1. March 11, 2011 RPG Meeting Lower Rio Grande Valley (LRGV) Import

2. 2 March 11, 2011RPG Meeting Lower Rio Grande Valley interface Valley Interface 1. North Edinburg - Lon Hill 345 kV 2. Ajo – Rio Hondo 345 kV 3. Raymond 2 – MV Yutt 138 kV 4. North Edinburg - Rachal 138 kV 5. Roma Switch – Falcon Switch 138 kV

3. 3 March 11, 2011RPG Meeting Existing LRGV System The AEP-TCC, Sharyland Utilities, Magic Valley Electric Cooperative (MVEC) and Public Utilities Board of Brownsville (PUB) transmission system currently serve approximately 2,200 MW of summer peak demand in the LRGV area. There are three combined-cycle generating stations in the LRGV with a combined capability of 1,592 MW. Additionally PUB has 4 units totaling approximately 120 MW on the eastern side of the LRGV.

4. 4 March 11, 2011RPG Meeting LRGV System Load Growth The McAllen-Edinburg-Mission and Brownsville-Harlingen- San Benito areas are has grown significantly in the past few years (15 year average annual MW growth, based on the summer peaks is ~ 63 MW * or ~ 4.3% * ). Extremely cold weather can result in a winter peak demand to significantly exceed the forecast and the summer peak levels. Extreme cold weather on February 3, 2011 has set an all-time new record peak of approximately 2,734 MW. Historical data (by AEP) indicates that in the past 15 years the winter peak demand has exceeded the summer peak four times (1997, 2007, 2010 & 2011) * excluding PUB area

5. 5 March 11, 2011RPG Meeting Actual Summer and Winter Peak for LRGV for past 15 years

6. 6 March 11, 2011RPG Meeting Actual Summer and Winter Peak for LRGV since 2007

7. 7 March 11, 2011RPG Meeting LRGV Winter Peak & Temperature correlation

8. 8 March 11, 2011RPG Meeting Summer Peak & Temperature correlation

9. 9 March 11, 2011RPG Meeting SSWG Planning Case - LRGV Area Summary Valley Area Load (MW) 20112012201320142015 Winter Peak – 2010/2011 SSWG model18061733 Summer Peak - 2010 5YTP model22142295235324262495 Units Summer Peak Max. Capacity (MW) Winter Peak Max. Capacity (MW) Frontera 1146.5154.2 Frontera 2147.9150 Frontera 3173170 Hidalgo 1144167 Hidalgo 2144164 Hidalgo 3171 Magic Valley 1207250 Magic Valley 2216.7245 Magic Valley 3242259 Silas Ray 104746 Silas Ray 51517 Silas Ray 619.317 Silas Ray 93845.7 Total Capacity17111810

10. 10 March 11, 2011RPG Meeting LRGV Power Flow Analysis The power flow analysis indicates the limiting contingency is the loss of a 345 kV transmission line, with the largest LRGV generation station out of service (all units @ combined cycle facility). The above NERC category C contingency falls with in the ERCOT planning criteria section 5.1.4 “In the case of a Combined Cycle Facility, a “single generating unit” experiencing a forced outage shall be defined as the entire train unless the combustion turbine and the steam turbine can operate separately”. Based on the 5YTP models the worst contingency results in the overload of the remaining 345 kV transmission line in 2014 summer peak condition at load level of 2,426 MW.

11. 11 March 11, 2011RPG Meeting 2015 Summer Peak Power Flow : Base Case

12. 12 March 11, 2011RPG Meeting 2015 Summer Peak Power Flow : Generating Station out of service + 345 kV line

13. 13 March 11, 2011RPG Meeting LRGV Voltage stability Analysis The voltage stability analysis indicates that the NERC Category C contingency limits the import capability to the LRGV. Based on the 5YTP model, the voltage stability limit for the LRGV is approximately 2,560 MW. The actual steady state voltage limits could be lower than the voltage stability limit.

14. 14 March 11, 2011RPG Meeting 2011 Summer Peak Voltage Stability

15. 15 March 11, 2011RPG Meeting LRGV Thermal/Voltage stability Summary The thermal limits based on the current ERCOT SSWG planning model/criteria will exceed by 2014. The voltage stability only exceed the thermal limits by approximately 150 MW. The voltage stability limits being so close to the thermal limits indicate that increasing the thermal capacity of the existing LRGV interface would not significantly improve the load serving capacity. There is a need for transmission or market solution in the LRGV to meet the forecasted load beyond 2014.

16. 16 March 11, 2011RPG Meeting Operational issues affecting the LRGV A major operational issue is the difficulty to grant clearances for both transmission and generation maintenance outage in the LRGV. There is a limited time windows to grant maintenance outages in the LRGV and any extreme weather during this period could require load shed. There is a potential for severe weather (hurricanes) that could affect both the existing 345 kV lines sourced from the Corpus Christi area and significantly reduce the load serving capability in the LRGV.

17. 17 March 11, 2011RPG Meeting Historical AEP-TCC Valley Load Data Historical AEP-TCC Valley load data presented in the next few slides provide show some evidence of peak windows. Based on the McAllen, Texas weather station data back to1960.

18. 18 March 11, 2011RPG Meeting Historical AEP-TCC Valley Load

19. 19 March 11, 2011RPG Meeting Historical AEP-TCC Valley Load

20. 20 March 11, 2011RPG Meeting Historical AEP-TCC Valley Load 0 5 10 15 20 25 30 35 40 45 50 19611963196519671969197119731975197719791981198319851987198919911993199519971999200120032005200720092011 McAllen, TX Annual Minimum Daily Average Temperature (1960 to Present) Only 6 times in the last 51 years has McAllen's annual minimum daily average temperature been 32 or below. It is the first time since 1997.

21. 21 September 17, 2010RPG Meeting March 12, 2010 Questions?