North Carolina Transmission System Reliability Study 2011 Summer & 2010/2011 Winter

1. 2006 Reliability Study Scope Name Date

2. 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 DRAFT

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

4. Assumptions • Study year is 2011 Summer and 2010/2011 Winter, if needed • LSEs have provided a dispatch order of their DNRs • Load growth assumptions are in accordance with each LSE’s practice • Generation, interchange and other assumptions are being coordinated between Participants as needed DRAFT

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

6. 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 • After performing the base case reliability analysis and identifying solutions to any identified problems, additional cases will be developed to evaluate import options to meet load demand forecasts DRAFT

7. Methodology • Initially, power flow analyses will be performed based on the assumption that thermal limits will be the controlling limit for the reliability plan • Voltage, stability, short circuit and phase angle 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 DRAFT

8. 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, based on using a surrogate line rating to flag the need to review the phase angle difference DRAFT

9. Assessment and Problem Identification • Duke and PEC will each run 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 will each document the reliability problems resulting from their assessments and report back to the PWG DRAFT

10. 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 DRAFT

11. Selection of Preferred Reliability Plan • 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 DRAFT

12. Report on the Study Results • The PWG will compile all the study results and prepare a recommended final reliability 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. DRAFT