AN INTRODUCTION TO THE MIDWEST ISO

By Bill MalcolmManager-State Regulatory Affairs

Pierre, South DakotaJune 9, 2006

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OverviewOverview

Midwest ISO is an independent, non-profit reliability coordinator for the transmission of high voltage electricity via a security constrained economic dispatch across all or parts of 15 states and Manitoba

Began Reliability Operations on December 15, 2001

Market Operations since April 1, 2005 Multi-control area environment (35 Control

Areas; 26 in the market) Peak Loads:

- Summer 2005--131,434 MW set on August 3, 2005

- Winter 2005/2006: 106,900 set on December 19, 2005

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RTO ServicesRTO Services

Monitor flow of power over the high voltage transmission system

Schedule transmission service

Manage power congestion through locational marginal pricing (LMP) energy market

Long term regional transmission planning

Operate real-time and day-ahead energy markets

Five minute security-constrained dispatch of the market (maintaining reliability in most economic manner)

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South Dakota and Midwest ISOSouth Dakota and Midwest ISO

Otter Tail, MDU, Xcel are transmission owning members

Basin, Missouri River and WAPA are non- transmission owning members. MidAmerican is a member in the power market sector

PUC is one of the lead states on the MISO Advisory Committee

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Midwest ISO Market OperationsMidwest ISO Market Operations

Locational Marginal Pricing (LMP) based upon Security Constrained Economic Dispatch (SCED)

SCED minimizes cost to serve load while maintaining reliability of electrical system

1,435 Commercial Pricing Nodes

Generator instructions calculated and sent every 5-minutes

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Centralize Generation Dispatch and Outage Management

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New Power Plants in South DakotaNew Power Plants in South Dakota

Big Stone #2 (600 MW coal)

Brookings County 100 MW wind project: interconnection agreement signed

Two other 100.5 MW wind projects and one 138 MW wind plant being studied in Deuel County

SD/IA/MN area of concern: amount of proposed generation exceeds reliable outlet transmission capacity

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Transmission Service RequestsTransmission Service Requests

Approved 114 transmission service requests

136 requests under study (Big Stone Unit 2, group study involving constrained facilities in southwest Minnesota, plus one new study)

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Big Stone #2 Proposed UpgradeBig Stone #2 Proposed Upgrade

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West Study Group Upgrades

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Seams Coordination

SPPTVA

MAPP

IESO

PJM

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MISO-MAPPCORSeams Operating Agreement (SOA)

• Data exchange

• Planning Coordination

• Outage Coordination

• Transmission Service Request Evaluation Coordination

• Congestion Management Process (TLR Avoidance)

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Current Issues/Recent DevelopmentsCurrent Issues/Recent Developments

Summer assessment: 18% reserve margin

Ancillary service markets

June 5 resource adequacy FERC filing

Single dispatch MISO-PJM: Savings less than .2% of total production costs

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Upcoming EventsUpcoming Events

6/14 Advisory Committee meeting, state of the market report presented

6/29 Regional expansion criteria benefits task force meeting (economic upgrades to the grid)

7/10 Ancillary services task force

9/1 RECB filing expected: economic upgrades to the grid

9/20 Advisory Committee meeting, St. Paul

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To get involved in the Midwest ISOTo get involved in the Midwest ISO

Sign up for West study group, RECB, and planning advisory committee on the extranet

Participate in our stakeholder meetings

Tour our control centers in St. Paul or Carmel

Contact Bill Malcolm (317) 249-5426 or bmalcolm@midwestiso.org

Visit our website: www.midwestmarket.org