The Transmission Imperative

November 3, 2011

Jay Caspary

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Overview

• NERC’s Evolution to Today’s Culture of Compliance

• Organized and Bilateral Markets – No Standard Market Design

• Regional Planning is working and improving

• Interregional Planning in process

• Smart Grid Applications for Transmission in Future

About NERC: Reliability History1965 Northeast Blackout I

1968 NERC formed

1978 National Energy Act – NERC Expands

1980 NERC Merges with NAPSIC

1987 National Electric Security Committee

1992 Energy Policy Act - NERC action plan for the future

1996 FERC orders on open access put NERC on a course to become a self-regulatory reliability organization

1997 NERC/DOE “Blue Ribbon” Panel suggests mandatory standards

2002 First reliability standards become mandatory and enforceable in Ontario

2003 Northeast Blackout II

2005 Energy Policy Act creates “Electric Reliability Organization”

2006 NERC applies & becomes “Electric Reliability Organization”

2007 First reliability standards become mandatory & enforceable in US

United StatesFederal Energy Regulatory

Commission

MexicoComision Reguladorade Energia

Electric Reliability Organization

Electric ReliabilityOrganization

RegionalEntities

Other ERO Members

Other ERO Members Bulk Power System

Owners, Operators, Users

Bulk Power System Owners, Operators, Users

ReliabilityStandards Compliance

Enforcement

Reliability Assessment

Government Oversight

Canada NEB, Alberta, British Columbia,

Manitoba, Ontario, New Brunswick, Nova Scotia, Quebec, and

Saskatchewan

3 Interconnections / 8 NERC Regions

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Regions and Interconnections

2010 Reporting AreasBased on Load/Capacity Areas defined by NERC

Subregions

NERC Reporting Areas = Subregions

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Changing Industry Landscape

ISO / RTO Map

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FERC Order 890 Planning Regions

Annual Average Wind Speed - 80 meters

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Need for Transmission

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High levels of variable generation will require significant transmission additions and reinforcements.

Historical 5-Year Plans Compared to Actual Miles Added (200 kV > greater)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1990

-94

1991

-95

1992

-96

1993

-97

1994

-98

1995

-99

1996

-00

1997

-01

1998

-02

1999

-03

2000

-04

2001

-05

2002

-06

2003

-07

2004

-08

2005

-09

2006

-10

2007

-11

2008

-12

2009

-13

Cir

cu

it-M

iles

5 year Plan Actual Miles Added

2009 5-year Plan:2013 Planned Projections

ChallengeInterconnect variable energy resources

in remote areasSmooth the variable generation output

across a broad geographical region and resource portfolio

Deliver ramping capability and ancillary services from inside and outside a Balancing Area to equalize supply and demand.

Construct/site/permit the needed transmission and supporting facilities to deliver power across long distances.

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345 kV+ Transmission Growth at a Glance

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345 kV+ Transmission Growth at a Glance

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345 kV+ Transmission Growth at a Glance

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345 kV+ Transmission Growth at a Glance

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345 kV+ Transmission Growth at a Glance

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Projects with Notifications to Construct

2020

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Transmission…

• represents only a fraction of a consumers total energy bill (5-10%)

• enables and defines markets

• can no longer be an undervalued asset since it provides tremendous benefits in reducing congestion costs, improving value of diverse/variable resources, enhances grid efficiencies and dynamic performance

• is aging infrastructure in existing ROWs that could provide tremendous value and capability as it is replaced and rightsized, where appropriate

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EWITS Scenario 2

Merchant Developers like Clean Line are Proposing Large HVDC Projects

FERC Order 1000US 500 kV and above AC plus HVDC Transmission

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Future in SPP

• Renewable development beyond member needs of 12GW in SPP will depend on level of exports. While focus to date has been wind, solar will be next, then…

• Asset management with aging infrastructure will be a challenge. Effective use of new and existing ROWs will be key success factor

• Future is bright with more robust planning and certainty of cost allocations, but we need smart grid applications to minimize renewable curtailments in advance of grid build-out and to manage flows using new technology, e.g., HVDC, as well as system reconfiguration/ optimization tools

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So…where are we going?

• ITP in process, Integrated Marketplace in place 1Q14

• EIPC Federal Futures project >100GW wind in SPP

• Customers have requested dozens of Firm Transmission Service Requests with more than 7GW of wind exports from SPP to SERC, with firm/contingent firm service on adjacent systems. Most under study, with few granted

• SPP reviewing through and out rates which should help potential rightsizing of facilities in a key corridor or two

• Compliance filings for FERC Order 1000 for regional and interregional planning due October 2012 and April 2013, respectively

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