ISO Grid Planning Presentation to CREPC October 1, 2002 Armando J. Perez Director of Grid Planning California ISO

Presentation Contents Components of ISO Grid Expansion Plan General Planning Process Transmission Projects Generation Projects Policy and Coordination Transmission Cost Recovery

ISO Grid Plan Components SDG&E PG&E SCE Transmission Expansion Plan Special Focused Plans New Generator Interconnection Plans ISO Controlled Grid Plan ISO Grid Plan Components Reliability Must-Run Generation Studies

General Planning Process Stakeholder Input Develop Study Plan Agree on Assumptions Refine Models to Simulate Grid (i.e., Power flow and stability) Run Simulations – Normal and Outage Conditions Compare Results with Planning Standards Develop Preliminary Projects and Draft Report Complete Final Report with Recommended Projects Projects Over $20 Million Require ISO Board Approval

Economic & Reliability Benefits Almost All Projects have both Reliability and Economic Benefits and may be justified from either or both perspectives. Reliability Benefits - Primarily based on complying with Planning Standards resulting in fewer, shorter, and less widespread outages. Economic Benefits – Reduction in the cost of power to ratepayers (access to lower cost resources and mitigation of market power).

Project Development Process Determine Project Need Determine Best Transmission Solution Conduct Competitive Solicitation Need methodology to compare projects with different time frames and benefits. Need a means for rate recovery of non-transmission expenses. Approve Best Project

Minimum Level of Reliability is Specified in Planning Standards

Transmission Projects 255 Projects Approved Since ISO Formation $1.74 Billion 145 Already In-service Generator interconnections not included 60+ Additional Projects Currently Under Study

Major Approved Projects Path 15 Valley-Rainbow = New 500 kV Project X - Metcalf X - Tracy X - Tesla X - Midway X – Imperial Valley X = New 500/230 kV Transformer Jefferson-Martin Tri-Valley Northeast San Jose Miguel-Mission San Luis Rey = New 230 kV Project

Generation Projects 225 Projects have been Followed by ISO 42 Projects On-line (6000+ MW) 71 Projects in Planning, Permitting or Construction (26,000+ MW) 112 Projects Cancelled or Placed on Hold (33,000+ MW)

Proposed New Generation 18 Projects MW 17 Projects 25 Projects 8 Projects 3 Projects Year

Policy and Coordination Policy – In various forums, we develop standards, procedures, methodologies, requirements, new organizations, etc. Continental Level – NERC & FERC Western Interconnection Level – WECC, CREPC & SSG ISO Level – Stakeholder Groups Coordination - Our planned changes will affect the entire interconnection and vice versa. All changes require some level of coordination.

Transmission Cost Recovery High Voltage Access Charge 200 kV and above Eventually Grid-wide 10 year transition period Grid-wide for new facilities Low Voltage Access Charge Below 200 kV Initially 3 TAC Areas (Northern, East Central, Southern) Wheeling Out Charge Offsets access charge

Questions ?