October 16, 2009 RPG Meeting ERCOT Independent Review of the Corpus Christi Improvements Project Jeff Billo

2 RPG MeetingOctober 16, 2009 Corpus Christi Improvements Project Background –AEP has experienced difficulty trying to take maintenance outages in Corpus Christi area recently –Barney Davis and Nueces Bay repower interconnection agreements signed in June 2008 –AEPSC submitted the Corpus Christi Improvements Project for RPG review in March 2009 Includes interconnection projects, summer peak reliability projects, maintenance reliability projects, and congestion relief projects Comments received from area industrial customers indicating the potential for the projects to have a significant negative affect on their facilities Comments not resolved during Study Mode – AEP and customers continued to work together during ERCOT Independent Review –ERCOT Independent Review began in May 2009

3 RPG MeetingOctober 16, 2009 Corpus Christi Improvements Project

4 RPG MeetingOctober 16, 2009 Corpus Christi Improvements Project Interconnection Projects Reliability Projects –Maintenance –Summer Peak Congestion Projects

5 RPG MeetingOctober 16, 2009 Nueces Bay Interconnection –2 on 1 combined cycle Unit 7 is existing steam turbine (336 MW) Units 8 and 9 are new combustion turbines (180 MW each)

6 RPG MeetingOctober 16, 2009 Nueces Bay Interconnection Four options studied for Nueces Bay Combined Cycle Interconnection 1.Connect all units at Nueces Bay 138 kV station –Resulting fault currents would require rebuilding multiple stations, including Nueces Bay to 80kA –Determined to be not feasible 2.Create a new station, Gila, next to Nueces Bay –Connect unit 7 to Nueces Bay –Connect units 8 and 9 to Gila –Relocate the Koch Upriver 138 kV line and the Highway kV double circuit to terminate at Gila –For stability reasons Gila requires another connection –Connect Gila and Nueces Bay via a series reactor –Studies showed that to keep the fault currents within limits the series reactor would need to be 95Ω –Determined to be not feasible

7 RPG MeetingOctober 16, 2009 Nueces Bay Interconnection 3.Create a new station, Gila, next to Nueces Bay –Connect unit 7 to Nueces Bay –Connect units 8 and 9 to Gila –Relocate the Koch Upriver 138 kV line and one Highway kV line to terminate at Gila –Construct a new 138 kV line from Gila to Highway 9 –Cost = $52.06M 4.Create a new station, Gila, next to Nueces Bay –Connect unit 7 to Nueces Bay –Connect units 8 and 9 to Gila –Relocate the Koch Upriver 138 kV line and one Highway kV line to terminate at Gila –Relocate one Whitepoint 138 kV line to terminate at Gila –Cost = $39.71M

8 RPG MeetingOctober 16, 2009 Nueces Bay Interconnection Option Comparison Options 1 and 2 determined to be not feasible Options 3 and 4 were modeled in UPLAN to determine if either resulted in lower congestion –Both options were found to allow full export of power from Nueces Bay in the model with no congestion in the area Option 3 would require new ROW and a CCN Option 4 had lower cost ($12.35 M less) with similar performance Option 4 is preferred option

9 RPG MeetingOctober 16, 2009 Maintenance Reliability Maintenance reliability analysis performed on SSWG 2009 fall peak case –If one element is out of service for maintenance the rest of the system must remain secure (pre-contingency and post-contingency) Generation redispatch and other system adjustments were considered to mitigate overloads –Some maintenance outages may cause sizeable generation curtailment in the area The following slides detail upgrades that were recommended for maintenance reliability

10 RPG MeetingOctober 16, 2009 Airline autotransformer maintenance Issue: With one Airline 138/69 kV autotransformer out of service for maintenance, loss of the other Airline autotransformer causes the case to not converge Solution Options: 1.Move Airline and Naval Base substation load to the 138 kV buses, Convert Airline-Naval Base 69 kV line to 138 kV service –Cost = $21.5 M 2.Construct a new 138 kV line from Barney Davis to Laguna, add a 138 kV bus at Laguna and install a 138/69 kV autotransformer at Laguna –Cost = $15.1 M Both options solved the reliability issue Option 2 recommended as the preferred solution

11 RPG MeetingOctober 16, 2009 Airline autotransformer maintenance

12 RPG MeetingOctober 16, 2009 Koch Upriver autotransformer maintenance Issue: With the Koch Upriver 138/69 kV autotransformer out of service for maintenance the following reliability issues were observed: –Loss of Highway 9-Air Liquide 69 kV line overloads Lon Hill-Hearn Road 69 kV line –Loss of Lon Hill-Hearn Road 69 kV line overloads Highway 9-Air Liquide 69 kV line

13 RPG MeetingOctober 16, 2009 Koch Upriver autotransformer maintenance Solution Options: 1.Construct a new 138 kV double circuit hairpin from the existing Citgo West-Weil Tract 138 kV line into the Air Liquide station, create a new 138 kV bus at Air Liquide and install a 138/69 kV autotransformer, upgrade Citgo West-Weil Tract 138 kV line such that Rate B is 535 MVA –Cost = $11.7 M 2.Reconductor Lon Hill-Hearn Road 69 kV line and rebuild/ reconductor Highway 9-Air Liquide 69 kV line –Cost = $5.25 M –Both options solved the reliability issue –Option 1 would provide better long-term load growth potential, but would require industrial customers to undergo substantial facility upgrades due to increased fault currents Option 2 recommended as the preferred solution

14 RPG MeetingOctober 16, 2009 Summer peak reliability analysis Used 2014 Summer Peak conditioned case from YTP Issue: With Koch Upriver generation on forced outage the loss of one Lon Hill 138/69 kV autotransformer overloads the other Lon Hill autotransformer Solution: Upgrade the Lon Hill 138/69 kV autotransformers

15 RPG MeetingOctober 16, 2009 Congestion analysis Used 2014 UPLAN Economic case from YTP Heavy congestion on lines exiting Barney Davis for multiple contingencies Two options initially studied to relieve congestion 1.Rebuild Barney Davis-Alazan-Nelson Sharpe 138 kV line such that the Rate B is 717 MVA, bypass the Nelson Sharpe PST, Upgrade Westside-Cabaniss 138 kV line terminal equipment –Cost = $27.0 M 2.Build a new Barney Davis-Nelson Sharpe 138 kV line on new ROW, Upgrade Westside-Cabaniss 138 kV line terminal equipment –Cost = $41.6 M

16 RPG MeetingOctober 16, 2009 Congestion analysis

17 RPG MeetingOctober 16, 2009 Congestion analysis Production Cost Savings Results [NOT FINAL] Other considerations –Option 1 should not require CCN and may be implemented sooner; output of Barney Davis restricted while line is being rebuilt –Option 2 would require CCN and may take longer to implement –Option 1 costs less with superior performance Option 1 recommended as preferred option OptionPC SavingsCapital Cost/ PC Savings 1$14.52M1.86 2$10.51M3.96

18 RPG MeetingOctober 16, 2009 Congestion analysis Note: Option 1 did not relieve all congestion in area but had less remaining congestion when compared to Option 2 –Congestion experienced only small number of hours near summer peak The following upgrade was tested in addition to Option 1 to relieve the remaining congestion: –Construct a new Barney Davis to Westside 138 kV line on new ROW –Upgrade Westside-McKenzie 138 kV line –Cost = $45.2M Congestion relieved, but no production cost savings realized –Additional project not cost justified

19 RPG MeetingOctober 16, 2009 Recommendation Tentative set of projects to be recommended: 1.Build new Gila substation: Relocate Koch Upriver – Nueces Bay 138 kV line into Gila Relocate Highway 9 – Nueces Bay 138 kV double-circuit into Gila Relocate Whitepoint – Nueces Bay 138 kV line #2 into Gila 2.Rebuild/ reconductor Air Liquide – Highway 9 69 kV line 3.Reconductor Lon Hill – Hearn Road 69 kV line 4.Build 138 kV line Barney Davis – Laguna and install new 138/69 kV autotransformer at Laguna 5.Rebuild Barney Davis – Alazan – Nelson Sharpe 138 kV line 6.Upgrade Westside – Cabaniss 138 kV line terminal equipment 7.Upgrade both Lon Hill 138/69 kV autotransformers Next Steps –Finalize Independent Review Report –Present at November 5 TAC meeting

20 RPG MeetingOctober 16, 2009 Questions?