Evolution of the ISO Power Markets Steve Berberich Vice President of Technology and Corporate Services and Chief Financial Officer PANC Meeting November 3, 2009

The new market is performing relatively well A new nodal wholesale market went live on April 1, 2009 Transition was smoother than expected but there were issues: Exceptional Dispatch Volatility in the Real Time Market Periodic system failures The systems have now been through three seasons Shoulder months have strained ramping Summer peak was about 46,000 MW

Now that the new market is in, we have several critical initiatives that are “in the plan” Capability Planned Deployment Payment Acceleration November 1, 2010 Scarcity pricing Proxy demand resource Procurement of ancillary services in HASP April 1, 2010 Multi-stage generator modeling Convergence bidding Refinements to participating load February 1, 2011 We’ll need to talk about the message on this slide. I’ve tried to pull out the program, deployment date, and risk.

There are also several initiatives that are anticipated Market efficiency enhancements Auctions for long term congestion revenue rights Increased granularity of default load aggregation points Renewable integration support Changes to ancillary services products and markets Resource adequacy program enhancements Promote demand response Leverage smart grid technologies Enable storage technologies

Renewable integration is going to dominate the landscape as far as the eye can see. 2000 MW ramp down 2000 MW ramp down and then 2000 MW ramp up

So, what are we going to do?? Work together A principals group has been created Collaborate on technologies and technology deployment Create a road map demonstrating a few key scenarios High wind High solar Combinations Deploy market products Encourage technologies Demand Response Storage