1. 1 TAG Meeting December 4, 2008 NCEMC Office Raleigh, NC

2. 2 TAG Meeting Agenda 1.Administrative Items – Rich Wodyka 2.2008 Study Final Results – Joey West 3.2009 Study Scope – Bob Beadle 4.Duke and Progress Attachment K Compliance Filings – Kendal Bowman 5.Update on Regional Studies – Bob Pierce 6.2009 TAG Work Plan – Rich Wodyka 7.TAG Open Forum – Rich Wodyka

3. 33 Joey West Progress Energy Report on Final Results of 2008 Study

4. 44  Base Reliability Results - 2013 and 2018 - Planned new generation units  Sensitivity Cases - Wind - TPL Reliability Standards Outline of 2008 Study Results

5. 55  Base Reliability Screening - Three new projects identified: -Folkstone 230/115 kV Substation (Progress) -Durham-RTP 230 kV Line, Reconductor (Progress) -Sadler Tie-Glen Raven Main Circuit 1 & 2 (Elon 100 kV Lines), Reconductor (Duke) 2013S and 2018S Results

6. 66  List of Units Included in Base Case -Cliffside Coal – 880 MW -Buck Combined Cycle – 620 MW -Dan River Combined Cycle – 620 MW -Richmond County Combined Cycle – 660 MW -Wayne County CT – 160 MW Planned New Generation Units

7. 77  Studied impacts of: -250 MW of hypothetical wind in Progress Eastern Region -300 MW of hypothetical wind in Progress Western Region -200 MW of hypothetical wind in Duke service area  No significant impact in Duke or Progress Wind Sensitivity Case – 2018S Results

8. 88  Studied impacts of: -Loss of a 230 kV line, 500 kV line or 500/230 kV transformer, then loss of another 230 kV line, 500 kV line, or 500/230 kV transformer -Common tower and common breaker failure between two 230 kV or 500 kV elements -No loss of non-consequential load allowed -The results of the contingencies were evaluated against the applicable ratings and bus voltages below 0.91 per unit were identified TPL Standards Sensitivity – 2018S Results

9. 99  For Duke, the results did not indicate any impact on 230 kV and above (EHV) planned projects or require new projects during the 10 year planning horizon.  Acceleration of projects would be required on Duke 100 kV facilities to mitigate the impact of the EHV contingencies that were studied. -38 projects identified for acceleration -On average, 10 year acceleration required -NPV of acceleration is between $80 and $100 Million TPL Standards Sensitivity – 2018S Results – Cont’d

10. 10  For Progress, the EHV results indicated only one significant impact, for which a solution is currently being developed  Acceleration of projects would be required on Progress 115 kV facilities to mitigate the impact of the EHV contingencies that were studied -32 projects identified for acceleration -On average, 14 year acceleration required -NPV of acceleration is about $200 Million TPL Standards Sensitivity – 2018S Results – Cont’d

11. 11 Comparison to Previous Collaborative Transmission Plan 2007 Supplemental Plan 2008 Draft Results Number of projects with an estimated cost of $10 million or more each 1816 Total estimated cost of Plan$523 M$520 M Planning horizon2007-20172008-2018 Date Plan published05/16/08TBD

12. 12 Import Scenarios Major Projects in 2008 Plan Reliability ProjectTOPlanned I/S Date Rockingham-West End 230 kV lineProgressJune ’09 Richmond 500 kV sub, reactorProgressDecember ’09 Clinton-Lee 230 kV lineProgressJune ’10 Asheville-Enka 230 kV line, Convert 115 kV line; & Asheville-Enka 115 kV, Build new line Progress December ’10 December ’12 Rockingham-West End 230 kV East lineProgressJune ’11 Harris-RTP 230 kV lineProgressJune ’11 Pleasant Garden-Asheboro 230 kV line, replace Asheboro 230 kV xfmrs Progress & Duke June ’11

13. 13 Import Scenarios Major Projects in 2008 Plan (Continued) Reliability ProjectTOPlanned I/S Date Rockingham-Lilesville 230 kV lineProgressJune ’11 Richmond-Ft Bragg Woodruff Street 230 kV Line ProgressJune ‘11 Jacksonville Static VAR CompensatorProgressJune ’12 Greenville-Kinston Dupont 230 kV lineProgressJune ’13 Folkstone 230/115kV SubstationProgressJune ‘13 Add 3 rd Wake 500/230 kV xfmrProgressJune ’13 Durham-RTP 230kV Line, ReconductorProgressJune ‘ 14 Cape Fear-West End 230 kV West line, Install reactor ProgressJune ’16

14. 14 Import Scenarios Major Projects in 2008 Plan (Continued) Reliability ProjectTOPlanned I/S Date Sadler Tie-Glen Raven Main Circuit 1 & 2 (Elon 100 kV Lines), Reconductor DukeJune ‘11

15. 15

16. 16 2009 NCTPC Study Scope Bob Beadle North Carolina EMC

17. 17 1.Assumptions Selected 2.Study Criteria Established 3.Study Methodologies Selected 4.Models and Cases Developed 5.Technical Analysis Performed 6.Problems Identified and Solutions Developed 7.Collaborative Plan Projects Selected 8.Study Report Prepared Steps the Study Process

18. 18  Study years -Short term (5 yr) and long term (10 yr) base reliability analysis -Alternate long term model scenarios  Thermal power flow analysis - Duke & Progress contingencies - Duke & Progress monitored elements Internal lines Tie lines Collaborative Study Process

19. 19  LSEs provide: –Load forecasts and resource supply assumptions –Dispatch order for their resources  Area interchange coordinated between Participants and neighboring systems Study Inputs

20. 20  TAG request to be distributed in mid February, 2009  Requests can now include in, out and through transmission service Enhanced Transmission Access Requests

21. 21  2014 Summer base case (short term)  2019 Summer base case (long term) –Additional sensitivities will be included in the study process: analysis of resource supply options from other control areas (Southern, SCE&G, SC, PJM, TVA) –Updated review of the PEC Western area resources and transmission 2009 Study

22. 22

23. 23 Duke and Progress Attachment K Compliance Filing Kendal Bowman Progress Energy

24. 24 FERC Order – September 18, 2008  Duke / Progress Attachment K’s, with certain modifications, adequately complied with the nine planning principles adopted in Order 890  Subject to compliance filing due in 90 days (December 16, 2008)  Filing changes address both the North Carolina Transmission Planning Collaborative Process (“NCTPC Process”) and the Southeast Inter-Regional Participation Process (“SIRPP”)

25. 25 Order 890 Principles September 18 th Order 1.Coordination 2.Openness 3.Transparency 4.Information Exchange 5.Comparability 6.Dispute Resolution 7.Regional Participation 8.Economic Planning Studies 9.Cost Allocation Duke/Progress Attachment K Partially Complies Complies Partially Complies

26. 26  Coordination –Requires that stakeholders have an opportunity for input into the development of the models used in the transmission planning process –Previously NCTPC provided for stakeholder input into the development of the models by allowing stakeholders (i.e., Transmission Advisory Group (“TAG”) participants) to review the study assumptions –Amending Sections 5.1.4 and 5.1.5 to permit TAG participants, just like the Planning Working Group (“PWG”), to review whether the models represent the study assumptions approved by the OSC and to provide their input on these models

27. 27  Openness - Participation –The Commission found that the two-tiered (voting and non-voting) TAG membership that allowed only valid stakeholders to vote was unreasonable –New open, Sector voting structure is proposed

28. 28  Openness – Participation Eight TAG Sectors : 1.Cooperative Load-Serving Entities (serving load in the NCTPC footprint) 2.Municipal Load-Serving Entities (serving load in the NCTPC footprint) 3.Investor-Owned Load Serving Entities (serving load in the NCTPC footprint) 4.Transmission Providers/Transmission Owners that are not LSEs in the NCTPC footprint 5.Transmission Customers (a customer taking Transmission Service from at least one Transmission Provider in the NCTPC footprint) 6.Generator Interconnection Customers (a customer taking FERC- or state-jurisdictional generator interconnection service from at least one of the Transmission Providers in the NCTPC footprint)) 7.Eligible Customers and Ancillary Service Providers (includes developers; ancillary service providers (including demand response resources), power marketers not currently taking transmission service) 8.General Public

29. 29  Openness – Participation –TAG Sector Entities such as corporations, partnerships, associations, government agencies, etc. –Only organized groups (TAG Sector Entities) will have authority to vote; General Public sector is the only exception –An entity cannot subdivide itself into subgroups in order to increase its number of TAG Sector Entities –Persons not affiliated with any TAG Sector Entity can register as an unaffiliated “Individual” and vote in the General Public sector

30. 30  Openness – Participation –TAG Sector Entities can only join one TAG Sector –A TAG participant must be present in person or on the phone to vote –An individual TAG participant may vote on behalf of one or more TAG Sector Entity on any particular vote –There is no voting by proxy –A TAG participant may well be an agent, member, or an employee of several TAG Sector Entities

31. 31  Openness – Participation –ITP will determine how many TAG Sectors are represented at the meeting for a vote –Each TAG Sector present shall be entitled to cast one (divisible) vote worth 1.00 –Each TAG Sector Entity and each Individual shall be entitled to cast one non-divisible vote –The votes of each TAG Sector Entity or Individual are then weighted by multiplying them by one divided by the number of TAG Sector Entities (or Individuals and TAG Sector Entities in the case of the General Public Sector) voting in that TAG Sector –These divisible votes of each TAG Sector are then multiplied by one divided by the number of TAG Sectors present.

32. 32 SectorNo. of Voters Yes Votes No Votes Sector Yes Vote Sector No Vote Weighted Sector Yes Vote Weighted Sector No Vote Coop LSE6601.000.200 Muni LSE826.25.75.05.15 IOU LSE211.50.10 TP/TO0000000 TCs10101.000.20 GICs0000000 ECs0000000 GP1064.60.40.12.08 Total Vote0.470.53 Voting Example

33. 33  Openness – Access to Confidential Information -Directed to remove the requirement that stakeholders obtain authorization from the Commission to access CEII contained in Form 715 reports before they are permitted access to confidential information and CEII related to the planning process -Requested clarification whether persons seeking CEII not contained in Form 715 can nonetheless be required to obtain Form 715 -Section 9.4.3 has been amended to eliminate the Form 715 requirement only as related to non-CEII Confidential Information (pending clarification)

34. 34  Transparency -Commission objected to the proposal to restrict access to data and information necessary to replicate planning studies only to TAG Voting Members -Given the elimination of the concept of TAG Voting Members, such restriction is being eliminated -All TAG participants will be permitted access to Confidential Information as reflected in revised Section 9

35. 35  Comparability -Comply with the requirement of Order No. 890-A to treat resources on a comparable basis by identifying how they will determine comparability for purposes of transmission planning –Amended Section 4.0 ensures that demand response resources are treated on a comparable basis by requiring Transmission Customers and Eligible Customers to accurately reflect demand response resources in the information they submit –Sponsors of transmission solutions, generation solutions, and solutions utilizing demand resources can fully participate throughout the planning process

36. 36  Dispute Resolution -Need to identify dispute resolution procedures to be used “by other parties” involved in planning- related activities –Any TAG participant has the right to seek assistance from the NCUC Public Staff to mediate an issue and render a non-binding opinion on any disputed decision concerning the NCTPC planning activities –TAG participant may seek review from a judicial or regulatory body that has jurisdiction over the issue –For disputes that arise under the Tariff, the Tariff’s dispute resolution process applies to all TAG participants (includes voluntary mediation)

37. 37  Regional Participation -Commission requested more details to allow customers and other interested stakeholders to understand how the NCTPC planning activities will be integrated into regional processes -NCTPC is the “regional planning process” in which the Parties are participating -Coordinates with neighbors outside the NCTPC footprint via two key coordination activities: SERC focuses on reliability SIRPP focuses on economics

38. 38  Economic Planning Studies –Commission found it unreasonable to limit full participation in the Enhanced Transmission Access Planning (“ETAP”) Process to TAG Voting Members –Corrected by adoption of TAG Sector Voting Process –Required to provide for stakeholder input (e.g., through the TAG) in the determination as whether to combine and/or cluster proposed scenarios –Have provided this option in Section 4.2.3

39. 39  Cost Allocation –Commission requested a cost allocation methodology for non-RETP economic projects that involve the transmission systems of multiple NCTPC Participants –Costs of any non-RETP project or any non-Regional Reliability Project that involves the transmission systems of multiple NCTPC Participants would be allocated pursuant to the OATT of each Transmission Provider

40. 40  SIRPP Stakeholder Definition -Concern that the definition of stakeholder in the SIRPP process may unduly restrict the ability of all interested parties to participate in the inter- regional economic planning process -SIRPP Stakeholder Group (“SIRPPSG”) membership is now open to all affected parties in accordance with Order No. 890 -Proposed a Sector voting approach

41. 41  SIRPP Access to Confidential Information -Commission required the Parties to revise their Attachment Ks, to remove the requirement that stakeholders seeking non-CEII confidential information from SIRPP participants first request and obtain from the Commission the Form 715 -Requirement has been removed for non-CEII confidential information -Clarify that resource specific data will not be made available if the data has been designated confidential by the data provider or if the data can be used to: Determine security constrained unit commitment or economic dispatch of resources; or Perform an economic evaluation of costs and benefits

42. 42  SIRPP Dispute Resolution -Ordered to establish a mechanism for resolving disputes that arise in planning activities performed by the SIRPP -Dispute resolution provision has been added to Appendix 1 of Attachment K, which addresses this issue

43. 43  SIRPP Cost Allocation -Commission required that the allocation of costs for upgrades identified through the SIRPP economic planning process be addressed -Appendix 1 has been clarified to reflect the intent of this approach to cost allocation and describe how it might work in more detail -Section 7.4 of the Attachment K clarifies that for the portion of an Inter-Regional Economic Upgrade project that is located in the NCTPC footprint, the cost allocation principles set forth in Section 7 would apply

44. 44  SIRPP Other Changes -Clarified that information to be discussed will be made available in final draft form for stakeholder review prior to any such meeting by posting it on the SIRPP website and/or e-mails to SIRPPSG members -Reasonable efforts to make such information available at least 10 calendar days prior to a particular meeting -SIRPPSG may consider clustering similar Economic Planning Study requests

45. 45 Duke / Progress believe that the proposed changes will fulfill their compliance obligations under Order 890 as requested by the Commission

46. 46

47. 47 Update on Regional Studies Bob Pierce Duke Energy

48. 48  Ongoing Studies - SCRTP - SIRPP - JCSP  Status Update  Where to go for more information Regional Processes

49. 49 The South Carolina Regional Transmission Planning (SCRTP) process was established by South Carolina Electric & Gas Company (SCE&G) and the South Carolina Public Service Authority (Santee Cooper) to meet the transmission planning requirements of FERC Order No. 890. SC Regional Transmission Planning Process

50. 50  NCTPC submitted 2 requests to study - 600 MW transfer from Santee-Cooper to CPLE - 600 MW transfer from SCE&G to Duke  Deadline for requests was 7/1/08  SCRTP selected 5 requests for study  SCRTP accepted NCTPC requests - Provided dispatch data and contingency files - Study process underway SC Regional Transmission Planning Process

51. 51  Initial results were reported at the 11/06/08 SCRTP meeting in Charleston  Stakeholder input on the initial results was requested, including study refinements and other solution options to consider  www.scrtp.com SC Regional Transmission Planning Process

52. 52 Sponsors PowerSouth Dalton Utilities Georgia Transmission Corporation (GTC) Duke Energy Carolinas Entergy Companies E. ON U.S. Municipal Electric Authority of Georgia (MEAG) Progress Energy Carolinas Santee Cooper South Carolina Electric & Gas South Mississippi Electric Power Association (SMEPA) Southern Companies Tennessee Valley Authority (TVA) Southeast Inter-Regional Planning Process

53. 53  NCTPC submitted requests to study - 3,000 MW from MISO to VACAR - 3,000 MW from SOCO to PJM (classic) - 3,000 MW from PJM (classic) to SOCO  5 of the 16 requests submitted were selected at 7/10/08 meeting Southeast Inter-Regional Planning Process

54. 54  Requests to be studied - 2,000 MW from Entergy to SOCO - 2,000 MW from PJM west to SOCO - 5,000 MW from SPP to SOCO - 3,000 MW from SOCO to PJM (classic) - 3,000 MW from PJM (classic) to SOCO  Preliminary study results expected by January 2009  www.southeastirpp.com Southeast Inter-Regional Planning Process

55. 55  MISO, PJM, SPP, TVA, ISO New England, New York ISO and the MAPP  Entergy is participating in the JCSP primarily through SPP Joint Coordinated System Planning

56. 56  Reliability assessment – 2018 Reference case  Economic assessment – 2024 Wind Integration case Joint Coordinated System Planning

57. 57  Main focus is the economic assessment  Performed in collaboration with the DOE’s Eastern Wind Integration Transmission Study  Objective to investigate both 20% and 30% wind energy penetration scenarios in the bulk of the Eastern Interconnection and the transmission required to support that level of wind penetration  The JCSP study adopted the DOE assumptions and added them to a Reference case that acts as a baseline for comparison Joint Coordinated System Planning

58. 58

59. 59

60. 60

61. 61  Working to refine results to optimize the cost/benefit ratio based on the assumptions regarding wind integration  www.jcspstudy.org Joint Coordinated System Planning

62. 62

63. 63 Rich Wodyka Independent Consultant 2009 TAG Work Plan Review

64. 64 1 st Quarter 2 nd Quarter3 rd Quarter 4 th Quarter Enhanced Access Planning Process Coordinated Plan Development  Perform analysis, identify problems, and develop solutions  Review Reliability Study Results  Evaluate current reliability problems and transmission upgrade plans  Propose and select enhanced access scenarios and interface  Perform analysis, identify problems, and develop solutions  Review Enhanced Access Study Results Reliability Planning Process  OSC publishes DRAFT Plan  TAG review and comment  Combine Reliability and Enhanced Results 2009 Overview Schedule TAG Meetings

65. 65 January - February  Finalize 2009 Study Scope of Work -Receive final 2009 Reliability Study Scope for comment -Review and provide comments to the OSC on the final 2009 Reliability Study Scope including the Study Assumptions; Study Criteria; Study Methodology and Case Development -Receive request from OSC to provide input on proposed Enhanced Transmission Access scenarios and interfaces for study -Provide input to the OSC on proposed Enhanced Transmission Access scenarios and interfaces for study Proposed 2009 TAG Work Plan

66. 66 April - May TAG Meeting  Receive feedback from the OSC on what proposed Enhanced Transmission Access scenarios and interfaces will be included in the 2009 study  Receive a progress report on the 2009 Reliability Planning study activities and results

67. 67 June - July TAG Meeting  2009 TECHNICAL ANALYSIS, PROBLEM IDENTIFICATION and SOLUTION DEVELOPMENT –TAG will receive a progress report from the PWG on the 2009 study –TAG will be requested to provide input to the OSC and PWG on the technical analysis performed, the problems identified as well as proposing alternative solutions to the problems identified –Receive update status of the upgrades in the 2008 Collaborative Plan –TAG will be requested to provide input to the OSC and PWG on any proposed alternative solutions to the problems identified through the technical analysis

68. 68 August - September TAG Meeting  2009 STUDY UPDATE –Receive a progress report on the Reliability Planning and Enhanced Transmission Access Planning studies  2009 SELECTION OF SOLUTIONS –TAG will receive feedback from the OSC on any alternative solutions that were proposed by TAG members

69. 69 December 2009 STUDY REPORT –Receive and comment on final draft of the 2009 Collaborative Transmission Plan report TAG Meeting –Receive presentation on the draft report of 2009 Collaborative Transmission Plan –Provide feedback to the OSC on the 2009 NCTPC Process –Review and comment on the 2010 TAG Work Plan Schedule

70. 70

71. 71 TAG Open Forum Discussion