1 COMPETITIVE EXAMPLE #1: - LSE charged $50 for Day-Ahead Energy - DRP paid $75 for PDR - Customers pay retail (R) or contract (C) rate for energy use DRP = 3rd Party Customer Pays LSE for Day-Ahead Energy Competitive Effect = Neutral IOU-LSE Pays ISO $50 ESP Pays ISO $50 BC Pays R DAC Pays C

2 COMPETITIVE EXAMPLE #2: - LSE charged $50 for Day-Ahead Energy - DRP paid $75 for PDR - Customers pay retail (R) or contract (C) rate for energy use IOU-LSE Pays ISO $50 ESP Pays ISO $50 BC Pays $0 DAC Pays C DRP = 3rd Party DAC Pays ESP IOU Costs Spread to Bundled Competitive Effect = IOU Advantage; DAC/ESP Disadvantaged IOU-LSE Recovers From All B

3 COMPETITIVE EXAMPLE #3: - LSE charged $50 for Day-Ahead Power - DRP paid $75 for PDR - Customers pay retail (R) or contract (C) rate for energy use IOU-LSE Pays ISO $50 ESP Pays ISO $50 B-PDR Pays $0 E DAC-PDR Pays C DRP = 3rd Party DAC Pays ESP IOU Costs Spread to All Customers Competitive Effect = IOU Advantage; DAC/ESP Disadvantaged IOU-LSE Recovers E From B+DAC DACs Pay Spread Costs Bs Pay Spread Costs DAC-PDR Pays Spread Costs B-PDR Pays Spread Costs

4 COMPETITIVE EXAMPLE #4: - LSE charged $50 for Day-Ahead Power - DRP paid $75 for PDR - Customers pay retail (R) or contract (C) rate for energy use IOU-LSE Pays ISO $50 ESP Pays ISO $50 B-PDR Pays IOU-LSE $0 E DAC-PDR Pays ESP C DRP = IOU DAC Pays ESP IOU Costs Spread to All Customers Competitive Effect = IOU Advantage; DAC/ESP/DRPs Disadvantaged IOU-LSE Recovers E From B+DAC IOU-DRP Recovers Op Costs From B+DAC CAISO Pays IOU-DRP $75 IOU-DRP Pays PDR Customers DACs Pay Spread Costs Bs Pay Spread Costs DAC-PDR Pays Spread Costs B-PDR Pays Spread Costs B-PDR Pays Spread Costs DAC-PDR Pays Spread Costs