Duke Energy Carolinas Quarterly Stakeholder Meeting

Independent Entity Services

Thursday, December 6, 2012

2:00 to 3:00 p.m. EST

4th Quarter 2012

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Agenda

Duke Energy Carolinas Tariff Administration

Follow-up August 30, 2012

NAESB Update - Wholesale Electric Quadrant

Wrap-up

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Duke Energy Carolinas Tariff Administration

• Duke Energy and Progress Energy completed a merger of the two corporations on July 3, 2012 • The merger created the largest electric power holding company in the United States, supplying and delivering energy to approximately 7 million U.S. customers in seven states • MISO began to function as the Independent Entity, performing some of the functions of the Transmission Service Provider (TSP) for Duke Energy in 2006 • Duke and MISO have had a very successful working relationship over the last 6 years 3

Duke Energy Carolinas Tariff Administration

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• During merger integration efforts, Duke identified the TSP function performed by the IE as best performed in-house and consistently across all of Duke’s jurisdiction • Duke Energy and MISO currently negotiating an agreement to terminate the Independent Entity Agreement. • This decision in no way reflects on the Independent Entity’s performance of their duties • The primary reason for this decision revolves around finding savings in operating expenses

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Duke Energy Carolinas Tariff Administration

• Estimated termination schedule: •Notify customers of plan to terminate the agreement

•Notify the North Carolina Utilities Commission of plan to terminate the agreement

•File Termination Agreement with the FERC

•Work towards FERC approval by the end of January 2013

•Duke perform Independent Entity function in parallel with MISO during March 2013

•Terminate Agreement no later than April 1, 2013

• We are committed to providing the customers on-going exceptional transmission and generator interconnection services during the transition and beyond

• Questions related to this transition should be directed to Charlotte Glassman (704-382-3621) or Alan Pritchard (704-382-7463)

Follow-up August 30, 2012

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Scenario Analyzer Customer critique, suggestions and OATI response

Customer: The tool would have more strength if you could run multiple scenarios at one time with a separate result for each scenario (Example: A run using monthly firm ptp for each month for the next year. It would kick out twelve results with each result being a month, and showing pass/fail) OATI: Each scenario has to be its own run to keep the evaluation results separate. SA is just like TSR submission in terms that you can’t submit multiple TSRs in one batch on the UI. Customer: This will probably be utilized for mostly long term transmission reservations. For trades with a shorter horizon, I could just see Offerings being used. When the time of a reservation request becomes a deciding factor in whether or not someone will be granted the transmission, a non-preconfirmed request is more likely to be done than a scenario run OATI: Running SA is totally optional and if submission of a TSR is more convenient for customer that is viable way to determine availability.

Follow-up August 30, 2012

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Scenario Analyzer Customer critique, suggestions and OATI response

Customer: It would be nice to be able to change the “Provider” while in the “Scenario Analyzer Entry Form” instead of having to exit the current provider’s for another’s OATI: Will consider addition of this capability. Customer: Scenario Analyzer only gives a Pass/Fail result. The tool would be useful if it displayed the time periods it failed evaluation and gave the partial service available. OATI: The full analysis results are available if the TP elects to expose SA and TSR evaluation reports to the customer. Obviously with flowbased systems the number of FG deficits over time can be voluminous which is why they are written as a report. Anything additional we’d have to spec and write a Change Order.

NAESB Update Wholesale Electric Quadrant

Cyber-Security – Public Key Infrastructure (PKI)

Changes to NAESB Business Practice Standards WEQ-012 (link) were ratified by membership on October 4, 2012. They establish the obligations of both Authorized Certification Authorities and End Entities under these Business Practice Standards. They do not specify how Certificates issued by Authorized Certification Authorities may be used in specific software applications or electronic transactions within the guidance of NAESB.

Changes to NAESB Business Practice Standards WEQ-000, WEQ-001, WEQ-002, WEQ-003, and WEQ-013 (link) were ratified by membership on November 28, 2012.. These additions or changes support and enable the NAESB WEQ PKI Business Practice Standard (WEQ-012) to provide for standard method for secured access to OASIS applications.

Changes to WEQ-004 (link) to support PKI implementation within Coordinate Interchange Business Practices Standard WEQ-004 were approved by the WEQ Executive Committee on November 27, 2012. The membership ratification ballot is due on December 28, 2012.

After membership ratification is completed, NAESB will file with FERC a supplemental change to the Version 3 WEQ Business Practice Standards.

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NAESB Update Wholesale Electric Quadrant

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Electric Industry Registry (Joint Electric Scheduling Subcommittee)

On November 13, 2012 the NERC TSIN Registry ceased publishing registry data, making OATI webRegistry the official source of registry data.

Proposed EIR Business Practice Standards and e-Tagging Specification Version 1.8.2 Informal comment period ends December 7 Submit any comments and/or proposed amendments you have to the NAESB

Office (naesb@naesb.org or fax to 713-356-0067

Proposed EIR Business Practice Standards Clean: http://www.naesb.org/pdf4/weq_jess110512w4.doc Redlined: http://www.naesb.org/pdf4/weq_jess110512w3.doc e-Tagging Specification Version 1.8.2 Clean: http://www.naesb.org/member_login_form.asp?doc=weq_jess110512w2.doc Redlined: http://www.naesb.org/member_login_form.asp?doc=weq_jess110512w1.doc

The JESS will begin review of comments at the December 13-14 meeting (link to the agenda).

NAESB Update Wholesale Electric Quadrant

Preemption and Right of First Refusal (OASIS Subcommittee)

These business practices will standardize rules for granting transmission service to higher priority requests (challenger) through displacement of service to lower priority requests (defenders) in accordance with tariff requirements.

Concepts to be incorporated:

A request must be pre-confirmed to be considered a valid challenger.

There won’t be any preemption if only partial capacity could be granted to the challenger.

MATCHING requests will modify the defender’s reservation. MATCHING requests must be pre-confirmed.

Any counteroffer to the challenger must be finalized to know how much capacity will be taken from defenders. A counteroffer will only be given to the challenger if one (or more) defender submits a MATCHING request.

Only one round of competition will be initiated for a given challenger.

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NAESB Update Wholesale Electric Quadrant

Preemption and Right of First Refusal (OASIS Subcommittee)

Two task forces are developing recommendations for the OASIS subcommittee:

Defender Mitigation Task Force

Investigate how to permit a defender who has a partial reservation at the end of the competition process to eliminate the capacity that is no useful. (e.g., 17 MW recalled from a 50 MW reservation leaves 33 MW)

Commercially Similar Defender Task Force

What business practice rules should be in place to facilitate the following concept:

The reservation capacity released by the defender or group of defenders should provide roughly equal or greater reservation capacity to the challenger and competition should be limited to commercially similar paths (similar flowgate impacts).

Target for completion 3rd Qtr 2013 instead of 1st Qtr 2013

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NAESB Update Wholesale Electric Quadrant

Parallel Flow Visualization for Eastern Interconnect (Business Practices Subcommittee)

Near real-time generator output is reported to the IDC (NERC requirement)

Balancing Authority selects one of the following data input methods for assigning transmission capacity to generator output (NAESB requirement) • Tag all Non-Firm Intra-BA transactions

• Upload to the IDC the use of all Intra-BA transmission service for each running generator every 15 minutes

The IDC will use Interchange Tags (Inter-BA) and the new information to improve the accuracy of flowgate loading calculations

BPS is developing a two-tiered firm curtailment process (first-to-cut / last-to-cut) which is tied to establishment of coordination agreements between transmission providers

An review of draft business practices and informal comment period should occur in the 1st Qtr 2013

Next meeting is December 11-12, 2012 (link to the agenda)

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Wrap-up

Proposed Next Quarterly Stakeholder Meeting

Thursday, March 14, 2013 – 2:00 p.m. to 3:00 p.m. EDT

Customer Suggested Topics? This is the forum for discussing emergent topics

(Upcoming changes, stakeholder input)

Questions and Comments

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