Navarro to Houston

Presentation to ERCOT RPG

August 27, 2013

2

Need for Houston Import

• North to Houston (N-H) flows increased to 3,100 MW– Summer 2012, 75% quartile for N-H, 3,102.9 MW

• Current grid– G-1 case results in more constrained conditions in terms of

Houston load deliverability prior to running into thermal/voltage stability concerns

– Singleton – Zenith double circuit line overload observed as most limiting element

Additional overloads observed along the existing N-H corridor

– Thermal constraints observed to be more limiting than voltage stability constraints

Independent studies by three TSPs identify a need for additional North to Houston injection

In Summer 2012, North to Houston flows exceeded the ERCOT expected 2018 flows 27% of the time

3

Need for Comprehensive Analysis

• With 3 proposals for Houston import, ERCOT has the unique opportunity to:

– perform a comprehensive, comparative analysis of the various options

– identify a solution that will provide lasting reliability benefits for the fast-growing Houston area

– coordinate major studies in development related to oil and gas load and Panhandle wind with Houston import to achieve benefits both to Houston and to the larger grid

ERCOT should endeavor to provide long-lasting benefits for Houston that also strengthen the larger grid

4

Screening Criteria

• Lone Star analyzed the Houston area and ERCOT grid with the goal of identifying projects that would provide the following:– Increased incremental import capability into Houston

– Route diversity and grid security

– Access to North Zone generation

– Strong link to CREZ renewable generation

Evaluation Methodology

Navarro projects meet each of the above criteria

5

Navarro Substation Benefits

• Navarro options provide higher incremental import capacity to Houston

• Navarro is strongly connected to over 10 GW of existing North Zone generators

• Navarro connects nine existing 345 kV lines and would create routing diversity versus existing Houston connections

• Navarro is the eastern terminus of CREZ and offers the most direct path for CREZ wind to reach Houston

• Navarro is state-of-the-art and readily expandable

Navarro Substation should be considered for the northern terminus of any Houston Import Project

6

Recommended Houston Import Solutions

• Navarro to King 345 kV with 50% Series Compensation

– High incremental transfer, 3,238 MW

– Strong Alternate Routing

– Strong link to CREZ and North Zone generators

• Navarro to King 500 kV– Highest incremental transfer, 3,558 MW

– Strong Alternate Routing

– Strong link to CREZ and North Zone generators

– Start of 500 kV backbone

– Requires the fewest upgrades to obtain >3,500 MW of incremental transfer

– Can initially operate at 345 kV

• Navarro to Gibbons to Zenith 345 kV– 2,700 MW of incremental transfer

– Strong link to CREZ and North Zone generators

Three Navarro options merit careful consideration for their benefits

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500 kV Advantages

• Highest incremental Houston import capability

• Lower line losses

• Lower impedance: can divert bulk power to unload and relieve constraints on underlying lower voltage systems

• Expandable backbone connecting two major load centers (Dallas and Houston) to renewable and thermal generation

• Lone Star’s Navarro substation has room for expansion and uses 500 kV breakers on the existing lines at Navarro, Sam Switch, and West Shackelford

• Lone Star’s affiliate has expertise building and operating over 1,100 miles of 500 kV

A 500 kV line would provide strong benefits to Houston and the entire ERCOT grid

Appendix

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Navarro Substation is a strong connection point to multiple North Zone generators and CREZ

Navarro

Big Brown

Trading HouseSandy Creek

Limestone

Twin Oak

Freestone

Midlothian

CREZ

Bosque County

Jewett

STP

TNP One

Gibbons Crk

Jack Crk

Singleton

Zenith

King

Hillje

WA Parish

O’BrienHolman

Fayette

Lost Pines

Temple

Sandow

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Historical North to Houston Flow

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Study Model Development

• Included WA Parish Addition (NG): 90 MW

• Included Channel Energy Center (NG): 190 MW

• Removed Pondera King (NG): 1,380 MW

• Removed Deepwater Energy Storage: 40 MW

• Removed Deer Park Energy Center (NG): 192 MW

• Removed Agrifos Steam Unit (NG): 0 MW

• Removed Tenaska’s switchable Frontier units (NG): 885 MW

The studied base case reflects ERCOT existing generation and load projections

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Reliability Criteria

• ERCOT Criteria per Planning Guide 4.1.1.2 (1) (b)“With any single generating unit unavailable, followed by Manual System Adjustments, followed by a common tower outage or the contingency loss of a transmission circuit or transformer, all Facilities shall be within their applicable Ratings, the ERCOT System shall remain stable with no cascading or uncontrolled Islanding, and there shall be no non-consequential Load loss. “

• Thermal Analysis used the loss of the largest unit inside Houston – Cedar Bayou 2: 745 MW

• Voltage Stability Analysis used the loss of the Gibbons Creek unit: 470 MW

The studied base case reflects ERCOT existing generation and load projections

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Voltage Stability Evaluation

• N-1 and N-1+G-1 analysis with loss of Gibbons Creek unit

• Houston Import Capability limited to 1,810 MW

• Voltage Stability Limit was not observed to be the binding constraint on North to Houston import in comparison to thermal constraints

• Thermal analysis was used as the primary gauge of evaluation of the studied transmission options

The studied base case reflects ERCOT existing generation and load projections

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Houston Import Projects sorted by Incremental Import CapabilityProposer -

Option Number

Option Description Incremental Houston Import Capability (G-1)

(MW)

Transmission Option Length(miles)

Cost Estimate ($ MM)*

MW/$MM

LST-17 Navarro - King (500 kV) 3558 166 674 5.28LST-7 Navarro - King (50% SC) 3238 166 552 5.87LST-13 Navarro - Tomball (345 kV) 2946 162 474 6.22LST-5 Navarro - King (345 kV) 2739 166 512 5.35LST-10 Navarro - Gibbons Creek - Zenith 345 kV 2717 165 417 6.51CNP-15 Twin Oak - Zenith 345 kV 2701 117 462 5.85CNP-25 Limestone -Ragan Creek - Zenith 345 kV 2532 93 532 4.76GP&L/CTT-9 Limestone - Gibbons Creek - Zenith 345 kV 2517 122 333 7.56GP&L/CTT-4 Gibbons Creek - Tomball 345 kV 2204 50 203 10.86GP&L/CTT-1 Gibbons Creek - Zenith 345 kV 2010 60 217 9.26CNP-24 Ragan Creek - Zenith 345 kV 1960 69 305 6.60

All Preferred Options from CNP, GP&L/CTT, and Lone Star

* Cost Estimates include substation costs and required upgrades.

* Cost estimates submitted by CNP, GP&L/CTT, and Lone Star are not made on the same basis.

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Detailed Cost Estimates of Lone Star’s Preferred Options

Option LST 7 LST 5 LST 17 LST 10

Project DescriptionNavarro - King 345

kV (50 % Series Compensation)

Navarro - King 345 kV

Navarro - King 500 kV

Navarro - Gibbons Creek - Zenith

Project length (miles) 166 166 166 165Transmission T-line Supply & Install 279,620,000$ 279,620,000$ 494,680,000$ 262,210,000$ T-line Land/Development/Other 91,300,000$ 91,300,000$ 90,750,000$

Total Transmission Costs 370,920,000$ 370,920,000$ 494,680,000$ 352,960,000$ SubstationSubstation Supply & Install 49,230,000$ 10,230,000$ 50,435,200$ 24,220,000$ Substation Land 1,250,000$ 1,000,000$ 300,000$

Total Substation Costs 50,480,000$ 11,230,000$ 50,435,200$ 24,520,000$ Transmission Addition Cost 421,400,000$ 382,150,000$ 545,115,200$ 377,480,000$

Transmission Addition Cost 421,400,000$ 382,150,000$ 545,115,200$ 377,480,000$ Network Upgrade Costs (System Reinforcements)

130,990,000$ 129,810,000$ 129,810,000$ 39,630,000$

Total Proposed Project and Network Upgrades

552,390,000$ 511,960,000$ 674,925,200$ 417,110,000$

Incremental Transfer Capacity (MW) 3238 2739 3558 2717MW/$MM with upgrades 5.86 5.35 5.27 6.51

Cost per Mile 2,234,458$ 2,234,458$ 2,980,000$ 2,139,152$ Cost Estimate Source NextEra Energy E&C NextEra Energy E&C ERCOT Generic NextEra Energy E&C