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The Midwest ISOAt the Crossroads of America

International Meeting of Very Large Power Grid Operators

October 24 & 25, 2005

Beijing, China

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Agenda

Midwest ISO: At the Crossroads of America

Objective & Benefits of ISO/RTO’s

The Midwest ISO • Status of the Midwest Market

• Key Technologies

• Path Forward

• Information

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At the Crossroads of America: Literally and Figuratively

Continually evolving industry

Regulatory preference

Ensuring safe & reliable delivery

Energy markets

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What is an RTO?

A Regional Transmission Organization (RTO) provides wholesale electric transmission service under one tariff for a large geographic area

An RTO must meet certain characteristics to be approved by the FERC• Independence• Scope and Regional Configuration• Operational Authority• Reliability Authority

An approved RTO must also be able to provide certain regional functions• Tariff Administration• Congestion Management• Parallel Path Flow• Ancillary Services• Open Access Same-Time Information Systems (OASIS)• Available Transmission Capacity (ATC)• Market Monitoring• Planning and Expansion• Interregional Coordination

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ISO/RTO Benefits

Efficiency & Optionality• Efficiency of equipment usage for generators and transmission grid• Increased supply options and optimal use of energy resources across footprint• Transparency and energy pricing data availability• Security constrained unit commitment and economic dispatch for load• Market-based congestion management

Independence• Non-discriminatory open access to a large consolidated transmission system• Independent Available Transfer Capability (ATC) & Available Flowgate Capability (AFC)• Independent market monitoring and mitigation in place

Enhanced Reliability• Better planning process for a large region, maintaining or improving reliability • Allows the opportunity to provide and implement a long-term congestion solution• Improved maintenance and outage coordination

One-stop Shopping• Single OASIS and scheduling system• Consolidation of reliability coordinators into one regional entity• Establishes one generator interconnection process

Cost Savings• Elimination of “pancaked” rates over a large area• All of the items above in One-Stop Shopping• Eliminates seams within the RTO and addresses seams with other RTO’s• Provides opportunity to consolidate and lower reserve requirements regionally

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Centralize Generation Dispatch and Outage Management• Manage congestion via Locational Marginal Pricing (LMP), Transmission Loading

Relief (TLR) and Seams agreements

• Evaluate all resources within the Midwest ISO footprint as a pool

Maintain and Enhance Reliability• Ensure real-time operating reliability of the interconnected bulk transmission systems

• Interact with 26 Balancing Authorities and maintain system reliability

Provide Transmission Services

Provide Market Services• Operate Day-Ahead & Real-Time Markets (2 settlements)

• Administer auctions for Financial Transmission Rights (FTR)

Seams Coordination

Regional Planning• Ensure long-term (1+ years) plan availability for adequate resources and

transmission

• Integrate and assess transmission and resource plans

What We Do

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Who We AreThe Midwest ISO is an independent, non-profit reliability coordinator for the transmission of high voltage electricity via a security constrained economic dispatch across all or parts of 15 states and Manitoba

• Operational Since December 15, 2001• Market Launch on April 1, 2005 • 27 Transmission-owning entities• Security constrained economic dispatch• Dynamic market monitoring• Multi-control area environment (35

Balancing Authorities (reliability)• All-Time Peaks in 2005: 112,197 MW

(footprint) & 131,434 MW (reliability) • 135,054 MW generating capacity

• 97,000+ miles of transmission lines

• Large footprint - 947,000 square miles & 15.1 million customers

• Over $12 billion installed assets

• 1,504 generating units (reliability footprint)

• All industry sectors represented

• Carmel, IN & St. Paul, MN Control Centers

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State Estimator: Power System Model• 170,000 data points collected every 15 seconds• Executes every 90 seconds with 99.8% solution availability• 8,500 contingencies assessed every 2.5 minutes for:

• 31,000 buses• 30,000 transmission lines (AC)• 15,000 transformers• 4,600 generating units

Unit Dispatch System (UDS)• Utilizes load forecasts, scheduled net market interchange, current

generator output, generator ramp limits and offers, transmission constraints

• Results in most economic generation being utilized to serve customer load and manage constraint

• Security-constrained dispatch provided every 5 minutes

Monitoring & Reliability Tools• Topology processor• Back-up capability and redundancy• Monitoring tools for generation/power supply, transmission “delta

flow” and flowgates

Midwest ISO: Key Technologies

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Market Overview Data

0.00

50.00

100.00

150.00

200.00

250.00

300.00

4/1/

2005

4/8/

2005

4/15

/200

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4/22

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4/29

/200

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5/6/

2005

5/13

/200

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5/20

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5/27

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6/3/

2005

6/10

/200

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6/17

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6/24

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7/1/

2005

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2005

7/15

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7/22

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7/29

/200

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8/5/

2005

Time

$/M

Wh

Midwest ISO

PJM

NYISO

IESO

Midwest ISO: Day-Ahead Cleared Demand (2005)

TWh $ US (Billions)August 66.3 4.5July 63.0 3.9June 57.6 3.1May 49.1 1.6April 43.9 1.9

Real-Time Market Prices

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Status of the Midwest Market

Experience Smooth start-up Good system performance Improved reliability Good Operator

performance Stable seams coordination

Challenges Portal data queries Generation offer

characteristics Unit Commitment Data Transfer to

Settlements Generation outage planning Balancing Authority

coordination

Preparation Extensive market

trials

Comprehensive Training programs- Market Participants- Midwest ISO Personnel

Coordinated System Operations tests

Comprehensive IT systems testing

Working directly with Market Participants & Other Stakeholders

Startup StabilizationMarket Launch

April 1st Q2/Q3 Q4

Experience Smooth transition to

Market-Based rates Continued system

stability Market Participant

development

Challenges System enhancement Market information

dissemination Balancing Authority

Control Performance Standards (CPS)

Settlement Disputes Market development Access to Operating

Reserves

January - March

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Midwest ISO: Path Forward

Overall cost efficiencies

Operations Excellence: continue to improve operational and market efficiency

Explore further market development• Joint & Common Market (JCM) & interregional coordination

• Ancillary Services

• Generation Adequacy (Capacity)

• Long-term FTR

Energy Policy Act of 2005

Enhancing external reporting capabilities and core IT system performance

Continued focus on information, education and communication

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For More Information

www.midwestmarket.org

www.miso-pjm.com

www.misostates.org