BOSTON PACIFIC COMPANY, INC. OVERVIEW OF THE ANNUAL LOOKING FORWARD REPORT Presented to SPP BOARD OF DIRECTORS/MEMBERS COMMITTEE by Craig R. Roach, Ph.D. Stuart Rein Vincent Musco Boston Pacific Company, Inc. April 26, 2011

BOSTON PACIFIC COMPANY, INC. 2 A.Purpose of the Looking Forward Report B.First year separate from the SOM report for more prominence C.Seven issues selected in consultation with the Board’s Oversight Committee D.Structure of presentation on each issue 1.Importance to SPP 2.Indications of impact (specific study) 3.Recommendation to Board INTRODUCTION

BOSTON PACIFIC COMPANY, INC. 3 I. THE SHALE GAS REVOLUTION A.Importance to SPP 1.Natural gas drives EIS Market Price (about 60% of time) 2.Primary substitute with tougher environmental regulations

BOSTON PACIFIC COMPANY, INC. 4 I. THE SHALE GAS REVOLUTION B.Indications of impact 1.U.S. gas reserves up: 39% from 2006 to Futures price for 2012 is down: 54% from 2008 to Long-term price forecast down: EIA cut price forecast by 20% in 2011 vs. 2010

BOSTON PACIFIC COMPANY, INC. 5 C.Recommendation to Board 1.High impact, but little the Board can do 2.Stay informed I. THE SHALE GAS REVOLUTION

BOSTON PACIFIC COMPANY, INC. 6 II. FOUR EPA REGULATIONS A.Importance to SPP 1.Reduced reserve, increased need for new resources B.Indications of impact 1.NERC study Could cut up to 5.5 percentage points from reserve margin in SPP Could need 2.6 GW of additional resources in SPP NERC does not recognize all resources

BOSTON PACIFIC COMPANY, INC. 7 II. FOUR EPA REGULATIONS C.Recommendation to Board 1.High impact 2.Facilitated collaborative meeting Expectations of impact Response so far Any SPP role

BOSTON PACIFIC COMPANY, INC. 8 III. GREENHOUSE GAS EMISSION CONTROL A.Importance to SPP 1.Impact on cost and resource mix in the mid-term B.Indications of impact 1.EPA regulations driven by courts, not by Congressional legislation 2.Congressional push back could mean change is gradual 3.Initial cases look modest

BOSTON PACIFIC COMPANY, INC. 9 III. GREENHOUSE GAS EMISSION CONTROL C.Recommendation to Board 1.Long-term potential high impact 2.Reassess at least annually 3.Could include in Collaborative

BOSTON PACIFIC COMPANY, INC. 10 IV. FEDERAL CLEAN ENERGY STANDARD A.Importance to SPP 1.Could require significant shift to low- or no-carbon generation 2.Could increase demand for wind power

BOSTON PACIFIC COMPANY, INC. 11 IV. FEDERAL CLEAN ENERGY STANDARD B.Indication of impact 1.President Obama’s proposal a)Renewables, fossil with CCS, nuclear, “efficient” natural gas b)80% by 2035 c)Now 40% U.S. average d)SPP approximately 22% 2.“Bigger tent”, but prospects seem unlikely in near-term

BOSTON PACIFIC COMPANY, INC. 12 IV. FEDERAL CLEAN ENERGY STANDARD C.Recommendations to Board 1.High impact (if passed) 2.Monitor

BOSTON PACIFIC COMPANY, INC. 13 V. PRODUCTION TAX CREDITS A.Importance to SPP 1.A key driver for wind power which, in turn, is a key driver for SPP transmission investment

BOSTON PACIFIC COMPANY, INC. 14 V. PRODUCTION TAX CREDITS B.Indication of impact 1.EIA Study a)Now, substantial financial benefit, but not only driver b)Into 2020, growth slow, with or without PTC, no major difference c)Long-term, significant difference in renewables growth without PTC

BOSTON PACIFIC COMPANY, INC. 15 V. PRODUCTION TAX CREDITS C.Recommendation to Board 1.Potential high impact long-term 2.Near-term: assess all drivers 3.Long-term: planning studies should include with and without PTC cases

BOSTON PACIFIC COMPANY, INC. 16 VI. ELECTRIC VEHICLES A.Importance to SPP 1.Can increase peak and off-peak demand B.Indications of impact 1.President Obama’s plan for 1 million EVs by ISO/RTO Council study Total Expected EVs in SPP: About 30,000 (of 1 million) Max load: 168 MW by 2015

BOSTON PACIFIC COMPANY, INC. 17 VI. ELECTRIC VEHICLES C.Recommendation to Board 1.Monitor for near-term, but big impact unlikely 2.Revisit longer-term

BOSTON PACIFIC COMPANY, INC. 18 VII. DEMAND RESPONSE A.Importance to SPP 1.Integrated Marketplace will create new opportunities B.Indications of impact 1.FERC Metrics Report Percent of installed capacity SPP 1.53% MISO 3.78% NYISO 6.60%

BOSTON PACIFIC COMPANY, INC. 19 VII. DEMAND RESPONSE C.Recommendation to Board 1.Look for substantial increase 2.Look for substantial debate Compensation Measurement and verification FERC Orders 719, 745