2. The Transmission Imperative November 3, 2011 Jay Caspary

3. 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 3

4. About NERC: Reliability History 1965Northeast Blackout I 1968NERC formed 1978National Energy Act – NERC Expands 1980NERC Merges with NAPSIC 1987National Electric Security Committee 1992Energy Policy Act - NERC action plan for the future 1996FERC orders on open access put NERC on a course to become a self- regulatory reliability organization 1997NERC/DOE “Blue Ribbon” Panel suggests mandatory standards 2002First reliability standards become mandatory and enforceable in Ontario 2003Northeast Blackout II 2005Energy Policy Act creates “Electric Reliability Organization” 2006NERC applies & becomes “Electric Reliability Organization” 2007First reliability standards become mandatory & enforceable in US

5. United States Federal Energy Regulatory Commission Mexico Comision Reguladora de Energia Electric Reliability Organization Electric Reliability Organization Regional Entities Other ERO Members Bulk Power System Owners, Operators, Users Reliability Standards Compliance Enforcement Reliability Assessment Government Oversight Canada NEB, Alberta, British Columbia, Manitoba, Ontario, New Brunswick, Nova Scotia, Quebec, and Saskatchewan

6. 3 Interconnections / 8 NERC Regions 6

7. 7 Regions and Interconnections 2010 Reporting Areas Based on Load/Capacity Areas defined by NERC Subregions NERC Reporting Areas = Subregions

8. 8 Changing Industry Landscape

9. ISO / RTO Map 9

10. FERC Order 890 Planning Regions 10

11. Annual Average Wind Speed - 80 meters 11

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13. Need for Transmission 13 High levels of variable generation will require significant transmission additions and reinforcements.  Challenge Interconnect variable energy resources in remote areas Smooth 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.

14. 14 345 kV+ Transmission Growth at a Glance

15. 15 345 kV+ Transmission Growth at a Glance

16. 16 345 kV+ Transmission Growth at a Glance

17. 17 345 kV+ Transmission Growth at a Glance

18. 18 345 kV+ Transmission Growth at a Glance

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20. Projects with Notifications to Construct 20

21. 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 21

22. 22 EWITS Scenario 2

23. Merchant Developers like Clean Line are Proposing Large HVDC Projects

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

25. 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 25

26. 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 26

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