Houston Region Import Capacity Project

August 27, 2013 Regional Planning Group Meeting

Background

Tie line capability limited to approximately 6500 MW currently Generation

‾ Previously or currently mothballed units: 1367 MW

‾ Additional units approaching 50 years old: 1174 MW

‾ Recent generation additions have been relatively small

‾ Houston is a non-attainment zone

‾ Proposed Pondera (1300 -1380MW) has not provided Notice to Proceed since signing SGIA in 2010

Recent ERCOT publications (2012 Constraints and Needs report and 2012 Long Term Study) show need for additional import path into Houston

CNP has serious concerns about reliability/resource adequacy for the Houston load pocket because of limited import capability

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Possible future retirements - a total of 1939 MW in-service units will be older than 50 years by 2018. These resources were modeled as online in the Study Case.

Older Units

3

Houston Load Pocket Projected Reserves

Note: Resources include both generation and import capacity into Houston

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Study Approach

Phase I: Study Case Analysis

Modify SSWG 2015-2018 base cases created in February 2013- Remove Pondera (1300 MW)- Add Deer Park Energy Center expansion (215 MW)- Add Calpine Energy Center expansion (200 MW)- CNP load matches 2012 ALDR (other than new transmission

customers)• Non-coincident peak• Hot summer load level (102 degree F)• 2013 ALDR CNP load about 600 MW higher in 2018 than in 2012

ALDR• CNP studying over 1000 MW of industrial load not included in 2013

ALDR which could be on-line as early as 2016

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Study Approach

Phase I: Study Case Analysis

Use ERCOT Criteria: Planning Guide 4.1.1.2 (1)(b) - Take largest unit inside Houston “zone” out of service: Cedar Bayou Unit

2 (745 MW)- Perform Single and Common Mode contingencies (Common tower

outage)· Overload of Singleton – Zenith circuits beginning in 2018

(100.8% in 2018)

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** From bus ** ** To bus ** CKT Rating Yr 2015 Yr 2016 Yr 2017 Yr 2018 Contingency Description

44645 SNGLTN_345 345 44900 ZENITH__345A 345 98 1450.0 95.2 95.9 100.8TOMBALL 345 -

SINGLETON & KING - ROANS PRAIRIE

44645 SNGLTN_345 345 44900 ZENITH__345A 345 99 1450.0 95.3 95.9 100.8TOMBALL 345 -

SINGLETON & KING - ROANS PRAIRIE

Emergency Loading %

Cedar Bayou 2 out-of-service

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Houston Region

Year 2015 2016 2017 2018

Peak Load (MW) 19111 19331 19525 19726

Peak Transmission Losses (MW) 291 319 330 346

Peak Demand (MW) 19402 19650 19855 20072

Installed Capacity w/o CB2 (MW) 11706 11706 11706 11706

Previously and Currently Mothballed (MW) 1367 1367 1367 1367

Average Import Capacity From 138 and 345 kV Ties (MW)

6500 6500 6500 6500

Planned Resources with Signed IA, Air Permit, and Securitized Deposit per Table 2-1 (MW)

415 415 415 415

Total Resources (MW) 19988 19988 19988 19988

Surplus/Deficit (MW) 586 338 133 (84)

Additional Reserve/Deficit Margin 3.07% 1.75% 0.68% -0.43%

Phase I: Study Case Analysis

Phase I: Reliability Analysis – CB2 out

Sensitivity Analysis Without 1367 MW mothballed generation – loading of 114% for year 2015

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New 500 MW generator inside CNP – loading of 92% for year 2018

** From bus ** ** To bus ** CKT Type Rating Yr 2015 Yr 2016 Yr 2017 Yr 2018 Contingency Description

44645 SNGLTN_345 345 44900 ZENITH__345A 345 98 LN 1450.0 114.3 121.4 124.1 134.3TOMBALL 345 - SINGLETON &

KING - ROANS PRAIRIE

44645 SNGLTN_345 345 44900 ZENITH__345A 345 99 LN 1450.0 114.3 121.5 124.2 134.4TOMBALL 345 - SINGLETON &

KING - ROANS PRAIRIE

44650 SMTHRS__345A 345 47000 BELAIR__345A 345 98 LN 1137 95.2 97.8 99.4

BELLAIRE 345 - JEANETTA 345 CKT.64 & BELLAIRE 345 - WA

PARISH 345 CKT.50

44645 SNGLTN_345 to 46500 TOMBAL__345B 345 74 1924.0 96.2 102.0 103.1 108.5SINGLETON - ZENITH 345

CKT.98 & SINGLETON - ZENITH 345 CKT.99

Emergency Loading %

** From bus ** ** To bus ** CKT Rating Yr 2015 Yr 2016 Yr 2017 Yr 2018 Contingency Description

44645 SNGLTN_345 345 44900 ZENITH__345A 345 98 1450.0 87.0 87.5 92.2TOMBALL 345 - SINGLETON & KING - ROANS

PRAIRIE

44645 SNGLTN_345 345 44900 ZENITH__345A 345 99 1450.0 87.0 87.5 92.2TOMBALL 345 - SINGLETON & KING - ROANS

PRAIRIE

Emergency Loading %

Phase II: Interconnection Options and Initial Screening– Evaluate transfer capability of the 2018 Study Case and 25 Options– Use ERCOT 2012 average transmission costs to estimate each option

- Include estimated costs of reinforcements – Rank Options based on Transfer Improvement Value (MW transfer

increase) / (Cost)– Select best Options for additional analysis

Phase III: Interconnection Options Detailed Analysis– Evaluate voltage stability impacts and estimate reactive compensation for

each Option– AC Contingency and Short-circuit analysis– Prepare detailed cost estimates using typical CenterPoint Energy costs

Identify preferred interconnection options that maximize increased transfer capability versus total project cost

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Study Approach

Twenty-five Options Studied Options 1 - 16

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Jordan

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Twenty-five Options StudiedOptions 17 – 25

Comparison of Electrical Alternatives

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Five Options Selected for Further Study

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21

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Phase III: Additional Studies

Detailed Cost Analysis

Three Preferred Interconnection Options

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*Ragan Creek is a future 345 kV Switching Station to be constructed as part of the interconnection option. **New 345 kV structure-miles include a 20 percent increase from their point-to-point straight-line distances to account for uncertainty in routing.

Preferred Interconnection OptionsTransfer Increase

(MW)

New 345 kV Structure-miles **

Cost ($ MM) MW/$ MM

Option 15 : Twin Oak-Zenith (including system improvements)

2701 117 462 5.85

Option 24 : Ragan Creek-Zenith* (including system improvements)

1960 69 297 6.60

Option 25 : Limestone-Ragan Creek-Zenith* (including system improvements)

2532 130 532 4.76

System Configuration – Option 15

Option 15: Twin Oak – Zenith 345 kV

Zenith

SingletonGibbons Creek

Twin Oak

Limestone

T.H.W

Jewett

Jack Creek

North Belt

Tomball

G

TNPONE

ROANS PR

G

Bobvle

2018

G

G

G

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System Configuration - Option 24

Zenith

SingletonGibbons Creek

Twin Oak

Limestone

T.H.W

Jewett

Jack Creek

North Belt

Tomball

Ragan Creek

Nucor

G

ROANS PR

Bobvle

2018

G

G

G

G

Option 24: Zenith – Ragan Creek 345 kV

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System Configuration - Option 25

Option 25: Limestone - Ragan Creek – Zenith 345 kV

Zenith

SingletonGibbons Creek

Twin Oak

Limestone

T.H. W

Jewett

Jack Creek

North Belt

Tomball

Ragan Creek

Nucor

G

ROANS PR

G

Bobvle

2018

G

G

G

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Conclusions

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Unless additional net generation or new import transmission paths into Houston region are constructed CNP will not comply with ERCOT’s Planning Criteria by year 2018.

25 interconnection options studied. Three options are recommended based on technical and economical analysis.

Conclusions

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– Option 15: New Twin Oak - Zenith 345 kV double circuit:2700 MW transfer capability improvement. $462 million project cost. 5.85 MW/$MM transfer/cost value. New line connects Oncor’s and CNP’s substations. Includes approximately $7.5 million in LCRA 138 kV line upgrades.

– Option 24: New Ragan Creek – Zenith 345 kV double circuit: 1960 MW transfer capability improvement. $297 million project cost.

6.60 MW/$MM transfer/cost value. New line connects CNP’s Zenith substation to a new 345 kV Ragan Creek substation. Includes $5 million upgrade of TMPA Twin Oak - Jack Creek -Ragan Creek double circuit. Includes approximately $2 million in LCRA 138 kV line upgrades.

– Option 25: New Limestone – Ragan Creek - Zenith 345 kV double circuit: 2530 MW transfer capability improvement. $532 million project cost. 4.76 MW/$MM transfer/cost value. New line connects Limestone to new 345 kV Ragan Creek substation to Zenith substation. Includes approximately $5.5 million of LCRA 138 kV line upgrades.

Questions?