CREZ Program Update

1. CREZ Program Monitoring & Reporting CREZ Program Update Presented by: Steve Farmer, CCC CREZ Monitoring Czar

3. CREZ – Transmission Build-Out Program • The CREZ program is the PUC’s response to a public mandate to increase renewable energy in Texas to serve the electric needs of the state. • The Texas Legislature passed Senate Bill (SB) 7 in 1999, which restructured the state’s electric industry and allowed Transmission Service Providers (TSPs) to offer transmission services to other utilities throughout Texas. • Ultimately, the CREZ effort will significantly increase Texas’s current level of wind generation capacity to 18,456 MW.

4. CREZ – Benefits to Community • CREZ projects are primarily designed to move electricity generated by renewable energy sources (primarily wind) from remote areas to the more heavily populated parts of Texas (e.g., Austin, Dallas-Fort Worth, San Antonio). • These lines also will provide additional transmission infrastructure necessary to meet the long-term needs of the region. • More clean energy will be brought to customers which will improve air quality in Texas.

5. Producers Energy Flow Consumers

6. CREZ Summary • Projects • New Transmission Lines, Substations, & Equipment to move power • Divided among 10 Transmission Service Providers (TSP’s) • Schedule: Complete by Dec 2013

8. Why a new CREZ Grid? • Current Transmission Lines in CREZ areas are near or at capacity now (“Congested”). Would not be able to carry the additional load provided by the new wind farms. • In addition, new Substations and Equipment are needed to collect, condition, and regulate the power on the new Grid. Big Hill Substation (LCRA)

9. Web-Tool

10. Public Site • www.texascrezprojects.com

11. Timeline • 2008 • 2009 • 2010 • 2011 • 2012 • 2013 Planning Study - CTOS Modeling and Simulation Studies Startup CREZ Monitoring & Reporting Design CCN Process Construction

13. Where are we now? • Program Start (2008) • Today • System Planning Studies (CTO, Reactive Power), Preliminary Routing and CCN Preparation • Estimated cost $4.97 Billion • 2963 Projected Miles • 109 Estimated Projects • Environmental / CCN process Complete, now in Final Design and Construction • Estimated Cost $6.91 Billion • 3591 Projected Miles • 186 Total Projects • 15 Projects Canceled • 171 Total Active Projects • 38 Completed to date

14. Program Overview

15. Budget Status by TSP

16. Why do costs always change on major projects? CTO Study – Project Definition stage. Little solid information on projects, many unknowns.

17. Example CREZ Project (X 186!) CCN Legislation Studies Identify Need Define Project, Input from Stakeholders Finalize Design Construct Project High Range Point Estimate, i.e.”THE PRICE” Low Range Uncertainty / Risks / Unknowns

18. Changes - CREZ • Cost Evolution • CTO Study Estimate = $4.9 Billion • Current Estimate = $6.9 Billion • Why did the cost go up so much? • CTO Study: Planning document, not meant to be all inclusive of all costs • CTO used straight line distances for estimates • (Shorter than actual routes) • Could not presume final routes for legal reasons • Final routes: Increase of 600 Miles ~ $1.03B

19. Planning Map Current Map

20. Changes - CREZ • Results of Reactive Study • Indicated a need for substantially more reactive power equipment for stable operations • Increase in Project Costs ~ $0.5B • 109 Projects in CTO Study, now 186 Total Projects • Projects cancelled, changed, divided, moved, added… • Cost Escalation

21. Quarterly Reports • Information consolidated by project • “Page View” • Every project has a map image • More schedule information • More descriptive information

22. Construction Images - CTT

23. Construction Images LCRA

24. Questions? • www.TexasCrezProjects.com