Presentation of Stephen G. Kozey, Vice President, General Counsel and Secretary,

1. Presentation of Stephen G. Kozey, Vice President, General Counsel and Secretary, of the Midwest Independent Transmission System Operator, Inc. Before the Istanbul Renewable Energy Integration Workshop NARUC AND USEA

2. Table of Contents Presentation of Stephen G. Kozey List of Acronyms Appendix 1 – Generator Requirements Appendix 2 – Wind Operations Planning

3. Acronyms DA – Day Ahead DIRs – Dispatchable Intermittent Resources M1, M2, M3 – Milestones MW – Megawatt RPS – Renewable Portfolio Standard SPA – System Planning and Analysis

4. Midwest ISO RPS Requirements through 2025 Yellow – State with RPS Mandate Blue – State with RPS Goal White – State with No RPS Mandate or Goal MN Xcel: 30% by 2020 Others: 25% by 2025 ND 10% by 2015 MT 15% by 2015 SD 10% by 2015 WI 10% by 2015 MI 10% by 2015 IA 105 MW PA 8% by 2020 IL 25% by 2025 OH 12.5% by 2024 IN No RPS MO 15% by 2021 KY No RPS Midwest ISO Existing Wind: 8,200 MW Midwest ISO RPS Mandates: ~ 25,000 MW Required for 20% Federal Mandate: ~ 41,000 MW Existing Wind In-Service as of 7/01/10

5. Energy Zones

6. Energy Zones & Natural Gas Line Overlap

7. First Set of Candidate MVP Lines

8. Planning

9. WPA TT Objectives • Wind Integration Steering Committee Recommendations to PAC. The WPA Task Team is formed to address Wind Integration Steering Committee recommendations. Specifically, Motion #9: – The Midwest ISO recommends assignment of the wind integration work related to System Stability and Conditions to PAC. It may be necessary to expand the scope of current stability and load flow analyses to ensure reliable operation of the interconnected grid. This could involve studying more system conditions than what are currently studied in the planning process, or utilizing a probability based analysis technique such as Monte Carlo simulation to ensure the transmission system continues to be reliable and robust. • To address this wind integration issue, the Planning Subcommittee (PS) agreed to the formation of the Wind Planning Analysis Task Team (formerly the System Conditions and Stability Task Team) at their October 8, 2009 meeting. • Planning Advisory Committee (PAC) approved recommendations would be used in MTEP, TAP and RGOS reliability studies.

10. Summary of Task Team Deliverables • Propose “critical system conditions” and types of analysis appropriate for testing system performance impacts of wind resources. System conditions include such factors as system or area load levels, dispatch level of renewables at those load levels including diversity of availability across the fleet of renewable resources, and associated dispatch of non-renewables. • Recommend and achieve concurrence from the Planning Subcommittee and Planning Advisory Committee on the proposed critical system conditions to be analyzed with renewables in MTEP and Transmission Access Planning processes. • Perform powerflow and stability screening analysis on the proposed critical system conditions for committed renewable resources with signed IAs in order to determine system reliability needs for current MTEP cycle.

11. System Conditions Screened ‘MTEP’ indicates system condition studied in MTEP10

12. What We’ve Done • Dispatched 9 powerflow cases and posted for stakeholder review • Develop corresponding dynamics cases • Crunched a lot numbers • Compared performance of 9 system conditions • Posted results for WPATT review on Jan31. WPATT met Feb 15 to review

13. What We Found • Confirmed the following Critical System Conditions – Summer Peak with low wind – Shoulder load with 90% wind – Light Load with 90% wind • Potential New Conditions or Sensitivity Cases – Light Load with 0% wind may be studied for high voltage concerns and dynamics – Is it new condition or sensitivity case?

14. Appendix 1 Generator Requirements

15. Generator Requirements • Once online • Low voltage ride-through • Control system – meet a schedule • SCADA (Supervisory Control and Data Acquisition) • During the process • Much more

16. Key Technical Requirements • Customer has 3 points in the process to provide information • M1-Entry to queue • M2-Before entry to “Definitive Planning Phase” • M3-Before the Facilities Study • Reasons for providing information • We need the information to perform the technical study • We need proof the project is moving forward to prioritize the study

17. Application Submission • Customer Submits Interconnection Request/Application • Appendix 1 - Interconnection Request • Attachment A - Generating Facility Data Unit Ratings • Attachment B - Interconnection Study Agreement • Attachment C - Confidentiality Agreement • The 4 pieces above provide information necessary to perform the study

18. M1 Milestones—Info Due at Application • Complete Application (Appendix 1 & all Attachments) • Proof of site control or $100,000 deposit • Electrical Point of Interconnection (POI) • Generic Stability Model (turbine type & power factor) • Impedance from collective substation to POI • One-line diagram • Generation output (MW) • Step-up Transformer data (to POI)

19. Proof of Site Control (continued) • A site map for the foot print of the project • Must show that enough land is under control to build at least 50% of the project • Acceptable proof: • Copies of the agreements • Certification by a company executive • Midwest ISO has hired a consultant to review site control documentation for randomly selected new queue projects

20. M2 Milestones — Definitive Planning Phase Entry * Any “material” changes after this point will result in withdraw of project. After this point, almost all changes are material • Technical • Detailed Stability Model • Definitive Point of Interconnection * • Definitive one-line diagram * • Definitive generation output (MW) *

21. M2 Milestones (cont.)Proof of Progress • Proof of Site Control • Site control deposit becomes non-refundable within 10 business days into DPP Meet any two of the following • Turbines on Order * • Power Purchase Agreement * • Necessary Permits (Application submitted) * • Regulatory Approval (Approval required) * • Board of Directors approval or highest level of approval authority as determined by Customer’s governance structure * • Deposit or Letter of Credit equal to one month’s service at the drive-out point-to-point rate * A letter of credit may be used in-lieu of milestone

22. M3 Milestones—Facility Study • Deposit or Letter of Credit for greater of estimated Network Upgrades or IC Facilities as determined in the SPA Review (Refundable upon execution of Interconnection Agreement or Withdrawal) • Power Purchase Agreement (or equivalent) • Demonstration that generation turbines have been ordered Customer must meet one of the milestones below

23. Appendix 2 Wind Operations Planning

24. Outline • Wind Resources in Midwest ISO Market • Wind Forecasting • Wind Generation Operational Treatment • Wind Challenges to Operations • Wind Integration Initiative

25. Installed wind generation capacity has grown steadily in Midwest ISO footprint over past several years…

26. Wind Generation Forecasting & Accuracy Started in June 2008 Energy & Meteo (E&M) is the forecast provider Numerical Weather Prediction Models Three independent forecasts are produced American Weather Service Canadian Weather Service European Weather Service Midwest ISO Wind Forecast Weighted average of the 3 independent forecasts Independent forecasts are weighted by their historical performance • Commonly used measure is error normalized to the installed capacity, • shown in table as Mean Absolute Percentage Error (MAPE) 26

27. Wind Generation - Capacity Credit • System Wide Capacity Credit • Midwest ISO uses a stakeholder endorsed probability-based methodology to establish a System Wide Capacity Credit for wind resources • The 2011 System Wide Capacity Credit is 12.9% of installed wind MW • Wind Resource-level Capacity Credit • Midwest ISO uses a ‘period metric’ to allocate the System Wide Capacity Credit to individual Wind Resources • Period metrics are a broad class including time of day, monthly value, time of peak, etc. • Resulting Credits range from 0% to 31.8% around the system wide 12.9%

28. 28

29. Wind Generation Treatment Treated as Intermittent Resources under the current Tariff 29

30. Wind Generation Treatment

31. Operating Reserve Impacts • Wind Impact on Regulation Reserves • Current intermittent treatment of wind output remaining unchanged for next dispatch interval (10 minutes ahead) contributes to regulation deployment • The general persistent nature of wind output over 10 minute forecast period results in a relatively small impact to regulation deployment • Wind Impact on Contingency Reserves • Could be deployed with a significant and sudden drop in wind output • Has not been required to date, might be needed at higher wind penetration levels

32. A significant operating challenge associated with wind resources is managing manual wind curtailments to manage transmission congestion…

33. Wind variability also creates a ramping challenge which will require improved tools and may require new market products to manage as wind penetration increases • The current wind variability and profile impact ramp requirements as significantly as Net Scheduled Interchange • RPS wind capacity levels will dramatically increase the operational difficulties • Current operational methods to manage this ramp include: • Load and wind forecasting • Pre-commitment of units • Use of fast-start units and spinning reserves to manage unexpected variability • Improved operational and market methods - under development • Improved load and wind forecasting • 30-minute reserve products • Ramping service product

34. Wind Integration Initiative • Began in 2009 • Goal is to enable Integration of Wind Resources in a manner that will ensure: • Reliable System Operation • Efficient and Effective Markets • Level Playing Field for all Market Participants • Status • Areas of enhancements identified – complete • Wind forecasting, Congestion Management, Ramp Enhancements • Solutions – in progress • Wind forecasting - ongoing • Dispatchable Intermittent Resources – June 1, 2011 • Ramp Enhancements – under discussion with stakeholders

35. Exhibit 1 Dispatchable Intermittent Resources Status

36. Dispatchable Intermittent Resources • Dispatchable Intermittent Resource • Uses forecasted maximum output (10 min ahead) for units with forecast-dependent fuel sources (i.e. Wind) • Enables wind to be automatically dispatched down or back up in real-time based on a resource-level offer price and system conditions • Eligible to set prices in the energy market • Benefits • Improve congestion management performance (Reduce need for manual curtailments) • Improve market price performance • Reduce system regulation burden due to wind variability in dispatch time-frame • Improve overall system control performance

37. Dispatchable Intermittent Resources, cont. • Tariff language filed on Nov 1, 2010 • Expecting FERC order by Mar 1, 2011 • Implementation by June 1, 2011

38. The ability to dispatch DIRs should improve overall control performance…

39. Questions?