2006 Reliability Study

1. 2006 Reliability Study James Manning Bryan Guy May 12, 2006

2. Two Part Presentation • 2006 Reliability Study Scope • James Manning (NCEMC) • Preliminary 2006 Reliability Study Results • Bryan Guy (Progress Energy)

3. 2006 Reliability Study Scope

4. Purpose of Study • Assess the PEC and Duke transmission systems’ reliability • Develop a single reliability transmission plan for North Carolina that ensures reliability of service in accordance with NERC, SERC, PEC and Duke requirements

5. The Process Steps • Assumptions • Study Criteria • Case Development • Methodology • Technical Analysis and Study Results • Assessment and Problem Identification • Solution Development • Selection of Preferred Reliability Solutions • Report on the Study Results

6. Assumptions • Study year is 2011 Summer and 2010/2011 Winter, if needed • Load Serving Entities (“LSEs”) have provided a dispatch order of their Designated Network Resources (“DNRs”) • Load growth assumptions are in accordance with each LSE’s practice • Generation, interchange and other assumptions have been coordinated between Participants as needed

7. Study Criteria • NERC reliability standards • SERC requirements • Duke and PEC company criteria

8. Case Development • The Base Case has been developed with detailed internal models for Duke and PEC • Duke and PEC have created their respective generation down cases from the common Base Case • including outaging key generators near the Duke/PEC interface • Additional cases will be developed to evaluate alternative resource supply options to meet load demand forecasts

9. Methodology • Power flow analyses will be performed to evaluate thermal and phase angle limits • Voltage, stability and short circuit studies may be performed if circumstances warrant • Duke and PEC have exchanged contingency and monitored element files so that each can test the impact of contingencies on the other’s transmission system

10. Technical Analysis and Study Results • Duke and PEC will report results throughout the study area based on: • Thermal loadings greater than 90% • Voltages limits • Post-contingency phase angle difference of Richmond-Newport 500 kV line

11. Assessment and Problem Identification • Duke and PEC are each running their own assessments • Duke reliability criteria will be used for Duke’s transmission facilities • PEC reliability criteria will be used for PEC’s transmission facilities • Duke and PEC are documenting the reliability problems resulting from their assessments and reporting to PWG

12. Solution Development • The PWG will develop potential solution alternatives to the identified reliability problems • Duke and PEC will test the solution alternatives • Duke and PEC will develop rough, planning level cost estimates and construction schedules for the solution alternatives

13. Selection of Preferred Solutions • The PWG will compare alternatives and select the preferred solution alternatives while balancing costs, benefits, and risks • The PWG will recommend a preferred set of transmission improvements that provide a reliable and cost effective transmission solution to meet customers’ needs while prudently managing the associated risks

14. Report on the Final Study Results • The PWG will compile all the study results and prepare a recommended final Collaborative Plan for the OSC review and approval • Final report would include: • A comprehensive summary of all the study activities; • A summary of all of the identified problems; and • The recommended transmission improvements, including estimates of costs and construction schedule.

15. Preliminary Resultsfrom our first NCTPC Study2011 Summer

16. Preliminary 2006 Study Results • Enhanced Transmission Access • Received no requests from the TAG • Reliability Study process • Focus on reliability • Evaluate impact of resource supply options to meet load demand forecasts

17. Preliminary Reliability Study Results • First studies of the year using updated cases • Opportunity to assess current plans • Duke and PEC have performed screens • Assessments were Coordinated • Combined detailed model • Tested impact of opposing system transmission and generation outages • Improved generation dispatch assumptions • Results shared & discussed at PWG meeting

18. Preliminary Reliability Study Results • Nothing new or imminent was found • Projects addressing reliability issues

19. Preliminary Reliability Study Results • PEC & Duke

20. Preliminary Reliability Study Results • PEC • May establish one new project • Three items to be monitored

21. Preliminary Reliability Study Results • PEC • Falls 230/115 kV Transformer • New project for a second transformer about 2013 • Franklinton 115 kV capacitor • Local load serving issue • Possible Wake Forest area capacitor in 2011 • Not a long lead-time item

22. Preliminary Reliability Study Results • PEC • Falls-Henderson 115 kV Lines • Local load serving issue • Monitor loading on 115 kV lines • Identified possible operating procedure for use in 2013 • Laurinburg 230/115 kV Transformers • Reduced loading on facilities • Possible 2 year delay of current project to install larger transformers from 2012 to 2014

23. Preliminary Reliability Study Results • Richmond – Newport 500 kV Line • 2011 study confirms PEC import limitations • Could become an issue before the end of the planning horizon • PWG will investigate solutions, cost and scheduling

24. Preliminary Reliability Study Results • Duke • No new facilities were identified by the study • Three projects previously identified continue to be monitored (2011 and beyond)

25. Preliminary Reliability Study Results • Duke • London Creek 230 kV Line (Riverview – Peach Valley 230 kV Line) • Internal screens indicate that bundling of this line will be required in the 2012 timeframe. The PWG study indicates upgrade will be necessary around 2016. • The timing is impacted by south-to-north flow across the Duke control area.

26. Preliminary Reliability Study Results • Duke • Antioch 500/230 kV Transformer Banks (2) • Internal screens show similar timing for an upgrade project. • Increased import from the north accelerates timing. • PWG study indicates additional transformer capacity needed around 2014.

27. Preliminary Reliability Study Results • Duke • Parkwood 500/230 kV Transformer Banks (2) • Internal screens show the need for additional transformer capacity around 2019 to 2022. • PWG study indicates 2018 in the base screen. • Added outage of a large PEC Roxboro unit shows need for project advancement of 3-4 years to 2015.

28. Where Are We Now ? • Assess the impact of resource supply options • Scenarios provided via Participant from… • NCMPA1,NCEMPA, FPWC, NCEMC, Waynesville, Tri-Towns, Forest City/Dallas, Concord • Provides Participants information for planning transmission needs • Obtain transmission service via OASIS

29. Preliminary Study Results Potential Alternative Resource Options for Study

30. Summary • Confirms PEC and Duke transmission plan • No surprises, nothing new, nothing imminent • Adjustments • PWG will identify possible solutions to PEC’s import limitation • PWG will assess impact of various resource supply options for LSEs