Updates on Energy Imbalance Market in the West, and CAISO Outage Management System Presentation to WECC Market Interface Committee March 24, 2015 Jim Price, Senior Advisor, Market Development & Analysis, CAISO

Update on Outage Management System (OMS) Affects entities with reporting obligations to CAISO Purposes include management of increasing numbers of outage requests, management of complex outages, process efficiency, detailed reporting For more detail: http://www.caiso.com/market/Pages/OutageManagement/Default.aspx Effective date 2/26/2014 for market participants ISO completed the migration of all users Historical data remained in SLIC on read-only basis

Update on Energy Imbalance Market Previous MIC briefings presented details of Energy Imbalance Market: 7/2013, 10/2013, 3/2014, 7/2014, 10/2014 Status of Energy Imbalance Market Implementation: Full operation with PacifiCorp: 11/1/2014 Benefits analysis confirms pre-implementation study NV Energy operational 10/1/2015 NVE filed their OATT revisions 3/6/2015 Puget Sound Energy operational 10/1/2016 Phase 1 EIM Enhancements proposal to Board: 3/26/2015 EIM Transitional Committee stakeholder process on EIM governance Issued issue paper 1/5/2015 and straw proposal 3/19 Next meeting: 3/31

Energy Imbalance Market offers real-time market functions to broader region Builds on existing market: automated dispatch resolves imbalance & avoids congestion Situational awareness enhances reliability No critical mass required, and no exit fees Easily scalable, low-cost, low risk option for new participants Preserves BAA autonomy, including compliance, balancing, and reserve obligations

15-minute transfers between PacifiCorp and ISO

EIM is projected to provide significant net benefits ISO/ PacifiCorp study (in millions) NV Energy study on incremental benefits (in millions) Puget Sound Energy study on incremental benefits Annual benefits $21.4 - $129.0 $9.0 - $18.0 (2017) $15.0 - $29.0 (2022) $21.8 - $24.3 (sub-hourly dispatch & flexibility reserve) Start-up costs approx. $20.0 ($2.5 to ISO) approx. $11.20 ($1.10 to ISO) approx. $14.2 Annual on-going costs approx. $3.00 ($1.35 to ISO) approx. $2.60 ($0.75 to ISO) approx. $3.5 Benefits tracking will include savings from: Reduced flexibility reserves Re-optimization in real-time with least cost generation Reduced renewable energy curtailment by leveraging geographical diversity of loads and resources in the market footprint

Method of calculating actual benefits COMPARE: Cost of the EIM optimized dispatch Transfers in15 minute market Excludes benefits from 5 min. market and flexible ramping TO: Counterfactual cost of dispatch without EIM optimization Without intra-hour transfers between PacifiCorp and ISO that would not occur but for the EIM.

Results for 4th Quarter 2014 are consistent with pre-implementation benefit analysis and are reasonable BAA November December Total ISO $0.65 $0.59 $1.24 PACE $1.05 $1.26 $2.31 PACW $1.39 $1.03 $2.42 $3.09 $2.88 $5.97 Benefits reflect: More efficient dispatch, both inter and intra-regional in the 15-minute market Reduced renewable energy economic or manual curtailment Subsequent reports will quantify the reduced flexibility reserves needed by both BAAs and 5-minute dispatch benefits

EIM prices stabilized after November 14 15-minute Market Aggregate Price, PAC West 15-minute Market Aggregate Price, PAC East Waiver effective Waiver effective

Main causes for MW undersupply infeasibilities Outages, derates/rerates management Timely informing the market about out-of-market actions impacting energy balance Wind forecast accuracy and managing wind deviations Data and software issues Within the hour interchange schedule variations Load forecast variation and load biasing coordination Network and resources model discrepancies 5 minute rate of change constraint on some BPA transmission interfaces Waiver of pricing rules lets prices be set by economic bids rather than constraint violations – effective 11/14/2014 through refund date for continuing FERC process to examine these transitional issues

EIM year one enhancements are proposed for Board approval March 26 Management of EIM Transfers and Intertie Scheduling Limits GHG flag and cost based bid adder EIM administrative charge redesign Administrative pricing rules Flexible ramping constraint BAA combinations Settlement rules for non-participating resources Phase 2 effort will consider transmission usage charges plus other enhancements

Governance proposal is designed to give regional entities a voice in decision-making 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Organize sectors nomination/ranking Issue paper issued 1/5/2015, Straw Proposal issued 3/19, Next meeting 3/31 Board decision & committee start-up Transitional Committee is an advisory committee to ISO Board 11-12 members Open meeting policy Advise on early operational phase of EIM Develop long-term EIM governance proposal Long term governance structure Stakeholder process Board approval of governance proposal

Resources available for EIM CBT - Introduction to the Energy Imbalance Market This Computer Based Training provides a high level overview of the Energy Imbalance Market http://content.caiso.com/training/Introduction%20to%20EIM/My%20Articulate%20Projects/Introduction%20to%20the%20Energy%20Imbalance%20Market/player.html CBT - How the Energy Imbalance Market Works – This Computer Based Training describes the roles and responsibilities of the key players in EIM and the business processes that will take place. http://content.caiso.com/training/HowEIMWorks/player.html EIM Stakeholder processes http://www.caiso.com/informed/Pages/StakeholderProcesses/EnergyImbalanceMarket.aspx EIM Business Process Manual http://bpmcm.caiso.com/Pages/BPMDetails.aspx?BPM=Energy Imbalance Market

EIM is operational and producing intended benefits for customers