December 7, 2012

Transmission Needs AnalysisScenario 5/7 Update

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Agenda

• Review Scenario Characteristics– Review Incremental Resources– Review Base Case Upgrades– Economic Analysis

• Key Lessons (S5/S7)

• LTSA Previews

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Scenario Characteristics

Scenario 5: Drought– Characterized by extended drought– Summer capabilities of existing water-consuming resources de-

rated– New water-consuming resources sited primarily in the East– Water costs are assigned to water-intensive resources– Increased peak load

Scenario 7: BAU – Hi Natural Gas– Characterized by a high natural gas price ($9.55 by 2016,

$13.70 by 2022)– Resources retire in 2018 and 2022 for competitive reasons

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Resource Build: Scenario 5

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Scenario 5 Resources

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Base Case Thermal Reliability Upgrades – Scenario 5 (2022)

• Water availability and higher LMP’s drive thermal/gas expansion units to areas East/South of Dallas and North of Houston.

• New resources East and South of the Dallas Metro area caused base-case overloads

• New resources North of Houston created increased congestion and overloads on the 345 kV imports North – Houston.

Lines

Voltage (kV) Miles Cost ($M)

345 163 457

138 375 451

Transformers Voltage (kV) MVA Cost ($M)

345/138 18808 285

Total Cost ($M) 1193

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Scenario 5: Base Case Reliability Upgrades

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*Note: Houston imports were upgraded in preparation of the base case, though “backed out” in reliability analysis. The upgrade of the existing North to Houston imports is likely unfeasible.

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Scenario 5: AC Stability Limitations

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Drought

Scenario 5

Incremental Reactive support (MVAR) Limit (MW)

Year of Violation

Austin - 3839 2028

Dallas - 18890 2022

Houston 3400 8827 2024

San Antonio - 3033 2028

LRGV - 2512 2021*

Panhandle* - - -

*Assumes no incremental gas units are built in the LRGV

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Scenario 5: Most congested elements

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Most Congested Elements in S5:

•Twin Oak-Jack Creek, Jack Creek-Gibbons Creek, Gibbons Creek-Singleton, Jewett-Singleton (north of Houston region)

•Hill Country-Skyline (San Antonio region)

•Dallas interface congestion

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Scenario 5: Economic Analysis

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Options Studied capital cost (2022$M)

Reliability benefit(2022$M)

Capital Cost Adjusted for Reliability Benefit (2022$M)

1/6 of adjusted Capital Cost (2022$M)

Production Cost Savings (2022$M)

Meet ERCOT Economic Criteria ?

Limestone-Singleton 163.6 9.7 153.9 25.6 26.1 YesWatermill-Bigbrown 208.2 153.0 55.2 9.2 0.6 No

Bigbrown-Venus 223.1 0.0 223.1 37.2 0.2 NoLakeCreek-Navaro 104.1 9.7 94.4 15.7 0.3 No

Lake Creek-Watermill 297.4 19.5 278.0 46.3 1.3 NoClear Spring-Hill Country 104.1 0.0 104.1 17.4 3.1 No

Hays-Kendall 41.8 0.0 41.8 7.0 4.0 NoSandow-Garfield 133.8 9.7 124.1 20.7 5.1 No

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Scenario 5: Key Lessons

• Water availability and higher LMPs draw new resources East / Southeast of Dallas and North / Northwest of Houston

• Increased peak loads increase stress on the 138kV systems in and around Houston / Dallas

• Base case overloads are more prevalent on existing urban import paths

• Heavy congestion North – Houston supports economic transmission expansion for expanded import capacity into Houston

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Scenario 7: Resource Build

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Scenario 7: Resources / Retirements

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Scenario 7: Base Case Thermal Reliability Upgrades

Large amount of wind generation at Panhandle area, load forecasted for 2022 and other incremental resources assumed in the scenario result in:• Major 345 kV line upgrades in Panhandle area to accommodate large amount of wind generation,• Some 345 kV line upgrades around Houston area and other transmission upgrades needed for urban areas primarily driven by load serving issue

Lines

Voltage (kV) Miles Cost ($M)

345 563 1052

138 400 438

Transformers Voltage (kV) MVA Cost ($M)

345/138 19437 247

Total Cost ($M) 1737

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Scenario 7: AC Stability Limitations

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* Need for analysis in Scenario 7 because of massive build-out of wind in the Panhandle region

Hi Nat Gas

Scenario 7

Incremental Reactive support(MVAR) Limit (MW)

Year of Violation

Austin - 4579beyond 2032

Dallas 600 19914 2025

Houston 1800 9267 2028

San Antonio - 3803 2031

LRGV - 2512 2021

Panhandle* - 6015 n/a

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Scenario 7: Base Case Reliability Upgrades

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Scenario 7: Most congested elements

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Most Congested Elements in S7:

•Panhandle interface limit

•Singleton-Zenith and other 345 kV lines around Singleton area (north of Houston region)

•Parker-Benbrook 345 kV line (west of DFW region)

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Scenario 7: Economic Analysis

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Scenario 7: Economic Analysis

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Options Studied Capital cost (2022 $ M)Reliability benefit

(2022 $ M)

Adjusted capital cost (Capital Cost-Reliability

Benefit,2022 $ M)

1/6 of Adjusted Capital Cost (2022

$ M)

Production Cost Savings ($ Million,

Base - Option)Meet Economic Criteria ?

Bowman-Benbrook $ 435.0 $ (188.9) $ 623.9 $ 104.0 $ 15 No

Clear Crossing-Benbrook $ 531.6 $ (145.3) $ 676.9 $ 112.8 $ 30 No

Parker-Benbrook $ 80.5 $ (145.3) $ 225.8 $ 37.6 $ 37 Yes

Wolf Hollow-Benbrook $ 162.6 $ (145.3) $ 307.8 $ 51.3 $ 28 NoFayette-O'Brien $ 241.7 $ (52.33) $ 294.0 $ 49.0 $ 37 No

TNP One-Salem-Zenith $ 444.6 $ (73.15) $ 517.8 $ 86.3 $ 232 Yes Limestone-Gibbons Creek-Zenith $ 391.4 $ (20.87) $ 412.3 $ 68.7 $ 274 Yes

Brown-Zenith $ 860.3 $ 25.99 $ 834.3 $ 139.0 $ 236 Yes Lufkin-Jordan $ 439.1 $ 13.72 $ 425.4 $ 70.9 $ 190 Yes

Navarro-Zenith $ 597.8 $ (57.6) $ 655.5 $ 109.2 $ 208 Yes Cagnon-Pawnee $ 241.7 $ 23.12 $ 218.5 $ 36.4 $ 4 No

Kendall-Hill Country-Haysen $ 338.3 $ 60.03 $ 278.3 $ 46.4 $ 26 No Brown-Hill Country $ 507.5 $ 4.57 $ 502.9 $ 83.8 $ 125 Yes

Bakersfield-Rio Bravo $ 978.7 $ 27.40 $ 951.3 $ 158.5 $ 94 No Cottonwood-Clear Crossing, Tesla-

Graham 500 kV $ 970.7 $ 15.82 $ 954.9 $ 159.1 $ 117 No

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Scenario 7: Key Lessons

• An increase in NG price favors renewable expansion

• Favorable wind profiles drive interconnected wind on the CREZ system beyond full-build out design capability

• Stability limitations for increasing transfers from the Panhandle to load require further study, new infrastructure

• Increased congestion (due to urban retirements) supports economic transmission expansion for imports into Houston, Dallas, and San Antonio

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Questions?

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LTS Preview / Summary Data

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Renewable Resource Integration

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Retirement BAU -New Wind Drought Hi Nat Gas Environmental

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Upgrade Summaries

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2022 Scenario 1 - BAU Scenario 2 - Retirements Scenario 3 – BAU / Updated Wind

Scenario 5a - Drought Scenario 7 – Hi Nat Gas

Lines Voltage (kV) Miles Cost ($M) Miles Cost ($M) Miles Cost ($M) Miles Cost ($M) Miles Cost ($M)

345 376 853

411 1,102 97 173 163 457 563 1052

138 360 339

376 464

204 187 375 451 400 438

Transformers Voltage (kV) MVA Cost ($M) MVA Cost ($M) MVA Cost ($M) MVA Cost ($M) MVA Cost ($M)

345/138 10363 213

15000 235

11521 173 18808 285 19437 247

Total Cost ($M) 1406 1802 533 1193 1737

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Upgrade Summaries

1 – BAU 2 - Retirement 3- BAU / New Wind 5a –Drought 7 - Hi Nat Gas