1. MISO Day 2: A Transmission Users (Marketers) Perspective Leon White August 8, 2007

2. MISO Footprint

3. US RTOs ERCOT ISO Grid Florida PJM PJM West New York ISO RTO New England Grid West WestConnect California ISO SPP MISO 138,870 MW capacity 111,275 miles transmission 16.5 million customers 111,503 MW load

4. MISO Control Center - Indianapolis

5. MISO Market – Types of Generation

6. Summer Load Curve

7. Winter Load Curve

8. Forward Prices

9. MISO Market & Bilateral Market Bilateral Market Energy Sale Between Two Counterparties ex : AEM -> TVA - 200 MWs @ $45.00 Can Occur External or Internal to MISO Long Term, Day Ahead, & Hourly Markets MISO Energy Market Offer Generating Units into MISO Power Pool Bid Loads into MISO Day Ahead & Hourly (Real-Time) Markets

10. MISO Day 2 LMP Market Locational Marginal Pricing Market (April 1, 2005) Locational Marginal Pricing Market (April 1, 2005) All generators offer generation into the day ahead and the hourly (real-time) market All generators offer generation into the day ahead and the hourly (real-time) market Load is forecast on a day ahead basis Load is forecast on a day ahead basis Day Ahead market closes at 11 am EST day ahead Day Ahead market closes at 11 am EST day ahead Day Ahead market settles at 5 pm EST day ahead Day Ahead market settles at 5 pm EST day ahead Day Ahead RAC (Reliability Assessment Commitment) completed at 8 pm EST day ahead Day Ahead RAC (Reliability Assessment Commitment) completed at 8 pm EST day ahead Hourly unit capability declaration 30 min prior to hour Hourly unit capability declaration 30 min prior to hour MISO LMP Market runs a security constrained dispatch model which determines the lowest cost generation dispatch without exceeding any transmission limitations MISO LMP Market runs a security constrained dispatch model which determines the lowest cost generation dispatch without exceeding any transmission limitations MISO redispatches generation based on LMP dispatch model every 5 minutes MISO redispatches generation based on LMP dispatch model every 5 minutes

11. Unit 1Unit 2Unit 3Unit 4 MISO Market – Day Ahead Awards

12. LMP = Energy + Congestion + Losses

13. Congestion Load Gen 1000MW On Gen 200MW OFF 3000MW Gen 2000MW On (3000MW Capability) 2000MW Limit $40 Offer $200 Offer $40 Offer $ LMP $

14. Financial Transmission Rights (FTRs) DA Congestion Financial Transmission Rights (FTRs) from base load generation to load provide a hedge against congestion. FTRs are funded if congestion shows up in the DA market –On paper, Generators lose money, but FTRs recover the lost money FTRs assure that at the very least, load obligations are served with low cost units whenever possible –Other Generators may see increased DA LMPs No DA congestion means units will be paid more but the FTRs will have no daily value RT Congestion FTRs do not apply to RT congestion If congestion does not show up in DA, but instead shows up in RT, then the RT LMP will be less than the Generator Offer Generators are paid in full in the DA market and can make more money in RT by NOT generating.

15. MISO Market – 5 Minute LMP Dispatch

16. Unit Meets Day Ahead Commitment

17. Unit Trip – RT LMP Settlement

18. Unit Trip – RSG Charges

19. Total Cost of Unit Trip Profit (Unit Meets DA Commitment) = $684,200 Profit (Unit Trips) = $45,375 Average RSG Charge (Unit Trips) = $95,051 Low RSG Charge (Unit Trips) = $2,019 High RSG Charge (Unit Trips) = $316,805 Cost of Unit Trip Ave = ($684,200 - $45,375) + $95,051 = ($733,876) Low = ($684,200 - $45,375) + $2,019 = ($640,844) High = ($684,200 - $45,375) + $316,805 = ($955,630)

20. Typical Generator/Marketer/MISO Communications Marketer Balancing Authority (Control Area)

21. Unit Returns from Outage Late – RT LMP

22. Unit Returns from Outage Late – RSG

23. Unit Returns from Outage Early

24. Actual Ramp vs. MISO Dispatch

25. MISO Charges Uninstructed Deviation : Unit is deviating greater than 10% of MISO Basepoint for an integrated hour (25 MWs max cap, 5 MWs min cap) Regulating Unit is deviating greater than the sum of 10% of MISO Basepoint for an integrated hour plus the amount of Reg Up and Reg Down offered in the generation offer Revenue Sufficiency Guarantee Revenue to Generators due to: Make whole payments to DA, RAC, or Reliability committed units Costs to Generators, Loads, Virtuals & MISO interchange due to: Charged for every MW difference between actual and MISO Dispatch Variation of RT load from DA load bid Variation of RT imports from DA imports Variation of RT unit output from DA unit schedule All exports from MISO All RT imports into MISO All DA Virtual Offers and Bids Average RSG Rates: 2005 - $7.72 / MWh; 2006 – $4.04 / MWh

26. 2006 RSG Rates by Quarter

27. Improvement Opportunities Regulation Units Available to Regulate for ACE Units Available to Regulate to Track 5 Min LMP Increased Ramp Rate Speed Larger Ramp Ranges Regulate to Top of Unit Capability Outage Scheduling More Exact Return to Service Times Optimal Economic Derate Windows Capability Declarations More Accurate Day Ahead Capability Estimates Plant and Marketer Communications MISO Ancillary Service Market - 2008

28. Questions?