EIM/EDT Update ColumbiaGrid Planning Meeting June 2, 2011

SCED EIM  Security Constrained Economic Dispatch (SCED) is: “the operation of generation facilities to produce energy at the lowest cost to reliably serve consumers, recognizing any operational limits of generation and transmission facilities.” ( FERC September 30, 2005)  Energy Imbalance Market (EIM) is: The operation of generation facilities to produce energy, at the lowest cost to reliably serve consumers, to account for the differences (including economic dispatch) between scheduled and actual loads and generation, recognizing operational limits of generation and transmission.  Efficient Dispatch Toolkit (EDT) includes the EIM and an Enhanced Curtailment Calculator (ECC) to redispatch generation to relieve transmission constraints.

Current Process Components  WECC Efficient Dispatch Toolkit Steering Committee (“EDTSC”) - Guidance and Oversight of EDTTRS  WECC EDT Technical Review Subcommittee (“EDTTRS”) - Benefit and Cost Analyses - Risk Assessments  WECC Market Interface Committee (“MIC”) - Guidance and Oversight of SIS  WECC Seams Issues Subcommittee (“SIS”) - Tariff issues and EIM structures white-paper  Crossroads – Western Interstate Energy Board - Coordinating information needed to determine next steps  Vehicle for Designing & Developing EIM beyond Crossroads & EDTSC/EDTTRS is yet to be determined

Timeline  March 7, 8 – Crossroads Stakeholder Workshop  March 16 - Phase 1 Benefits distributed to WECC BOD  March 31 - Cost analysis completed  April 1 - Phase 2 Benefits scope posted for comments  April 7 – Third Stakeholder Workshop, Cost analysis results and Phase 1 Benefits results  April 22 – Finalize Phase 2 Scope  June 22 – Distribute Phase 2 Benefits Results to WECC Board  Post June 22 – Individual BAs to evaluate individual costs/benefits  June and Beyond - Individual BAs to decide whether to proceed with EIM or not

WECC June Board Meeting  Phase 2 Benefits to be Distributed and Discussed  Cost Analysis Results to be Discussed  Risk Assessment Work Plan to be Presented - Risks to WECC of potentially being the Market Operator - Risks to WECC Region of implementing an EIM  WECC Staff not seeking any Board action or approvals regarding WECC Members supporting or rejecting EIM

Benefit Analysis EDTTRS ( - “EDT Results”)  Hour-Ahead Economic Dispatch as Proxy for EIM  Four Cases – 2006 and 2020, Benchmark and EIM Cases  Two Phases – Phase 1 fewer zones, calibrate model; Phase 2 more zones, fine-tune model, more sensitivity analyses  Phase 1 Results EIM $100 Million in dispatch savings EIM $235 Million in dispatch savings - Most of dispatch savings result from coordinated procurement of Reserves (i.e. economic procurement)  Phase 2 Analysis – - Results to be presented at June 22 WECC Board Meeting - Phase 2 benefits expected to be less than Phase 1

Cost Analysis - Results EDTTRS  Capital Costs to Establish a Market Operator - $19 Million to $163 Million  Pre-Operational Costs to Establish a Market Operator – $7 Million to $57 Million  Operational Costs of a Market Operator – $33 Million to $127 Million  Market Operator FTEs – 86 to 316 Total Staff

Cost Analysis – Results EDTTRS (Continued)  Generic BA Individual Costs in Addition to Market Operator Costs (costs are not applicable to specific BA situations) – Capital per BA - $1.2 Million to $3.5 Million Operational Cost per BA - $1.4 Million to $3.9 Million

EIM Process Cycle  Requirements Phase – 1 to 1.5 years  Development Phase – 1.5 to 2 years  Testing & Trials Phase – 1 to 1.5 years  TOTAL – 3.5 to 5 years

NEXT STEPS  Phase II Benefit Results – June 22  Individual BAs determine their own costs/benefits  Individual BAs decide to proceed or not with an EIM  Coalition of willing BAs determine ‘vehicle’ for advancing the development of an EIM