1. Overview Seams Coordination Process

2. 2 Introduction Midwest ISO Non-profit organization that manages the reliable flow of electricity across much of the Midwestern United States Operational since December 15, 2001 Generation Capacity –127,000 MW (market) –156,000 MW (reliability) Peak Load (set July 31st, 2006) –109,157 MW (market) –129,647 MW (reliability ) Registered PA, TSP, MO, RC, Soon to be BA

3. 3 Why Seams Coordination ? Ensuring reliability by managing congested path in a coordinated manner Ensuring equitable treatment for all customers and Transmission Service Providers

4. 4 The Reliability Side –We look beyond our boundaries at external facilities –We quantify the impact of all of our flows (both tagged interchange schedules and internal dispatch) on these external facilities –We leverage our real-time systems – which use fresher and more accurate data –We redispatch our internal generators to protect these external facilities Congestion Management has been a paradigm shift: Congestion Management Process is a big part of Seams Coordination

5. 5 Congestion Management Process Background Loop Flows and Resulting Congestion exist today as part of interconnected operations Each Control Areas dispatch has an impact on other neighboring control areas facilities One of the FERC appointed responsibilities of RTOs was to improve the management of parallel flows

6. 6 Reduces the overselling of firm transmission service Provides a mechanism where market and non-market entities can control parallel flows in an economic manner that consistently ensures system reliability Improves response time of markets when a curtailment is called Respecting Your Neighbors Systems Congestion Management Process Benefit

7. 7 Participation Multi-Party CMP Meeting MISO/PJM JOA CMP Structure Agreements 200420052006 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2003 Q3Q4 Q3Q4 2007 Q1Q3 Q1Q2 MISO/MAPP SOA MISO/PJM /TVA JRCA MISO/SPP JOA MISO/MH SOA MISO/PJM Mkt – Non-Mkt Implementations MISO/PJM Mkt--Mkt TVA SPP MAPPLGEE CMPCCMPWGCMPITCPWG OCTF SPP Market PJM/CPL JOA BREC EKPC

8. 8 Participation Note: TVA agreement for CMP has been extended to include Big River Electric Cooperative, East Kentucky Power Cooperative, and Louisville Gas & Electric.

9. 9 The Equity Side –Market Entities (such as PJM, MISO and SWPP) –Non-market Entities (such as MAPP and TVA) There are multiple transmission providers in the area Each Entities have historical rights and allocations that need to be respected

10. 10 Three Scenarios –Non-Market to Non-Market Coordinated AFC and Allocation Calculations Congestion Management through NERC TLR process curtailing transactions based on priority –Market to Non-Market Coordinated AFC and Allocation Calculations Market Entities Redispatch for Congestion on an External Flowgate Non Market Entities Congestion Management through NERC TLR process that curtail transactions –Market to Market Coordinated External Dispatch to Address Flowgate Responsibilities Example: MISO and PJM market-to-market dispatch

11. 11 Non-Market to Non-Market – Overview Addresses a cause of many TLRs – an oversubscribed transmission system RESPECT each others flowgate limitations during the determination of AFC/ATC and the calculation of firmness Flowgates identified upon which COORDINATION shall occur. Reciprocal Entities implement a process for SHARING or transferring unused allocation. Coordination – Wide Area View

12. 12 Non-Market to Non-Market – Process Reciprocal Entities conduct tests on flowgates to determine which flowgates will be coordinated. Transmission service request evaluation: –Check for available AFC/ATC –Check for available Allocations –Request allocations from another Reciprocal Entity Approve/deny request Coordination – Bridges the Seams

13. 13 Non-Market to Non-Market – Benefits Reciprocal Entities consider available allocation as well as AFC on a flowgate when selling firm- transmission service. Reduces over-selling firm transmission service. Provides entities requesting firm service higher level of confidence approved transmission service will not be curtailed. Reduces the number of TLR events

14. 14 Market to Non-Market – Overview Processes define what portions of a BAs dispatch should be considered FIRM or Non-Firm Total Market Flow on Flowgate Non-Firm Market Flows Firm Market Flows From dispatch Note: Market flows equal generation to load flows in market areas.

15. 15 Market to Non-Market – Process Redispatch Curtail Schedules

16. 16 Market to Non-Market – Benefits –Greater granularity in the IDC –More granular calculation based on real-time telemetered data versus static model –More surgical solution –Redispatch is far faster than TLR –Does not require multiple requests for TLR when initial requests failed to resolve the constraint A more reliable solution than TLR for addressing congestion

17. 17 Market to Market – Purpose Provides a mechanism whereby Market-Based Operating Entities can economically dispatch their systems, respecting transmission constraints in each others footprints. Redispatch by each Market-Based Operating Entity is based on the most economic solution for the combined system. Uses market flow calculations to proactively manage congestion. M to M Currently implemented between Midwest ISO and PJM. Process enables neighbors to help solve the others obligations

18. 18 Market to Market – Benefits Builds on Market-to-Non-market Coordination and retains features for other Non-market Operating Entities. More effective and economic interregional control of transmission congestion Less reliance on individual transaction curtailments Provides equity through preservation of entitlements on RCFs. Maintains process for sharing or transferring of unused allocations Provides consistent price signals and incentives for market behaviors that augments reliable system operations

19. 19 Impact of CMP – Market to Market If we coordinate dispatch on the top 10 congested flowgates we may solve 75% of the problem If we coordinate dispatch on the top 10 congested flowgates we may solve 75% of the problem Few Constraints: Big Benefits

20. 20 Impact of CMP - TLRs MISO PJM

21. 21 Impact of CMP – Market to Market As market to market redispatch continues there has been a trend in the reduction of MWH that are being curtailed. Midwest ISO TLR Information

22. 22 Impact of CMP – Market to Market TLR Level 5 events have increased in some months, which were in part related to specific outage events. Midwest ISO TLR Information

23. 23 Summary The parties have implemented methodologies that have allowed each party to identify their respective flows on external parties and respond in a proactive and reliable manner to alleviate congestion and enhance reliability.

24. Questions and Discussion