1

RMR EXIT STRATEGY FOR B.M. DAVIS

December 16, 2003

BILL BOJORQUEZDirector of Transmission Services

Fort Phantom

San Angelo

La Palma

Rio Pecos

G

G

G G

G

G

Bates

Laredo G

B. M. Davis 335 MWLa Palma 249 MWLaredo 172 MWBates 183 MWFort Phantom 202 MW San Angelo 102 MWRio Pecos 98 MWTotal: 1,341 MW

B. M. Davis

Fort Phantom

San Angelo

La Palma

Rio Pecos

G

G

G G

G

G

Bates

Laredo G

B. M. Davis 335 MWLa Palma 249 MWLaredo 172 MWBates 183 MWFort Phantom 202 MW San Angelo 102 MWRio Pecos 98 MWTotal: 1,341 MW

B. M. Davis

RMR UNITS

EXIT TIMELINES

1,341 MWTOTAL

N/A172 MWLaredo

N/A183 MWBates

Dec. 2004335 MWB.M. Davis

Dec. 2005249 MWLa Palma

Dec. 2004202 MWFort Phantom

Summer 2004102 MWSan Angelo

November, 200398 MWRio Pecos

Est. Exit Timeline CapacityUnit

1,341 MWTOTAL

N/A172 MWLaredo

N/A183 MWBates

Dec. 2004335 MWB.M. Davis

Dec. 2005249 MWLa Palma

Dec. 2004202 MWFort Phantom

Summer 2004102 MWSan Angelo

November, 200398 MWRio Pecos

Est. Exit Timeline CapacityUnit

B.M. DAVIS EXIT SCOPE OF WORK

Phase 1 (complete by January, 2005)• Installation of series reactors on both lines between

White Point and Nueces Bay • Terminate the Lon Hill to CCCP into the Weil substation • Cut in the Nueces Bay – Morris 138-kV line into the

Highway 9 line • Reconnect the Westside to Davis 138-kV line and install

two 28.8 MVAR capacitor banks at Weil, Westside and Airline substations

Phase 2 (complete by June, 2006)• Nelson Sharpe 345/138-kV substation on the south side

of the Corpus Christi at the crossing of Lon Hill to Rio Hondo 345-kV line and Alazan to Celanese 138 kV line

• 150-MVA 30-degree phase shifting transformer

CORPUS SYSTEM,PHASE 1 ADDITIONS

CORPUS SYSTEM,PHASE 1 ADDITIONS

CORPUS SYSTEM,PHASE 1 ADDITIONS

CORPUS SYSTEM,PHASE 1 ADDITIONS

CORPUS SYSTEM,PHASE 1 ADDITIONS

CORPUS SYSTEM,PHASE 2 ADDITIONS

COST

TRANSMISSION ADDITIONS PHASE 1 & 2Total Capital Cost $33.3 MAnnual TCOS $ 6.7 M

ESTIMATED RMR COSTProjected Cost Net Uplift $22 M per year

QUESTIONS/MOTION

• ERCOT Staff recommends that the Board approve the Phase 1 and 2 RMR Exit Strategy for B.M. Davis Unit No 1 as described in the RMR Exit document

REJECTED OPTIONS

1. Original Nelson Sharpe Proposal w/ Two Series Reactors

2. Special Protection Schemes3. Seven Series Reactors4. Multiple 138kV Upgrades5. Nelson Sharpe with New 9-mile 345kV

line into Rodd Field

APPROACH

• Staged approach to determine cost effective and timely transmission alternatives

• Near-term Alternatives: Upgrades to existing infrastructure that can be expedited − Do not require CCN− Can be completed in less than three years

• Long-term Alternatives: Future lines and system upgrades necessary to ensure that load is served reliably and without uneconomic RMR support

OPEN PROCESS

• September 15, ERCOT hosted stakeholder meeting in Austin to review short-term RMR alternatives

• September 22, Stakeholders submitted comments to the short-term alternatives

• September 30, ERCOT issued a draft recommendation on RMR short-term exit strategies

• October 9, TAC voted in support of alternatives for Fort Phantom and La Palma

• October 10, Second stakeholder meeting:− Long-term alternatives for the Valley and Laredo and − Short-term alternatives for Corpus Christi

• November 21, ERCOT issues a revised draft exit strategy recommendation for B.M. Davis

• November 26, Stakeholder comments on B.M. Davis exit strategy

• December 4, TAC Support of Exit Strategy