Western Regulation Usage and Pilot Program Results 1

Regulation Usage Real Time Load/Resource Balancing Real Time Load/Resource Balancing Frequency Response Frequency Response Net Interchange Deviations Net Interchange Deviations Maintain Uniform Ramp rates for Generation Dispatch and Net Interchange Schedule Changes Maintain Uniform Ramp rates for Generation Dispatch and Net Interchange Schedule Changes Inadvertent Payback Inadvertent Payback COI Mitigation (initial response) COI Mitigation (initial response) BA Supplemental Regulation BA Supplemental Regulation Time Error Correction Time Error Correction 2

Regulation Users SNR Operations SNR Operations SNR Merchant SNR Merchant SNR LSE’s SNR LSE’s Host BA (SMUD now BANC) Host BA (SMUD now BANC) WECC Interconnected Utilities WECC Interconnected Utilities 3

Regulation Refresher Generating Units are set up to Receive Signals From an EMS AGC placed on Regulation. Generating Units are set up to Receive Signals From an EMS AGC placed on Regulation. WASN Provides 27 MW of Regulation for LSE Control Performance and another 33 MW’s to manage SBA Control Performance Requirements which equates to 60 MW’s of Regulation in the Up and Down Direction. WASN Provides 27 MW of Regulation for LSE Control Performance and another 33 MW’s to manage SBA Control Performance Requirements which equates to 60 MW’s of Regulation in the Up and Down Direction. Inadvertent payback is limited to 10 MW (+) or (-). Inadvertent payback is limited to 10 MW (+) or (-). Transmission loss forecast errors vary, but can be anywhere from 10 MW to as much as 50 MW. This Variance is Normally Driven by Market Conditions Transmission loss forecast errors vary, but can be anywhere from 10 MW to as much as 50 MW. This Variance is Normally Driven by Market Conditions 4

Regulation Reduction Pilot Test Conclusions The Pilot Test Provided Enough Data to Support the Reduction of Regulating Margins During Certain Timeframes and Western’s Ability to Maintain Reliable Operation of the Western SBA The Test Also Indicated that the Requirements for Regulation are not Flat and Vary With System Conditions 5

Regulation Reduction Pilot Test Conclusions The Pilot Test Results and Supplemental Studies by Operations Indicate that There are Additional Hours Where Regulation May be Reduced and Still Maintain Reliable Operation of the Western SBA The Pilot Test Results and Supplemental Studies by Operations Indicate that There are Additional Hours Where Regulation May be Reduced and Still Maintain Reliable Operation of the Western SBA Western Will Coordinate with the USBR to Examine Those Hours and Times When this May be Possible Western Will Coordinate with the USBR to Examine Those Hours and Times When this May be Possible 6

Future Regulation Pilot Test Propose Another Pilot Test Beginning on or about Oct. 1, 2011 Propose Another Pilot Test Beginning on or about Oct. 1, 2011 Test to Include a Reduction in Up and Down Regulation Test to Include a Reduction in Up and Down Regulation Test to Run for Approximately 180 Days, Concluding on or about March 31, 2012 Test to Run for Approximately 180 Days, Concluding on or about March 31, 2012 Western Will use 60 MW of Up and Down Regulation as the Base Requirement Western Will use 60 MW of Up and Down Regulation as the Base Requirement Test Will Use Varying Levels of Reduced Up and Down Regulation. Test Will Use Varying Levels of Reduced Up and Down Regulation. 7

Regulation Usage Studies Operations Examined SBA Regulation Usage for the 2010 Calendar Year Including the Pilot Test Period Operations Examined SBA Regulation Usage for the 2010 Calendar Year Including the Pilot Test Period All 8760 Hours Were Sampled Each Hour Was Polled Twice Producing Over 16,000 Snapshots Each Snapshot has a Minimum of 10 Data Points All 8760 Hours Were Sampled Each Hour Was Polled Twice Producing Over 16,000 Snapshots Each Snapshot has a Minimum of 10 Data Points Operations Also Examined SBA Performance on an Hourly basis for 2010 Producing 8760 Data Points Operations Also Examined SBA Performance on an Hourly basis for 2010 Producing 8760 Data Points 8

Regulation Usage Studies Data SBA NIA SBA NIA SBA NIS SBA NIS CVP Gen Scheduled CVP Gen Scheduled CVP Gen Actual CVP Gen Actual CVP Gen Set Point CVP Gen Set Point SBA Load SBA Load Hourly Load Change Hourly Load Change Hourly Tie Change Hourly Tie Change Hourly Gen Change Hourly Gen Change LSE Hourly Deviation LSE Hourly Deviation SBA Losses SBA Losses 9

Preliminary Study Results Regulation Requirements are Reduced during the Late Fall, Winter and Early Spring Regulation Requirements are Reduced during the Late Fall, Winter and Early Spring Regulation Requirements Increase during the Warmer Months Regulation Requirements Increase during the Warmer Months 10

Preliminary Study Results More than 40 MW of Down Regulation was Used in 254 Hours More than 40 MW of Down Regulation was Used in 254 Hours More than 40 MW of Up Regulation was Used in 300 Hours More than 40 MW of Up Regulation was Used in 300 Hours The SBA used 60 MW of Down Regulation in 53 Hours The SBA used 60 MW of Down Regulation in 53 Hours The SBA used 60 MW of Up Regulation in 35 Hours The SBA used 60 MW of Up Regulation in 35 Hours 11

Peak Day Study Results August 25, 2010 SBA Load :45 SBA Load :45 SBA Load :15 SBA Load :15 SBA Peak Load 1520 Approx. 17:00 SBA Peak Load 1520 Approx. 17:00 SBA NIA 140 MW (Net Exporter) SBA NIA 140 MW (Net Exporter) SBA NIS 130 MW (Net Exporter) SBA NIS 130 MW (Net Exporter) CVP Gen Scheduled 1169 MW CVP Gen Scheduled 1169 MW CVP Gen Actual 1199 MW CVP Gen Actual 1199 MW LSE Deviation -1 MW (Coming to the SBA) LSE Deviation -1 MW (Coming to the SBA) 12

Peak Day Study Results August 25, 2010 LSE Total Deviation for the Day -125 MWH (Delivered to the SBA) LSE Total Deviation for the Day -125 MWH (Delivered to the SBA) LSE Average Deviation for the Day MWH (Delivered to the SBA) LSE Average Deviation for the Day MWH (Delivered to the SBA) LSE Hourly Peak Deviation for the day -16 MWH (Delivered to the SBA) LSE Hourly Peak Deviation for the day -16 MWH (Delivered to the SBA) 13

Peak Day Study Results August 25, 2010 SBA Daily Scheduling Delta 385 MWH (Delivered from the SBA) SBA Daily Scheduling Delta 385 MWH (Delivered from the SBA) SBA Hourly Average Scheduling Delta 16 MWH (Delivered From the SBA) SBA Hourly Average Scheduling Delta 16 MWH (Delivered From the SBA) SBA Peak Hourly Scheduling Delta 39 MWH (Delivered From the SBA) SBA Peak Hourly Scheduling Delta 39 MWH (Delivered From the SBA) 14

Monthly Study Results August 2010 LSE Maximum Daily Deviation 205 MWH (Delivered From the SBA) LSE Maximum Daily Deviation 205 MWH (Delivered From the SBA) LSE Maximum Daily Deviation -144 MWH (Delivered to the SBA) LSE Maximum Daily Deviation -144 MWH (Delivered to the SBA) LSE Maximum Hourly Deviation 33 MWH (Delivered from the SBA) LSE Maximum Hourly Deviation 33 MWH (Delivered from the SBA) LSE Maximum Hourly Deviation -23 MWH (Delivered to the SBA) LSE Maximum Hourly Deviation -23 MWH (Delivered to the SBA) LSEs out of Bandwidth 1 hour on 8/21 33 MWH LSEs out of Bandwidth 1 hour on 8/21 33 MWH 15

Preliminary Study Conclusions Initial Data Suggests that that Loss Forecast Error and Net Interchange Deviations (Exports) Require More Detailed Analysis Initial Data Suggests that that Loss Forecast Error and Net Interchange Deviations (Exports) Require More Detailed Analysis Regulation Usage Patterns are Seasonal Regulation Usage Patterns are Seasonal LSE Deviation (Regulation Usage) is Relatively Neutral, Both + and – LSE Deviation (Regulation Usage) is Relatively Neutral, Both + and – There is opportunity to reduce the Amount of Regulation Necessary to Maintain Reliability There is opportunity to reduce the Amount of Regulation Necessary to Maintain Reliability 16

Next Steps Analyze the Large Volume of Data in More Detail Analyze the Large Volume of Data in More Detail Incorporate the Lessons Learned From the Regulation Pilot Test into SNR Daily Operations and the Next Proposed Pilot Test Incorporate the Lessons Learned From the Regulation Pilot Test into SNR Daily Operations and the Next Proposed Pilot Test GOAL: Reliably Reduce SBA Regulation Requirements in Both the Up and Down Direction GOAL: Reliably Reduce SBA Regulation Requirements in Both the Up and Down Direction 17