1 NAUSCA Summer Meeting Boston June 30, 3009 David W. Hadley Vice President State Regulatory Relations Midwest ISO

2 Midwest ISO Reliability Footprint

3 Electric System Development – Historical View Traditional Electric System Development (Generation and Transmission) –Planned at a single company level –Designed for single company use –Funded at company / state level Decision basis –Meet local requirements (i.e., load growth) –With local natural resources –Few national policy issues –Limited regional use Last major build out of baseload capacity and transmission ended in the early 1980s

4 WECC MIDWEST NORTHEAST ERCOT SOUTH Coal Nuclear Gas Hydro Wind Other The current regional generation fleets reflects the natural resources of each region – with gas being the default peaking fuel for all

5 WECC MIDWEST NORTHEAST ERCOT SOUTH Coal Nuclear Gas Hydro Wind Other … and the sources of each regions’ electrical energy reflects those generation portfolios and resources

6 …While the transmission system reflects the desire to move energy from a company’s generation to the load it serves – without a robust “backbone”

7 Xcel Energy Transmission

8

9 Midwest ISO Transmission Map

MW Load RPS 10,000 – 12,000 MW

11 Who Pays? Remember Open Access – Transmission Owners cannot discriminate & favor their own generation over another's So – the utility must open it’s transmission lines to others generation Today the developer pays for transmission from the generator to the transmission 100% Transmission upgrades needed have the developer pay 50% and the utility pay 50%

12 Midwest ISO Planning Principles reflect need to address local and regional issues Make the benefits of a competitive energy market available to customers by providing access to the lowest possible electric energy costs Provide a transmission infrastructure that safeguards local and regional reliability Support state and federal renewable energy objectives by planning for access to all such resources (e.g. wind, biomass, demand-side management) Create a mechanism to ensure investment implementation occurs in a timely manner Develop a transmission system scenario model and make it available to state and federal energy policy makers to provide context and inform the choices they face Midwest ISO Board of Director Planning Principles Fundamental Goal The development of a comprehensive expansion plan that meets both reliability and economic expansion needs

13 Midwest ISO is actively engaged in planning from local to regional level RGOS Phase I Scope: Develop transmission for mandates in IA, IL, MN, WI; GW, Completion 3 rd Q 09 Participants: MISO Stakeholders, Regulators, Governors, PJM Lead: MISO for MTEP09; UMTDI (Phase I) and MGA Who’s Watching: State Regulators, Governors Offices (UMTDI, MGA), FERC, State Transmission Authorities MTEP Scope: Develop MISO transmission; GW (20% scenario); on-going Participants: MISO Stakeholders Lead: MISO Who’s Watching: Stakeholders JCSP Scope: Develop East. Int. transmission; GW (20% scenario) Participants: MISO, PJM, SPP,TVA, MAPP, Utilities Lead: MISO for Dept of Energy Who’s Watching: Utilities, ISO's/RTO's EWITS Integration Study Scope: Operating impacts of JCSP; End of Aug 2009; GW (20% scenario) Participants: MISO, PJM, SPP,TVA, MAPP, Utilities, Enernex, Ventyx Lead: Enernex for Dept of Energy Who’s Watching: Utilities, ISO's/RTO's RGOS I MTEP & RGOS II JCSP EWITS RGOS Phase II Scope: Develop transmission for mandates in IA, IL, MN, WI; GW, Completion 3 rd Q 09 Participants: MISO Stakeholders, Regulators, Governors, PJM Lead: MISO for MTEP09; UMTDI (Phase I) and MGA Who’s Watching: State Regulators, Governors Offices (UMTDI, MGA), FERC, State Transmission Authorities RGOS = Regional Generation Outlet Study MTEP= Midwest ISO Transmission Expansion Plan JCSP = Joint Coordinated System Plan EWITS = Eastern Wind Integration and Transmission Study

14 Different policy assumptions result in very different siting outcomes with different transmission system requirements.

15 The transmission overlay for the Reference Case (Status Quo) establishes the need for some backbone development…

16 …While the 20% Wind Energy Case highlights the need for substantial transmission backbone development

17 We must effectively manage our current infrastructure while carefully planning and developing our future infrastructure 60% of the electric grid infrastructure (T/D/G) is at or near the end of original planned life 20% of T/D/G is past original planned life In the Midwest, the average age of infrastructure is very high –Baseload generation = 42 years –Transmission = 40+ years The region use of the electric system is also increasing the transmission congestion Current Infrastructure Planning must balance many issues –Use of existing generation fleet –National policy issues –Efficient use of natural resources –Demand response –Costs Construction Operating Fuel Decommissioning Environmental Regional / national use of the electric system must be considered as the planning is done Unknowns (policy and financial) challenge planning Future Infrastructure

18 Planning Activities Key Issues Congestion Renewable Policy Operational Impacts New Generation and Demand Response Changing Regulatory Requirements Fair Cost Allocation Load Growth and DSM Aging Infrastructure Key Issues