1. Duke Energy Carolinas Transition to AFC Methodology Stakeholder Meeting Independent Entity Services Thursday, March 17, 2011 2:00 to 3:00 p.m. EDT

2. 2 22 Agenda  What is AFC Methodology?  Flowgate Method vs. Contract Path  Introduction to Duke’s Process  Business Practice Changes  Transition Expectations  Analytical Tools  Wrap-up

3. 3 What is AFC Methodology?  ATC Path Methodology (prior to April 1)  ATC - Available Transfer Capability  Control Area to Control Area (Path) capability calculation  Transfers studied for each Path and a limit is determined for that Path - Total Transfer Capability (TTC)  Key Aspect: assumes all power from one Control Area to another flows on that path

4. 4 What is AFC Methodology?  AFC Methodology (post April 1)  Available Flowgate Capability (AFC)  Flowgates are pre-determined points on the system where problems have been seen or are expected to occur  Control Area to Control Area transfers studied against a pre-determined set of transmission limiters – flowgates  AFC values are compiled into an Effective ATC for path postings  Key Aspect: AFC based on how power actually flows

5. Introduction to Duke’s Process  Increased Coordination with Neighbors  Load Forecasts & Outages  TSRs & Tags  Flowgates & AFC Overrides  Two-Part Process  Model Builder  ATC Calculator 5

6. Introduction to Duke’s Process  Model Builder  Builds model snapshots  Calculates base-flows & shift factors  ATC Calculator  Calculates posted ATC (Effective ATC) as the minimum of:  Available Contract Path capability  Available flowgate capability  Utilizes base-flows & shift factors from Model Builder 6

7. 7 Business Practice Changes  Business Practice 1 - Changed  Who to Call > TTC/ATC Who to Call  Reference to ATC/TTC or TTC/ATC change to ATC  Reference to Total Transfer Capability (TTC) change to Total Flowgate Capability (TFC)  ATC Information Page ATC Information Page  Reference to ATC/TTC or TTC/ATC change to ATC  Business Practice 2.E - Changed  NAESB Business Practice Standards  Incorporated as filed in Duke Energy Carolinas OATT Section 4.2; effective April 1, 2011  Business Practice 3.A.v - Changed  ATC changed to ATCID - hyperlink to OASIS Homepage Posting; April 1, 2011  Business Practice 3.E - Eliminated  NAESB BP 001-8.2 Queue Flooding  Business Practice 7.C.i (a) – Changed  (TTC= 0 Contract Path = 0)

8. 8 88 Transition Expectations  Scheduled Transition Date & Hour  March 29, 2011@ (Time-TBD)  Dead-band on Processing  Approximate duration (TBD)  Queued Requests during Transition  Processed manually on OASIS  Submitted Tags  Processed manually  Assessment of Open Requests  Accepted or Counteroffered Requests  Honored  Rebids will be evaluated using AFC Methodology  Request in the evaluation phase  Queued through Study will be evaluated using AFC Methodology

9. 9 99 Analytical Tools  OASIS Development System  webOASIS Demo Node Login ( http://demo.oatioasis.com/ )http://demo.oatioasis.com/  Offerings  Accessed on OASIS by clicking  Effective ATC  Available Contract Path capability vs. Available flowgate capability  No change to your analysis  Outages  Accessed on OASIS from the Security Template by clicking  No change to your analysis

10. 10 Wrap-up Proposed Next Quarterly Stakeholder Meeting Friday, May 13, 2011 – 2 p.m. to 3 p.m. ET Customer Suggested Topics? This is the forum for discussing emergent topics Questions and Comments