1. Congestion Hedging Process Transmission Planning Summit September 21-22, 2011

2. Agenda Topics Integrated Marketplace Overview Congestion Hedging Process Impact of TCR/IM on Engineering Processes TCR Time line- Next Steps

3. Overview of Integrated Marketplace Functions 3 T- 12 monthsT- 1 day TT+ 7 days Day Ahead Reliability Unit Commitment Intra-Day RUC Real-Time Balancing Market Settlement Day Ahead Market Performs unit commitment Sets DA prices TCRs cleared Makes sure enough capacity committed for next operating time frame Real-Time dispatch much like today’s EIS Market (5 min) ARR/TCR Auction

4. Why hedging is needed in Integrated Marketplace? In the DA Market, price separation of MP’s resource to load may occur due to congestion leaving the MP exposed to high prices TCRs allow for an efficient market –The TCR can be used as hedge against congestion that allows MPs to reduce their exposure to high market prices 4

5. ARR-TCR Process Overview SPP Transmission System Capability ARR HoldersAuction Revenue ARRs Allocated (MWs) TCR Auction (MWs w/ Price) Auction Revenue Rights Participate in TCR Auction Congestion rights TCR Holders

6. Annual vs. Monthly TCR Auctions 6 Annual TCR AuctionMonthly TCR Auction Capability Auctioned 100% for June 90% for July-September 60% for Fall, Winter, Spring No June Auction 100% July-May Auction FormatSingle Round July- September (single round ) October- April (two rounds) TCR ProductsMonthly and SeasonallyMonthly TCR Periods On Peak Off Peak On Peak Off Peak Credit CheckYes TCR Terms4 Months and 3 SeasonsOne Month

7. Modeling & Steady State Planning 7  Under IM, SPP will have centralized generation dispatch for the entire SPP footprint (vs. individual BA dispatch)  SPP is using a centralized balancing approach to long term planning Market Implementation CBA

8. Transmission Service and TCR 8  SPP is conducting Transmission Service Studies as described in SPP OATT  Studied on aggregate basis  Relationship between TCR and TSS  Firm Transmission Service (NITS, PTP) will provide ARR Entitlement to Eligible Entities  The value of TCR (Sink LMP- Source LMP) would depend on the transmission improvements committed through TSS studies

9. GI and TCR/Integrated Marketplace 9  SPP is conducting GI studies according to SPP OATT  Grant Energy Resource Interconnection Service (ERIS) and Network Resource Interconnection Service (NRIS)  Relationship between GI and TCR/ Integrated Marketplace  No hedging rights (ARR/TCR) associated with ERIS and NRIS

10. Compliance, Seams and IM/TCR 10  Compliance  Compliance studies need to be performed in support of NERC/ Regulatory Standards  Seams and Inter-Regional Coordination  Various Trading Hubs will be defined as a part of TCR and Day Ahead market Process  Loop flows (Parallel flows) and outage coordination will be critical for revenue adequacy in TCR market

11. TCR Work in Progress!  System design and customization is underway  Nexant is our vendor  Plan to use offline module (Hedge) to perform test runs, MP training  Overall “Congestion Hedging” Implementation Timeline

12. Upcoming Key Dates for Mock TCR Auction October 5 th 2011: TCR Mock Auction Kickoff meeting November 9, 2011 : Preparing for Mock TCR auction* December 12, 2011: Preparing for Mock TCR auction* January 11, 2012: Preparing for Mock TCR auction* January 16 th 2012: TCR Mock Auction Phase I- Start February 22 nd, 2012: Preparing for Mock TCR auction* March 12, 2012: Preparing for Mock TCR auction* April 2 nd, 2012: TCR Mock Auction Phase I- Start * Offered through Learning Management Service (LMS)