IPC’s Energy Imbalance Market OATT Stakeholder Meeting April 3, 2017

Agenda Topic Presenter Welcome and Introduction Tess Park, VP of Power Supply EIM Background, Benefits, and Implementation Milestones Kathy Anderson, Project Co-Lead Key OATT Provisions, Stakeholder Process, Next Steps, and Additional Resources Julia Hilton, Project Co-Lead Comments or questions about IPC’s proposed OATT modifications or today’s presentation can be submitted by emailing them to EIM@idahopower.com through May 5, 2017.

Welcome and Introductions Tess Park

EIM Background, Benefits, and Implementation Milestones Kathy Anderson

Opportunity for Grid Efficiencies Western Balancing Authorities Existing Organized Markets

Western EIM Today A Real-Time Market for participating Balancing Authority Areas in the West CAISO is the non-profit market operator Future EIM Entities include: Balancing Authority of Northern California Seattle City Light Los Angeles Department of Water & Power

What is the western EIM? A voluntary, real-time market that considers load and generation and economically dispatches low-cost resources while taking into account transmission congestion.

What changes in resource planning and utilization? Integrated Resource Planning (20 yrs) Risk Management Process (18 mos ) Monthly Balancing Day-ahead balancing Hour-ahead balancing Real Time (5-15 minute increments) Key change is to real time, intra-hour scheduling and dispatches Additional software and process changes to support real-time operations

Why join the EIM? EIM is good for Reliability, Customers & Renewables Maintains excellent reliability It strengthens reliability through improved real-time grid visibility and coordinated dispatch of resources to avoid congestion. Maximizes low-cost regional resources Lowest cost resources in the EIM are dispatched first (greater footprint = more resource/load variation = lower costs) Improves Renewable Integration Greater resource and load diversity eases balancing the variability of renewable resources EIM is good for Reliability, Customers & Renewables

Are there financial benefits? Energy and Environmental Economics (E3) conducted a study showing financial benefits to Idaho Power’s EIM participation The study showed modest positive annual savings $4.1-5.1M gross benefits Approx $15M start-up costs IPUC approved accounting treatment that will allow Idaho Power to defer the costs of joining until benefits are received.

How does the EIM work? Market Operator Load Data Full Network Model Hourly Resource Plan 15-Minute Schedule 5-Minute Dispatch Instructions Energy Bid Range Schedules (Base & Interchange) Forecasts (Demand and VER) Transmission Limits Outages (Generation & Transmission) Resource Ramping Capability

Continual Information Exchange 15-minute dispatch intervals (4.5 hour look-ahead) T-75: Base schedules and energy bids due T-55: Updated base schedules submitted T-20: E-tagging deadline T (T = start of the hour) Market Participants T-40: Final opportunity to submit base schedules X:00 X:15 X:30 X:45 Y:00 5-minute dispatch intervals (65-minute look-ahead) T-22.5: 15-minute scheduled awards published T-37.5: Start of Market 1 optimization Market Operator T-45: Results of sufficiency test published T-60: Results of sufficiency test published Resource sufficiency tests: Balanced load and generation? Free of congestion? Sufficient ramping capability?

Project Overview and Timeline IPC will join the EIM on April 4, 2018 Implementation Agreement April 2016 Stakeholder Processes March 2017 – June 2017 Systems Testing March 2017 – November 2017 Market Simulation December 2017 Market Entry April 2018

What does this mean to you? Regulatory Tariff Changes and Readiness Certification to participate in the Western EIM Scheduling & Forecasting Importance of Base Schedules in the EIM Timing and content of forecasting and data requirements Outage Coordination Planned Outages Unplanned Outages and De-rates Accurate reporting and timely communications Metering Compatibility Metering changes to ensure compliance with CAISO metering requirements Parallel Operations & Go Live Prior to market participation (April 2018), extensive testing and parallel operations will take place Billing & Settlements New EIM-related charges

Key OATT Provisions, Stakeholder Process, Next Steps, and Additional Resources Julia Hilton

Tariff Revisions Most of IPC’s OATT provisions will not change. There will be changes in the following areas: Timing and content of forecasting and data requirements Price at which imbalance and losses are settled Most changes will be located in the new Attachment O to IPC’s OATT. Other notable changes are located in: Part I: Definitions Schedule 1A: EIM Administrative Service Schedules 4, 4A, 10, 10A: Imbalance Services Schedule 12: Real Power Losses

Defining Key Terms EIM Entity Balancing Authority that represents one or more EIM Transmission Service Providers and that enters into an EIM Entity Agreement with CAISO to enable the operation of the Real-Time Market in its Balancing Authority Area EIM Entity Owner, operator, or seller of energy from a resource that elects to participate in the Real-Time Market and enters into a EIM PR Agreement under which it is responsible for meeting requirements of Section 29 of the CAISO Tariff Participating Resources A resource in an EIM Entity’s BAA that is not a participating resource Non-Participating Resources

Participating Resource Eligibility May elect to participate in EIM as a Participating Resource The resource must be associated with qualified transmission service Resources inside IPC’s BAA (Att. O § 3.1) May participate in the EIM as a Participating Resource Requires a pseudo-tie into the IPC BAA Obtains firm transmission to an IPC boundary equal to the amount of energy that will be dynamically transferred The resource must follow IPC Business Practices relating to pseudo-ties and upcoming EIM Business Practices Resources outside IPC’s BAA (Att. O § 3.2)

Scheduling and Forecasting Currently Penalties for over- and under-scheduling Within the EIM EIM charges caused by scheduling errors will shift to the entity that made the scheduling errors Submitted by all transmission customers to the IPC EIM Entity Used to balance loads and resources within the BA Also used as a baseline for settlements

Forecast and Schedule Timing Forecast submittal for service is required at T-7 days Must update forecast at least once by T-1 day Forecasts serve to support market functions, but are not financially binding until base schedule submission (T-77 min) Forecast Submittal Final base schedule submission at T-77 minutes Modifications are accepted up to T-57 minutes Base Schedule Submittal Transmission customers have full access to purchased transmission rights past base schedule submission; however, modifications are settled as imbalance at the respective LMPs Adjustments After Base Schedule Submits

Pricing Proxy for EIS and GIS OATT Schedules 4 (Energy Imbalance) & 10 (Generator Imbalance) Currently: Mid-C Powerdex The Mid-C hourly price published by Powerdex is used to calculate imbalance charges and penalty tiers are applied. As reflected in Schedules 4A and 10A, Mid-C pricing will remain in place if IPC is not participating in the EIM or if the EIM is suspended. Within the EIM: LMP and LAP Imbalance pricing in the EIM is aligned with the geographic footprint of the EIM. No penalty tiers are applied. Generation and E-tag changes settle at LMP Locational Marginal Price (LMP): The marginal cost of serving the next increment of demand at a particular node, consistent with transmission constraints Load Changes Settle at LAP Load Aggregation Point (LAP): The weighted average of all LMPs in IPC’s BAA. Schedule 4 applies to load, Schedule 10 applies to non-participating resources.

Real Power Losses Currently OATT §§ 15.7, 28.5 Transmission Customers are responsible for replacing losses on scheduled energy In-kind or financial settlement, based on loss factors Within the EIM OATT §§ 15.7, 28.5, Sch. 12 Transmission Customers remain responsible for losses Financial settlement only Loss factors remain for NITS, Firm or Non-Firm Point-to Point LAP price for Schedules 4 (Energy Imbalance Service) and 10 (Generator Imbalance Service)

Settlement Statements CAISO will invoice IPC weekly; IPC will then allocate charges to Transmission customers. Charges will include: Schedule 1A EIM Administrative Services Schedule 4 Energy Imbalance Schedule 10 Generation Imbalance Schedule 12 Losses Other EIM charges, e.g. uplift Western EIM pricing reflects competitive, real-time energy market costs

Stakeholder Process Timeline Activity Date Announcement of Stakeholder Process March 8, 2017 Post OATT Revisions on OASIS First Comment Period March 8 – March 28, 2017 First OATT Stakeholder Meeting April 3, 2017 Second Comment Period April 3 – May 5, 2017 Second Stakeholder Meeting May 12, 2017 Third Comment Period May 12 – June 12, 2017 Post Responses to Stakeholder Comments July 12, 2017 File OATT with FERC August 3, 2017 Please submit questions to EIM@idahopower.com

EIM Information on OASIS

Additional EIM Resources CAISO site for EIM participation http://www.caiso.com/participate/Pages/EnergyImbalanceMarket/Default.aspx CAISO EIM Computer-based training (CBT) http://www.caiso.com/participate/Pages/Training/default.aspx Introduction to the EIM How the EIM works EIM Business Practice Manuals https://bpmcm.caiso.com/Pages/BPMLibrary.aspx Includes readiness criteria