1 A Conversation about MISO Paul Spicer November 8, 2007

2 How does the MISO Market affect you- the industrial customer Electric Rates Capacity Transmission Energy Market pricing index during economic interruptions Day-ahead Real-time Delivery reliability October 06 (Weston Lightning Strike) ASM opportunity?

3 Electric Rates Capacity Reserve margins Currently no uniform requirement Wisconsin ~ 18% during summer months MISO records reserves in “Module E” Resources can count if the they are “deliverable” to the market Resources can count if they are local capacity (firm tx) This has enabled more short-term capacity transactions WPSC has gained about $1.5 million from these transactions These revenues go through the Wisconsin Fuel Rules as a credit to Purchase Power costs

4 Electric Rates Transmission Network Service From Designated Network Resources (DNRs) To Network Load 12 CP Coincident Peak Zonal Price (ATC zone for us) Currently about $32.50/Kw-year for Network Charge Schedule Charges currently about $3/Kw-year Schedule 1 (System Control) Schedule 2 (Reactive Supply) Schedule 10 (Scheduling/reliability/market planning) Schedule 26 (Network Upgrade) FERC Charges Creates entitlement to candidates for allocated FTRs

5 Electric Rates Transmission

6 Electric Rates Energy

7 Electric Rates Energy

8 Electric Rates Energy Importing Utility Perspective

9 Electric Rates Energy Importing Utility Perspective

10 Market Pricing During Day-ahead Economic Interruptions

11 Market Pricing During Day-ahead Economic Interruptions

12 Market Pricing During Day-ahead Economic Interruptions October 8 Scarcity Price

13 Example: If the average of the four 5 LMPs (20 minutes) is $100/MWhr, you can be 95% confident that the actual settlement LMP will be less than (1.9*$100/MWhr) $190/MWhr. If by 35 minutes into the hour the average of seven 5 minute LMPs continues to be $100/MWhr, then you can be 95% confident that the settlement LMP will be less than (1.5*$100/MWhr) $150/MWhr.

14 Reliability Importing Utility Perspective

15 Reliability Ancillary Service Market (ASM) Regulation Second to second generator control and frequency response Performed today by local “Balancing Authorities” Operating Reserve- Spinning Generators synchronized to the grid Generally used for contingency response Performed today by local “Balancing Authorities” and the Contingency Reserve Sharing Group (CRSG) Operating Reserve- Supplemental Fast acting (not necessarily connected) resources including load response Generally used for contingency response Performed today by local “Balancing Authorities” and the Contingency Reserve Sharing Group (CRSG)