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“The National Grid”Presented To The

Fall Tri-State Member Services

ConferenceOctober 10, 2001Covington, KY

Jeff MitchellECAR

Manager, Transmission Services

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““The bulk electric system is a term commonly The bulk electric system is a term commonly applied to that portion of an electric utility applied to that portion of an electric utility system, which encompasses the electrical system, which encompasses the electrical generation resources, transmission lines, generation resources, transmission lines, interconnections with neighboring systems, and interconnections with neighboring systems, and associated equipment, generally operated at associated equipment, generally operated at voltages of 100 kV or higher.”voltages of 100 kV or higher.”

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ECARTRANSMISSION CIRCUIT MILEAGE

AS OF DECEMBER 31, 2000

COMPANY 120KV 138KV 161KV 230KV 345KV 500KV 765KV Total

AP --- 3,617.832 --- 267.060 17.040 684.540 --- 4,586.472AEP --- 8,673.110 46.340 98.770 3,801.130 110.960 2,022.060 14,752.370

BREC --- 14.400 335.400 --- 67.400 --- --- 417.200CIN (CGE) --- 658.250 --- --- 387.630 --- --- 1,045.880

CIN (PSI) --- 1,493.260 --- 701.350 742.230 --- --- 2,936.840CONS --- 3,713.500 --- --- 1,942.350 --- --- 5,655.850

DPL --- 379.870 --- --- 413.650 --- --- 793.520DECO 1,555.900 31.000 --- 89.800 968.500 --- --- 2,645.200

DLCO --- 406.880 --- --- 118.540 --- --- 525.420EKPC --- 360.280 426.310 --- 59.560 --- --- 846.150

FE (CEI) --- 906.340 --- 0.700 358.020 --- --- 1,265.060FE (OE) --- 2,261.910 --- --- 670.730 --- --- 2,932.640

FE (TE) --- 508.050 --- --- 167.370 --- --- 675.420HE --- 16.680 223.680 --- 62.430 --- --- 302.790

IMPA --- 18.650 --- 31.720 70.710 --- --- 121.080IPL --- 363.423 --- --- 457.481 --- --- 820.904

LGEE (KU) --- 1,029.280 531.090 --- 357.480 56.870 --- 1,974.720LGEE (LGE) --- 316.270 65.930 --- 135.250 --- --- 517.450

NIPS --- 757.218 --- --- 354.442 --- --- 1,111.660OVEC --- --- --- --- 774.400 --- --- 774.400

SIGE --- 313.240 --- --- --- --- --- 313.240WVPA --- 14.400 --- 83.870 63.470 --- --- 161.740

TOTAL 1,555.900 25,853.843 1,628.750 1,273.270 11,989.813 852.370 2,022.060 45,176.006

GRAND TOTAL 45,176.006

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NERC Regions

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Formed June 1968

Mission: “Promote Reliability of Bulk Electric Supply in North America”

Voluntary Organization of 10 Regions ( and Their Members)

Develops Planning and Operating Reliability Standards

Uses “Peer Pressure” to Enforce Reliability Rules

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Since its formation in 1968, the North American Electric Reliability Council (NERC) has operated as a voluntary organization - one dependent on reciprocity, peer pressure, and the mutual self-interest of all those involved. Through this model, NERC has helped to make the North American electric system the most reliable system in the world. Now, the growth of competition and the structural changes taking place in the industry have significantly altered the incentives and responsibilities of market participants to the point that a system of voluntary compliance is simply no longer adequate. NERC is in the process of transforming itself into NAERO - the North American Electric Reliability Organization - whose principal mission will be to develop, implement, and enforce standards for a reliable North American bulk electric system. Under today's system, compliance with NERC standards is mandatory but it is not enforceable. NERC is working with its members to incorporate an enforcement mechanism by way of contracts between NERC's Regional Councils and their members. However, federal legislation is needed in the United States to ensure that NERC and its Regions have clear-cut statutory authority to enforce compliance with reliability standards among all market participants. NERC's membership is unique. As a not-for-profit corporation, NERC's members are ten Regional Councils. The members of these Regional Councils come from all segments of the electric industry: investor-owned utilities; federal power agencies; rural electric cooperatives; state, municipal and provincial utilities; independent power producers; power marketers; and end-use customers. These entities account for virtually all the electricity supplied in the United States, Canada, and a portion of Baja California Norte, Mexico.

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ECAR is one of the ten Regional Reliability Councils of the North American Electric Reliability Council (NERC).

ECAR was established in 1967 to augment the reliability of its members’ electricity supply systems through coordination of the planning and operation of the members’ generation and transmission facilities. ECAR’s membership includes 29 major electricity suppliers located in nine east-central states serving more than 36 million people.

Membership is voluntary, and the current Full Members are those utilities whose generation and transmission have an impact on the reliability of the interconnected electric systems in the Region. Small electric utilities, IPPs, marketers who are active within the Region, and Full Members of other NERC Regions participate as Associate Members. The ECAR organization is comprised of an Executive Board, a Coordination Review Committee, a Market Interface Committee, nine technical advisory panels, and various working groups. Over 250 individuals drawn from all the Region’s members participate in carrying out the Region’s reliability mission. A small permanent staff located in Canton, Ohio provides coordination and technical support of the Region’s activities.

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P U R P O S E

“ . . .TO AUGMENT RELIABILITY OF THE PARTIES’ BULK POWER SUPPLY

THROUGH COORDINATION OF THE PARTIES’ PLANNING AND OPERATION

OF THEIR GENERATION AND TRANSMISSION FACILITIES.”

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ALLEGHENY POWER AMERICAN ELECTRIC POWER BIG RIVERS ELECTRIC CORPORATION CINERGY CORPORATION CONSUMERS ENERGY THE DAYTON POWER AND LIGHT COMPANY THE DETROIT EDISON COMPANY DUQUESNE LIGHT COMPANY EAST KENTUCY POWER COOEPRATIVE, INC. ENRON SE CORPORATION FIRSTENERGY HOOSIER ENERGY RURAL ELECTRIC COOPERATIVE, INC. INDIANAPOLIS POWER & LIGHT COMPANH LGE ENERGY NORTHERN INDIANA PUBLIC SERVICE COMPANY OHIO VALLEY ELECTRIC CORPORATION ORION POWER MIDWEST VECTREN ENERGY DELIVERY OF INDIANA

TOTAL 18

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CATEGORY A

Joint Action Agencies

• 6 Included • Example – AMPO-OHIO

CATEGORY BMarketers and IPPs

• 20 Included• Example – Dynegy

CATEGORY CUtilities from Other Regions

• 3 Included • Example - IMO

CATEGORY DRTOs and ISOs

• 1 Included• Midwest ISO

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Like most other entities involved in the electric industry, ECAR is actively addressing the many significant issues related to the restructuring of the industry. Among the issues being addressed by ECAR are: ECAR’s governance and organizational structure; funding mechanism; transformation of ECAR from a Regional Reliability Council of NERC to a Regional Reliability Organization of the coming new NAERO; and implementation of a formal compliance monitoring and enforcement process for ECAR. As a result of activities such as these, eventually ECAR will look and function a lot differently than it does today.

In a word, we are in a time of significant change. ECAR is taking the steps necessary to ensure the continued high reliability of its bulk electric systems while accommodating the needs and realities of the competitive marketplace that is evolving from restructuring of the industry.

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•Regional Transmission Organizations (includes Independent System Operators, ISOs)

•Scheduled to be operational by December 15, 2001, per FERC Order 2000

•FERC, in a July 2001 announcement, would prefer to see 4 total in the United States (plus ERCOT)

–Northeast–Southeast–West–Midwest

•Now have 15 in various stages of development, plus 2 new ones – PPRTG (TVA) and WestConnect (Desert Star)

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The “Old World”:

- Approximately 110 Control Areas Nationwide

- Had Control Over All Generation, Transmission, and Distribution Facilities for One Company or Pool

The “New World” After Deregulation:

- FERC Would Prefer to Have 5 RTOs Nationwide

- RTOs Would Operate the Grid with Many Participants

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Open Access to Transmission Systems Now

Many New Industry Participants

Separation of Reliability and Merchant Functions

Increased Use of Transmission Systems

Voluntary Compliance or “Peer Pressure” Not Sufficient in a Competitive Industry

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Federal Legislation:

- Senate Bill Passed in 2000 in old Congress

- House Bill Passed in 2001 in new Congress

“Plan B”

- NERC has signed contracts with 7 of 10 Regions (Remaining 3 to sign by end of 2001)

- ECAR Plans to sign similar contracts with its members

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FOR MORE INFORMATION:

www.ecar.org

www.nerc.com