1. Ludington Pumped Storage Plant and Wind Power Operational Considerations David Lapinski Consumers Energy Company June 16, 2009

2. Summary  Ludington Plant Overview  Operational Characteristics  Past & Current Use  Impacts of increasing wind generation

3. Ludington Pumped Storage Plant

4.  In operation since 1973  Jointly owned by Consumers Energy and The Detroit Edison Company  Pond is 2.5 miles x 1 mile  Six reversible pump – turbines  360 feet from Lake Michigan to full pond level  27 billion gallons H2O

5. LPS Operation

6. Ludington – Well connected to transmission system

7. LPS Key Operating Parameters  1872 MW Generating capacity  1960 MW Pumping  15000+ MWh generation storage  70% cycle efficiency  Generators quick start & regulation capable  Pumps quickly interruptible

8. Historic and Current Operational Uses  Economic alternative to more expensive generation to meet load If value of generation > 1.4 times cost of pumping If value of generation > 1.4 times cost of pumping  Ancillary Services & flexible response to operational uncertainties

9. Managing Stored Energy is Important  Predictability of Cost & Value  Strategy for economic value, with room for contingencies

10. Potential Impacts of Increased Wind Energy  Reduced predictability  Increased variation in supply-demand balance Other resources required to compensate for longer duration variations (10’s of minutes to hours) Other resources required to compensate for longer duration variations (10’s of minutes to hours) Potential for increased need for ramping capacity & intermediate term reserves capacity Potential for increased need for ramping capacity & intermediate term reserves capacity

14. Storage Technologies Have a Role  For short term replacement and balancing, pumped storage can fill in rapid response for ramping and contingencies rapid response for ramping and contingencies economic generation to buy time for longer lead time units to come on line economic generation to buy time for longer lead time units to come on line absorb excess generation absorb excess generation

15. Additional Considerations  Reliance on accurate wind generation forecasts Storage Management Storage Management Overall system optimization Overall system optimization  Optimum storage management changes May require decreasing daily budget of energy available to day ahead market May require decreasing daily budget of energy available to day ahead market  Limits on ability to cycle pumped storage units to compensate for variations.  Pump mode startup is limited