1

NAUSCASummer Meeting

BostonJune 30, 3009

David W. HadleyVice President State Regulatory Relations

Midwest ISO

2

Midwest ISO Reliability Footprint

3

Electric System Development – Historical View• Traditional Electric System Development (Generation and

Transmission)– Planned at a single company level– Designed for single company use– Funded at company / state level

• Decision basis– Meet local requirements (i.e., load growth)– With local natural resources– Few national policy issues – Limited regional use

• Last major build out of baseload capacity and transmission ended in the early 1980s

• Traditional Electric System Development (Generation and Transmission)– Planned at a single company level– Designed for single company use– Funded at company / state level

• Decision basis– Meet local requirements (i.e., load growth)– With local natural resources– Few national policy issues – Limited regional use

• Last major build out of baseload capacity and transmission ended in the early 1980s

4

WECC

MIDWEST

NORTHEAST

ERCOT

SOUTH

Coal

Nuclear

Gas

Hydro

Wind

Other

The current regional generation fleets reflects the natural resources of each region – with gas being the

default peaking fuel for all

5

WECC

MIDWEST

NORTHEAST

ERCOT

SOUTH

Coal

Nuclear

Gas

Hydro

Wind

Other

… and the sources of each regions’ electrical energy reflects those generation portfolios and resources

6

…While the transmission system reflects the desire to move energy from a company’s generation to the load it serves – without a robust “backbone”

7

Xcel Energy Transmission

8

9

Midwest ISO Transmission Map

10

800 MW Load

RPS

RPS

RPS

10,000 – 12,000 MW

11

Who Pays?

• Remember Open Access – Transmission Owners cannot discriminate & favor their own generation over another's

• So – the utility must open it’s transmission lines to others generation

• Today the developer pays for transmission from the generator to the transmission 100%

• Transmission upgrades needed have the developer pay 50% and the utility pay 50%

12

Midwest ISO Planning Principles reflect need to address local and regional issues

• Make the benefits of a competitive energy market available to customers by providing access to the lowest possible electric energy costs

• Provide a transmission infrastructure that safeguards local and regional reliability

• Support state and federal renewable energy objectives by planning for access to all such resources (e.g. wind, biomass, demand-side management)

• Create a mechanism to ensure investment implementation occurs in a timely manner

• Develop a transmission system scenario model and make it available to state and federal energy policy makers to provide context and inform the choices they face

Midwest ISOBoard ofDirectorPlanningPrinciples

FundamentalGoal

The development of a comprehensive expansion plan that meetsboth reliability and economic expansion needs

13

Midwest ISO is actively engaged in planning from local to regional level

RGOS IMTEP & RGOS II

JCSP

EWITS

RGOS = Regional Generation Outlet StudyMTEP= Midwest ISO Transmission Expansion PlanJCSP = Joint Coordinated System PlanEWITS = Eastern Wind Integration and Transmission Study

RGOS = Regional Generation Outlet StudyMTEP= Midwest ISO Transmission Expansion PlanJCSP = Joint Coordinated System PlanEWITS = Eastern Wind Integration and Transmission Study

14

Different policy assumptions result in very different siting outcomes with different transmission system requirements.

15

The transmission overlay for the Reference Case (Status Quo) establishes the need for some backbone development…

16

…While the 20% Wind Energy Case highlights the need for substantial transmission backbone development

17

We must effectively manage our current infrastructure while carefully planning and

developing our future infrastructure

• 60% of the electric grid infrastructure (T/D/G) is at or near the end of original planned life

• 20% of T/D/G is past original planned life

• In the Midwest, the average age of infrastructure is very high– Baseload generation = 42 years– Transmission = 40+ years

• The region use of the electric system is also increasing the transmission congestion

• 60% of the electric grid infrastructure (T/D/G) is at or near the end of original planned life

• 20% of T/D/G is past original planned life

• In the Midwest, the average age of infrastructure is very high– Baseload generation = 42 years– Transmission = 40+ years

• The region use of the electric system is also increasing the transmission congestion

Current InfrastructureCurrent Infrastructure

• Planning must balance many issues– Use of existing generation fleet– National policy issues– Efficient use of natural resources– Demand response– Costs

• Construction• Operating• Fuel• Decommissioning• Environmental

• Regional / national use of the electric system must be considered as the planning is done

• Unknowns (policy and financial) challenge planning

• Planning must balance many issues– Use of existing generation fleet– National policy issues– Efficient use of natural resources– Demand response– Costs

• Construction• Operating• Fuel• Decommissioning• Environmental

• Regional / national use of the electric system must be considered as the planning is done

• Unknowns (policy and financial) challenge planning

Future InfrastructureFuture Infrastructure

18

Planning Activities

Key Issues

CongestionRenewable

PolicyOperational Impacts

New Generation and

Demand Response

ChangingRegulatory

Requirements

FairCost

Allocation

Load Growth and DSM

AgingInfrastructure

Key Issues