1 WECC/AESO Membership and Coordinating Operating Agreement WECC Board of Directors Meeting December 2007 Diana Pommen Director Interjurisdictional Affairs Alberta Electric System Operator

2 Partnership with WECC AESO is an active member in and supporter of WECC AESO values the collaborative synergies and enhanced system reliability created by working with the WECC and WECC members AESO and WECC are currently parties to Canadian version of RMS Agreement Proposed WECC/AESO Membership and Coordinating Operating Agreement (Agreement) expected to establish a mutually acceptable business relationship working together in the new and evolving North American MRS environment

3 Alberta Reliability Framework Alberta Department of Energy creates policy and legislation to support reliability of the Alberta interconnected electric system AESO ensures reliability of AIES; plans transmission facilities to meet the needs of load and generation; monitors compliance with Alberta Standards and rules The Market Surveillance Administrator performs the prosecution function of Alberta entities as may be required Alberta Energy and Utilities Board regulates the electric industry and approves Alberta Standards Alberta Framework does not align well with NERC Functional Model – AESO not a Registered Entity

4 Key Objectives of WECC/AESO Operating Agreement – AESO Perspective Create a relationship that supports a North America-wide implementation of a substantially common set of reliability standards Set out and clarify the unique member relationship between the AESO and the WECC AESO will continue as a Class 1 member for all activities excluding election of Canadian members to the Board of Directors (Class 6 in this case) AESO will participate in the activities of WECC within the constraints of being a non-FERC jurisdictional entity AESO will abide by WECC Bylaws unless there is a conflict with Alberta applicable laws Acknowledge WECCs role as the Regional Entity in the US and align with Albertas jurisdictional authority Outline for WECC an external review role of AESO operations related to Alberta-approved reliability standards Does not delegate Alberta authorities to the WECC

5 Key Sections – Process for Making Standards in Alberta Alberta has defined through legislation a process for the approval of standards –AESO must consult with affected stakeholders –AESO provides technical expertise and analysis of standards –AESO may recommend to the Alberta regulator, approval of a NERC/WECC standard without changes or may propose amendments to a NERC/WECC standard (i.e. Alberta variance) –AESO will implement Alberta regulator-approved NERC/WECC standards As Alberta Standards are made which address the same subject matter as a standard in the RMS Agreement, the RMS Agreement should be amended to delete standards

6 Key Sections – Compliance Monitoring in Alberta The compliance monitoring program developed for Alberta may not mirror the WECC compliance program AESO will perform a compliance monitoring function for all applicable Alberta entities WECC to monitor AESO compliance with Alberta- approved reliability standards Will work together in good faith Alberta regulator has the authority to levy penalties or sanctions against the AESO

7 Key Sections – Compliance Enforcement in Alberta While the AESO monitors Alberta entities, the decision to render penalties or sanctions rests with the Alberta regulator A separate body in Alberta will perform the prosecution function of Alberta entities as may be required Alberta legislation requires that penalty dollars related to non-compliance remain in Alberta Any penalty dollars that may be assessed (and verified) to the AESO related to non-compliance with an Alberta- approved Standard applicable to a WECC reserve sharing group would remain in Alberta

8 Key Sections – Fee Structure AESO will pay its portion of WECC fees based on NEL Alberta eligible for a credit for the compliance monitoring and enforcement programs that are the responsibility of/and conducted by AB entities, as WECC or NERC are not incurring costs to perform those functions

9 Key Sections – Data Collection and Information AESO will collect data and information from Alberta entities AESO will forward data to WECC WECC can provide summary Alberta data to NERC as may be required FERC directives to NERC/WECC for the collection of data are not applicable in Alberta –However AESO may provide such data to WECC

10 Timelines and Next Steps Draft Agreement sent to the WECC – November 07 AESO / WECC meeting - December 10 th 07 AESO / WECC negotiations completed – March 08 Agreement provided to WECC Board of Directors for consideration and approval – April 08 Board meeting AESO will then file the Agreement for EUB approval – April 08 Agreement signed by AESO and WECC - ~ Q3 08 AESO develops a Compliance Monitoring and Enforcement Program – ~ Q4 08

11 Discussion and Questions