed Pondera (1300 -1380MW) has not provided Notice to Proceed since signing SGIA in 2010  Recent ERCOT publications (2012 Constraints and Needs report and 2012 Long Term Study) show need for additional import path into Houston  CNP has serious concerns about reliability/resource adequacy for the Houston load pocket because of limited import capability 1

3. Possible future retirements - a total of 1939 MW in-service units will be older than 50 years by 2018. These resources were modeled as online in the Study Case. Older Units 2

4. Houston Load Pocket Projected Reserves Note: Resources include both generation and import capacity into Houston 3

5. Study Approach Phase I: Study Case Analysis  Modify SSWG 2015-2018 base cases created in February 2013 -Remove Pondera (1300 MW) -Add Deer Park Energy Center expansion (215 MW) -Add Calpine Energy Center expansion (200 MW) -CNP load matches 2012 ALDR (other than new transmission customers) Non-coincident peak Hot summer load level (102 degree F) 2013 ALDR CNP load about 600 MW higher in 2018 than in 2012 ALDR CNP studying over 1000 MW of industrial load not included in 2013 ALDR which could be on-line as early as 2016 4

6. Study Approach Phase I: Study Case Analysis  Use ERCOT Criteria: Planning Guide 4.1.1.2 (1)(b) -Take largest unit inside Houston “zone” out of service: Cedar Bayou Unit 2 (745 MW) -Perform Single and Common Mode contingencies (Common tower outage) ·Overload of Singleton – Zenith circuits beginning in 2018 (100.8% in 2018) 5

7. Cedar Bayou 2 out-of-service 6 Houston Region Phase I: Study Case Analysis

8. Phase I: Reliability Analysis – CB2 out Sensitivity Analysis  Without 1367 MW mothballed generation – loading of 114% for year 2015 7  New 500 MW generator inside CNP – loading of 92% for year 2018

9.  Phase II: Interconnection Options and Initial Screening –Evaluate transfer capability of the 2018 Study Case and 25 Options –Use ERCOT 2012 average transmission costs to estimate each option -Include estimated costs of reinforcements –Rank Options based on Transfer Improvement Value (MW transfer increase) / (Cost) –Select best Options for additional analysis  Phase III: Interconnection Options Detailed Analysis –Evaluate voltage stability impacts and estimate reactive compensation for each Option –AC Contingency and Short-circuit analysis –Prepare detailed cost estimates using typical CenterPoint Energy costs  Identify preferred interconnection options that maximize increased transfer capability versus total project cost 8 Study Approach

10. Twenty-five Options Studied Options 1 - 16 9 Jordan

11. 10 Twenty-five Options Studied Options 17 – 25

12. Comparison of Electrical Alternatives 11

13. Five Options Selected for Further Study 12 21

14. 13 Phase III: Additional Studies Detailed Cost Analysis

15. Three Preferred Interconnection Options 14

16. System Configuration – Option 15 Option 15: Twin Oak – Zenith 345 kV 15

17. System Configuration - Option 24 Option 24: Zenith – Ragan Creek 345 kV 16

18. System Configuration - Option 25 Option 25: Limestone - Ragan Creek – Zenith 345 kV 17

19. Conclusions 18  Unless additional net generation or new import transmission paths into Houston region are constructed CNP will not comply with ERCOT’s Planning Criteria by year 2018.  25 interconnection options studied. Three options are recommended based on technical and economical analysis.

20. Conclusions 19 –Option 15: New Twin Oak - Zenith 345 kV double circuit: 2700 MW transfer capability improvement. $462 million project cost. 5.85 MW/$MM transfer/cost value. New line connects Oncor’s and CNP’s substations. Includes approximately $7.5 million in LCRA 138 kV line upgrades. –Option 24: New Ragan Creek – Zenith 345 kV double circuit: 1960 MW transfer capability improvement. $297 million project cost. 6.60 MW/$MM transfer/cost value. New line connects CNP’s Zenith substation to a new 345 kV Ragan Creek substation. Includes $5 million upgrade of TMPA Twin Oak - Jack Creek -Ragan Creek double circuit. Includes approximately $2 million in LCRA 138 kV line upgrades. –Option 25: New Limestone – Ragan Creek - Zenith 345 kV double circuit: 2530 MW transfer capability improvement. $532 million project cost. 4.76 MW/$MM transfer/cost value. New line connects Limestone to new 345 kV Ragan Creek substation to Zenith substation. Includes approximately $5.5 million of LCRA 138 kV line upgrades.

21. Questions?