Transmission Options for Mariah Project, Phase II

3/10/2010

Proposed Agenda• A Quick Mariah Project Update

– Land lease status– ERCOT application– SPP application– Tres Amigas

• Present Mariah Interconnection Solutions• Discuss Potential Mariah/AEP Cooperation:

– Interconnection of Sherman/Dallam to Hitchland, Tres Amigas, HPX– Timing– Possibilities for signing letter of intent– Interconnection business model alternatives– Tres Amigas/Hitchland interconnection, possibilities for Mariah

interconnection• Tallgrass Line And Other Bottlenecks – How can Mariah project

contribute to optimum grid solutions• Other items

AssumptionsNotes1) Phase I and II installed capacity and actual capacity

1) Phase I1) Parmer 1250 MW2) Sherman 1000 MW

2) Phase II1) Parmer 1750 MW – total 3000 MW2) Sherman 1000 MW – total 2000 MW

Actual capacity - 10% Operating reserve (other ancillaries services)-10 % Losses = 80 % installed capacity for sale into the different markets

2) The sales are assumed to be under long-term contracts for energy deliveries that count as renewable energy and therefore will be at prices that include a renewable premium.

3) Any surplus energy produced over the long-term sales will be sold in the local imbalance market, that is SPP, ERCOT or New Mexico (WECC).

4) Transmission lines between Mariah and TASS/ERCOT/SPP are shown in orange and red. Without a full study and optimization of capacity required, required TASS capacity is estimated at:

Phase 2: ERCOT–WECC 1500-2000 MWSPP–WECC 750-1000 MWERCOT–SPP 500-750 MW

5) Optionally, if capacity is available at low prices, 500 MW each for WECC–SPP; SPP–ERCOT; WECC–ERCOT. This will provide operational flexibility.

6) It is assumed that other transmission (shown in green dashed lines) will be built by third parties to access TASS.

Owned by Mariah, built by AEP?

Alt. routing, owned by Mariah, built by AEP?

Public interconnection between TASS-SPP and TASS-ERCOT?

Owned by Mariah, built by Sharyland?

Mariah interconnection solutions

Parmer

ERCOT-Nazareth

SPP-Hitchland

Dallam

TresAmigasSuperStation

SPP-Toke?

Sherman

Phase I1250 MW

Phase II 3000 MW

Phas

e I

1 00

0 M

W

Pha

se II

1 00

0 M

W

Pha

se II

I

5 00

0 M

W

Phase II – 2015/2016

In Phase 2, MWF-S (Sherman) is interconnected to SPP through a 2000 MW line. Assume that sales to the East and West are:1) 300 MW in PJM requiring 300 MW of transmission between MISO & PJM2) 300 MW in MISO requiring 600 MW of transmission between SPP & MISO3) 400 MW in SPP 4) Remaining 500 MW exported to WECC

MWF-P (Parmer) is interconnected to TASS by a 1250 MW line and to ERCOT via 3000 MW of CREZ transmission.Assume that sales to the West and East are:1) 500 MW in CA requiring 500 MW of transmission between AZ and CA2) 500 MW in AZ requiring 1000 MW of transmission between NM and AZ3) 700 MW in NM requiring 1700 MW of transmission between TASS and NM 4) Remaining 700 MW exported to SPP

MWF-P

MWF-S

ERCOT

SPPNM

Phase 1+2; 3000 MW Parmer – TASSUp to 1250 MW Parmer - ERCOT

Phase 1+2; 2000 MW Sherman – Tallgrass

TASS

CA

AZ

MISOPJM

G4

G6

G1

G5

G2

G3

1500 - 2000 MW

500

- 750

MW

750 - 1000 MW

3000 MW

Phase 1+2; 3000 MW Parmer – TASSUp to 1250 MW Parmer - ERCOT

1250 MW

2000 MW