Duke Energy Carolinas Duke Energy Progress

Quarterly Stakeholder Meeting

4th Quarter 2014

Thursday, October 9, 2014

2:00 to 3:30 p.m. EST

Agenda

Duke Energy Carolinas-Progress Alignment

NAESB WEQ Update

Wrap-up

Duke Energy Carolinas-Progress Alignment OASIS Business Practices

Remember when… Three levels of alignment

Organizational – easily implemented Functional – issues that require back-office changes Regulatory – cannot be changed without filing with FERC

Duke Energy Carolinas-Progress Alignment OASIS Business Practices

Project underway to use same Transmission Service Provider tools for all Duke Energy Transmission Providers OATI Webtrans and other OATI modules have been

selected (PCM, CCO, SSW) Allow similar TSR processing and validations. Allow similar e-Tag processing and validations. Expected to begin:

Late January 2015 for DEC Late February 2015 for DEF Late March 2015 for DEP

Duke Energy Carolinas-Progress Alignment OASIS Business Practices

New e-Tag Loss Validation (Applies to DEC and DEP) Currently validates e-Tag each hour for correct losses

supplied New loss validation will check daily total MWh for correct

losses supplied and check for cumulative deficit losses Example: 50MW @ 2 hours = 100MWh total Check #1:

100MWh @ 3% loss = 3MW losses Check #2:

Hour 1: 2 MW loss supplied Hour 2: 1 MW loss supplied

Targeted effective date coordinates with Transmission Service Provider tool rollout

Duke Energy Carolinas-Progress Alignment OASIS Business Practices

Duke Energy Progress Loss Compensation Current practice requires at least 1 MW minimum collected for losses every hour The 1MW minimum loss Business Practice requirement will be eliminated (proposed start date 10/17/2014) Loss value will be determined by rounding up or down to the nearest whole MW value using basic arithmetic rounding principles Values ≥0.50 are rounded up, values <0.50 are rounded down 1 MW to 23 MW will incur zero losses (See revised DEP Business Practice Section 6.D Loss Compensation) When DEP moves to the new loss validation using the OATI tools, losses will be based on the daily schedule as mentioned in the previous slide (i.e. schedules in the 1-23MW range may incur losses)

Duke Energy Carolinas-Progress Alignment

OASIS Business Practices

DEP currently does not accept financial losses

DEP is working towards allowing financial losses, but an OATT change to Schedule 9 will be required

DEC, DEF and DEP will seek to align loss compensation in Schedule 9 of the Joint OATT

Financial losses for DEP and DEF

Change the loss calculation methodology for DEC from “divide-by” to “multiply-by”

Targeted effective date-first quarter 2015

NAESB WEQ Update

FERC Order 676-H, Adoption of NAESB WEQ Business

Practice Standards

WEQ OASIS Subcommittee Update

WEQ Business Practices Subcommittee Update

NAESB WEQ Update

FERC ORDER 676-H NAESB WEQ Business Practice Standards

000 Abbreviations, Acronyms, and Definition of Terms

001 Open Access Same-Time Information Systems (OASIS)

002 OASIS Standards and Communication Protocols (S&CP)

003 OASIS Data Dictionary

004 Coordinate Interchange

005 Area Control Error (ACE) Equation Special Cases

006 Manual Time Error Correction

007 Inadvertent Interchange Payback

008 Transmission Loading Relief (TLR) – Eastern Interconnection

009 Standards of Conduct for Electric Transmission Providers

010 Contracts Related Business Practice Standards

011 Gas / Electric Coordination

012 Public Key Infrastructure (PKI)

013 OASIS Implementation Guide

014 WEQ/WGQ eTariff Related Business Practice Standards

015 Measurement and Verification of Wholesale Electricity Demand Response

016 Specifications for Common Electricity Product and Pricing Definition

017 Specifications for Common Schedule Communication Mechanism for Energy Transactions

018 Specifications for Wholesale Standard Demand Response Signals

019 Customer Energy Usage Information Communication

20 Smart Grid Standards Data Element Table

21 Measurement and Verification of Energy Efficiency Products

Adopted Adopted with exceptions Informational Not Adopted

NAESB WEQ Update

FERC Order 676-H (RM05-5-022) Key Changes to NAESB WEQ Business Practice Standards:

OASIS (WEQ-001, WEQ-002, WEQ-003, WEQ-013)

1. Service Across Multiple Transmission Systems (SAMTS) – permits a customer to wait until all TPs have responded (accept, counteroffer, etc) to a group of requests on multiple transmission systems before making a commitment (confirm, withdraw, etc).

2. Network Integration Transmission Service (NITS) – added new practices and templates to put NITS application, including designation and Undesignation of DNRs, on OASIS . • FERC did not incorporate Standard WEQ-001-106.2.5, which appeared to

contemplate a Transmission Provider refusing a request to terminate a secondary network service.

3. Rollover Rights for Redirects – improved functionality of the rollover rights template

4. Redirect Requests and Available Transfer Capacity (ATC) Credit – Capacity of the Parent Reservation is reduced upon confirmation of a Firm Redirect • FERC declined to adopt in this order standards which were previously

adopted. 5. Standards of Conduct - Removal of reference to the Standards of Conduct related

OASIS posting obligations (WEQ-001, WEQ-002, WEQ-003) 6. ATC Narrative - Modifications to NAESB WEQ-001-14.1.3 and WEQ-001-15.1.2

• FERC did not incorporate these standards because the proposed five-business day requirement did not meet FERC’s requirement to post the ATC narrative as soon as feasible.

NAESB WEQ Update

FERC Order 676-H (RM05-5-022)

Other Changes to NAESB WEQ Business Practice Standards :

• Coordinate Interchange Standards (WEQ-004) – make standards consistent with current Electronic Tagging Functional specifications (ndw maintained by NAESB) as well as to incorporate a guideline standardizing the rounding of partial megawatt hours schedules

• Gas/Electric Coordination Standard (WEQ-011) -- modifications to eliminate inconsistencies between definitions used by the NAESB quadrants as well as the NERC Glossary

• Public Key Infrastructure (PKI) Standards (WEQ-012) -- Standard WEQ-012 specifies those transactions for which public utilities need to use PKI. The WEQ-012 standards specify the minimum authentication requirements that end entities must meet when conducting transactions under NAESB Business Practice Standards defined in Standards WEQ-000, WEQ-001, WEQ-002, WEQ-003, WEQ-004 and WEQ-013. This includes the use of PKI in communicating with the Electric Industry Registry (EIR) of commercial transaction information useful for electronic tagging

• Smart Grid Standards (WEQ-016, WEQ-017, WEQ-018, WEQ-019, WEQ-020) -- The NAESB WEQ Version 003 Business Practice Standards include five wholesale business practice standards related to Smart Grid that define use cases, data requirements, and a common model to represent customer energy usage

NAESB WEQ Update FERC Order 676-H (RM05-5-022)

FERC Guidance to NAESB:

• NAESB standards WEQ-001-14.1.3 and WEQ-001-15.1.2 establish the timing requirements for posting Available Transfer Capability narratives and currently set a five business day requirement while encouraging the posting of the narratives within one business day. The Commission has requested that NAESB consider revising the standards to provide for a one-day posting requirement as articulated in FERC Order No. 890.

• NAESB standards WEQ-001-9.5 and WEQ-001-10.5 establish when a transmission customer loses rights to capacity on an original path after requesting a redirect on a firm and non-firm basis. The Commission requested that NAESB revise standards WEQ-001-9.5 and WEQ-001-10.5 and any other standards affected by these standards to be consistent with the Commission’s policy in Dynegy Power Marketing, Inc., 99 FERC ¶ 61,054 (2002) and Entergy Services, Inc., 137 FERC ¶ 61,199 (2011), order on reh’g and compliance, 143 FERC ¶ 61,143 (2013). The Commission also requested that this project be a priority for NAESB.

• NAESB standard WEQ-001-106.2.5 allows transmission providers to refuse a request for terminating secondary network service based on the availability of capacity. The Commission has requested that NAESB revise the standard to clarify when transmission providers may exercise such a refusal.

NAESB WEQ Update FERC Order 676-H (RM05-5-022)

Implementation:

18 Months to implement NITS on OASIS

All other requirements to be implemented by Feb 2, 2015

NAESB WEQ Update

Dynegy Power Marketing, Inc. and Entergy Services, Inc.

As we stated in Entergy Services, Inc., 143 FERC ¶ 61,143, at P 25 & n.68 (2013), our guiding precedent on the issue of when a customer requesting redirect loses rights on the original path was set in Dynegy Power Marketing, Inc., 99 FERC ¶ 61,054, at P 9 (2002), where we held that a transmission customer receiving firm transmission service does not lose its rights to its original path until the redirect request satisfies all of the following criteria: (1) it is accepted by the transmission provider; (2) it is confirmed by the transmission customer; and (3) it passes the conditional reservation deadline under OATT section 13.2.

NAESB WEQ Update

Preemption and Competition (OASIS Subcommittee) – 4th Quarter 2014 Updating standards for displacement of lower priority

requests and reservations when there isn’t enough ATC for all requests

All issues have been reviewed and addressed

Drafting standards language has begun

Planned completion was for end of 2014.

However, standards will need additional revisions to comply with Dynegy/Entergy

Will need substantial additional work by the OASIS Subcommittee

NAESB WEQ Update

Parallel Flow Visualization (BPS) Only for Eastern Interconnection

Utilizes more robust IDC model

Generation and Load data captured every 15 minutes

Intra-BA Non-firm Transmission use of the system will be captured and modeled

Standards have been approved by the BPS and sent to the EC

If approved by the EC they not sent to membership for ratification until after an IDC test is completed.

The IDC Association will modify the IDC software after NAESB finishes the standards (approximately 12 months)

A 12-18 month test will be performed after the IDC software has been modified

NAESB will review standards after the test and make final changes if necessary

NAESB WEQ Update

NERC MOD Standards (BPS) NERC determined parts of the MOD A standards (MODs 001, 004, 008,

028, 029 and 030) were not necessary for reliability Drafted replacement standards (MOD-001-2) Requested NAESB develop standards for commercial aspects of MOD A

standards Filed MOD-001-2 standards with FERC

FERC NOPR issued June 19 in Docket No. RM14-7-000 (Comments due August 25, 2014) FERC proposes to approve Modeling, Data, and Analysis reliability

standard MOD-001-2 as submitted by NERC. FERC seeks comment on the 18-month implementation plan

The NAESB WEQ Executive Committee provided guidance to the WEQ BPS on the scope of the new standards at the August 19 meeting

BPS has begun work and has a target completion date of 2nd quarter 2015

NAESB WEQ Update

WEQ BPS Schedule for remainder of 2014: • October 7, 2014 & October 8, 2014 Face-to-Face Meeting Hosted by MISO in Carmel,

Indiana Deliverable: Review Formal Comments for Parallel Flow Visualization Recommendation. If time permits, begin gap analysis of requirements contained in the work paper provided by the WEQ EC MOD Standard Scoping Task Force.

• October 28, 2014 and October 29, 2014 Face-to-Face Meeting, Hosted by PJM in Valley

Forge, Pennsylvania Deliverable: Begin and/or continue gap analysis of requirements contained in the work paper.

• November 25, 2014 from 9:00 AM Central to 4:00 PM Central Conference Call

Deliverable: Continue gap analysis of requirements contained in the work paper. If time permits, begin review of proposed standards language.

• December 3, 2014 and Thursday, December 4, 2014 Face-to-Face Meeting, TBD

Deliverable: If needed, complete gap analysis of requirements contained in the work paper. Begin and/or continue review of proposed standards language.

Wrap-up

Next Quarterly Stakeholder Meeting

– Thursday, February 12 – 2 p.m. to 3:30 p.m. ET

Customer Suggested Topics?

– This is the forum for discussing emergent topics (Upcoming changes, stakeholder input)

Questions and Comments