Iberdrola Renewables Power Resource Scheduling Juan C Cartagena Manager, Power Resource Scheduling May 11th, 2010 Elk River Wind Power Project, Kansas

52% About Us: Iberdrola Group Generation Capacity (52% emissions-free) More than 43,300 MWs of installed capacity 108-year history with roots in hydroelectric Generation Capacity (52% emissions-free) Leading wind producer worldwide with 10 GW installed, 58.4 GW pipeline Traditional Thermal 18% Hydro 23% Installed wind represents 1/12 of the world’s total capacity 33,000 employees in 40 countries Gas Mexico 12% 52% Nuclear 8% One of the lowest CO2 emissions levels in the electricity sector Renewables 21% Strategic focus on US, UK, Latin America and Spain Gas 19% Updated Feb. 24, 2010

A collection of exceptional assets Iberdrola Renewables: North American Business A collection of exceptional assets #2 developer in the U.S. with nearly 3.6 GWs (1,311 MWs of wind started up in 2009) U.S. represents 1/3 of earnings 24.5 GWs of wind development pipeline is in the U.S. 826 employees in 28 U.S. states, DC, India and Canada Wind Power Gas 621 MW of CCGT & peaking capacity on the strategic CA-OR border 1,311 MW in‘09 521 MW CCGT 100 MW peaking 155 BCF Owned & Contracted 155 BCF of owned & contracted natural gas storage positioned for a volatile future Updated Feb. 23, 2010

North American Asset Portfolio Wind projects owned or controlled Gas storage owned Thermal generation Biomass cogeneration Updated March 1. 2010

Western Wind Assets WESTERN REGION 162 MW Operating wind projects Hay Canyon 100.8 MW Big Horn 199.5 MW Stateline 300 MW Klondike 24 MW Klondike II 75 MW Pebble Springs 98.7 MW Klondike III 223.6 MW Pleasant Valley 144 MW Klondike IIIa 76.5 MW Star Point 60.9 MW WESTERN REGION High Winds 162 MW Twin Buttes 75 MW Shiloh 150 MW Colorado Green 81 MW (162 MW Project) Dry Lake 63 MW Mountain View III 22.44 MW Dillon 45 MW Operating wind projects Updated :January 25, 2010

Mid-Continent Wind Assets Rugby 149.1 MW Moraine 51 MW Moraine II 49.5 MW MinnDakota 150 MW Trimont 101 MW Buffalo Ridge 50.4 MW Top of Iowa II 80 MW Elm Creek 99 MW Barton 160 MW Flying Cloud 43.5 MW Streator Cayuga Ridge 300 MW Winnebago 20 MW Farmers City 146 MW Providence Heights 72 MW Elk River 150 MW Barton Chapel 120 MW MID-CONTINENT REGION Penascal 202 MW Operating wind projects Updated March 1, 2010

Northeast Wind Assets NORTHEAST REGION Operating wind projects Maple Ridge II 45.4 MW (91 MW Project) Maple Ridge 1 115.5 MW (231 MW Project) Lempster 24 MW Locust Ridge 26 MW Locust Ridge II 102 MW Casselman 34.5 MW NORTHEAST REGION Operating wind projects Updated January 25, 2010

Resource Scheduling – Org Chart VP Tim McCabe Resource Scheduling West / East Manager Juan Cartagena Dan Taylor Resource Scheduler Tara Guillory Resource Scheduler Jessica Briz Resource Scheduler Steve Cousenau Resource Scheduler Mike Purcell Resource Scheduler Rae Manseau Resource Scheduler

The Function of Resource Scheduling within our Organization Cash Trading Desk Prompt Month & Dailies Proprietary Sales & Purchases Asset Sales and Purchases Transmission Purchases Structured Trades Gas Balancing Forward Trading Desk BOM thru Prompt 2 Cal Years Proprietary Sales & Purchases Asset Sales and Purchases Forward Hedging Fundamental Based Trading Resource Desk Day-Ahead Scheduling/Pathing Generation Coordination Transmission Purchases Tagging ISO Scheduling Deal Path Deal Path Deal Path Hourly Desk Intra-Day Trading & Marketing Scheduling/Pathing Transmission Purchases Tagging ISO Bids/Scheduling Generation Coordination Transaction Integrity Gas Balancing 3/28/2017 CONFIDENTIAL

Beginning of our Scheduling Day

Signs on Road

Frustration Encountered

Ending of our Scheduling Day

Bunch of Happy Cats

Understanding Transmission & Resource Scheduling Resource Desk Day 0500-0600: Wind forecasts downloaded, scheduled and sent to customers by 0600. 0600-0800: Coordinate transmission, balance positions at all hubs, balance generation assets. Submit MISO intermittent resource schedules . 0800-1200: Create schedules and communicate to counterparties, E-Tags created, Schedules captured in ACES. Submit ERCOT bilateral transactions and resource plan. 0900-1000: Submit CAISO generation trades. Submit APN and PHYS IST transactions. 1000-1400: Transmission & generation schedules are communicated & balanced with BPA, CAISO finals are confirmed. 1400-1500: Real-time folders are prepared, Set-up for next day completed, all day ahead schedules complete by 1500 deadline. 0500 0600 0700 0800 0900 1000 1100 1200 1300 1400 1500 Scheduling Timeline 3/28/2017 CONFIDENTIAL

Understanding Transmission & Resource Scheduling Deadline Driven Business Resource scheduling handles over 4.2 million MWhs per month All power transactions, whether thermal, biomass, or wind, are touched by this group Anticipate volumes increasing at least 20% Year on Year as Iberdrola Grows Wind and Power Trading businesses 7 day scheduling coverage for CAISO, MISO, and ERCOT Coordination of schedules with up to 60 counterparties on a daily basis Support our Realtime Desks with scheduling questions 3/28/2017 CONFIDENTIAL

Variable Generation Integration Laura Beane Manager, Western Market Structure May 11, 2010 Regulation & Market Structure

Overview Wind Integration Costs (WIC) are caused by wind’s variability and the difficulty of forecasting its output precisely which drives the need for flexible generation Historically, the costs associated with integrating wind have been paid by load Regions with increasing penetration levels of variable generation are starting to re-evaluate the current load-based cost allocation regime and are beginning to allocate integration costs to the generator Cost-causation reason for allocation shift 18

Wind Energy’s Impact to the Power System 26 junio 2002 Wind Energy’s Impact to the Power System Wind energy has four characteristics that affect how it is integrated into power systems: its variability its near-zero variable cost the difficulty of forecasting its output precisely its remoteness These characteristics can be better accommodated in some markets structures than others The diversity of the US markets has made integration a difficult and fragmented effort 19

Wind Penetration Levels Current Estimate of Installed Wind Capacity as a Percentage of Peak Load 30 % 6 % 7 % 13 % 5 % 2 % 4 % 1 % Regions that have moved or are moving toward allocating WIC to generators Source: Ventyx

FERC NOI on the Integration of Variable Energy Resources FERC’s recent NOI solicited comments on virtually all aspects of integration of variable resources Data & Forecasting Scheduling Flexibility Scheduling Incentives Day-Ahead Market Participation Reliability Commitments Balancing Authority Coordination Reserve Products & Ancillary Services Capacity Markets Real-time Adjustments Iberdrola Renewables submitted comprehensive comments addressing each of the subject areas The NOI may lead to a rulemaking to establish a policy framework to ensure integration is addressed consistent with the principles of the Federal Power Act

Wind Integration Solutions IBR is working to encourage regions to exhaust solutions on the lower half of cost curve before moving to the next solution. Markets Additional Flexible Generation Curtailment Wind Storage Accessing Intra-hour flexibility Price Responsive Load Demand Response Dynamic Scheduling Simple Cycle GT Combined Cycle GT In Range of 1-2% Pumped Storage Batteries Flywheels SMES CAES Capacitors PHEV Accurate Forecasting Real time forecasting Centralized Forecasting High Cost Low Cost High Wind Penetration Level Low Wind Penetration Level Source: UWIG

Wind Integration in ISO/RTO Markets ISO/RTO markets have more favorable integrations characteristics that can better accommodate higher penetrations of wind generation at lower integration costs Large electric balancing area with access to neighboring markets Robust electric grid Short-term electricity generation markets Access to Flexible generation and load However, dysfunctional ISO/RTO markets, such as MISO, could result in increased exposure to wind integration cost at lower penetration levels MISO has a high concentration of transmission constrained wind generation (ND, SD, MN) Examples of dysfunction that could result in emerging wind integration costs include: Large concentrations of wind not responding to LMP price signals creating negative LMPs Interconnections do not address deliverability constraints Increase in Minimum Generation Events resulting from a supply surplus that result in requests to reduce output from generators – wind curtailment Merchant projects could have significant exposure to emerging WIC charges in ISO/RTO markets.

Optimal Wind Integration Conditions 26 junio 2002 Optimal Wind Integration Conditions Large electric balancing area with access to neighboring markets Wind integration costs are significantly lower in large balancing areas More opportunity for excess generation in one region to be offset by shortfalls in generation in another region Larger pool of flexible resources to accommodate variations in electric supply or demand Robust electric grid Allowing power flows to neighboring regions requires robust regional interconnections Short-term electricity generation markets Shorter dispatch and scheduling windows capture time periods when wind power is relatively constant (ten-minute intervals) instead of periods when generation may be inconsistent (sixty-minute intervals). In regions with hourly markets, significant deviations in wind output over an hour are often accommodated through regulation services, which are expensive Since RTOs and Independent System Operators (“ISOs”) often operate both sub-hourly markets, they do not have to rely on expensive regulation services to respond to output variations and thus, typically have lower integration costs. 24

Optimal Wind Integration Conditions, Cont. 26 junio 2002 Optimal Wind Integration Conditions, Cont. Access to Flexible generation and load Systems with more flexible generators, i.e. hydro and natural gas, tend to have lower integration costs Effective integration of wind forecasts into utility operations Reliable wind forecasts allow system operators to significantly reduce their uncertainty about future wind output, thereby lowering the amount of reserves they need to hold to accommodate variations in wind output Flexible transmission services Conditional Firm service Dynamic line ratings 25

Northwest Integration Solution Self-Supply Pilot Program

BPA 2009 Rate Case Outcomes $5.89/MWh WIC rate Reduced level of allocated operating reserves based on assumed improvements to scheduling accuracy Enforcement of Persistent Deviation penalties Implementation of Phase II of Dispatcher Standing Order 216 (DSO-216) October 1, 2009 BPA implemented DSO-216 to: limit wind generation to the scheduled value when there is insufficient DEC balancing reserves available to offset the over-generation of wind curtail wind plant’s schedules/e-Tags when their actual generation output is less than their scheduled amount and there are insufficient INC balancing reserves available to offset the under-generation of wind BPA unbundled the WIC into the three separate categories of reserves to allow customers the option of providing all reserves or a portion of reserves Regulation Reserves – reserve required to balance error every 4 seconds Following Reserves – reserve required to balance error every 10 minutes Generation Imbalance Reserves – reserve required to balance error outside of 10-minute window through the balance of the hour Option for generators to self-supply imbalance reserves

Self-Supply Pilot Introduction 26 junio 2002 Self-Supply Pilot Introduction Iberdrola Renewables is the only wind generator that has elected to self-supply Generation Imbalance Reserves Regulation Reserves and Following Reserves will continue to be purchased from BPA Because Iberdrola is choosing to self-supply only a portion of the balancing reserves, no Balancing Authority (BA) certification is required as BPA will continue to provide the second-to-second balancing of Iberdrola’s generation portfolio Iberdrola Renewables self-supply program will initially be implemented as pilot program with both parties given the option to discontinue if the program proves to be unworkable The pilot has a target implementation date of August 1, 2010 and will continue through September 2011 28

Self-Supply Pilot Structure 26 junio 2002 Self-Supply Pilot Structure Today, all if Iberdrola Renewables’ plants are scheduled on an individual basis Under self-supply all of Iberdrola Renewables northwest wind resources will be aggregated into a single signal and schedule and will be measured on a net basis BPA will allocate a portion of Regulation and Following reserves to Iberdrola’s generation portfolio and Iberdrola will be responsible to self-supply generation imbalance reserves to resolve any remaining error between the net schedule and net output of the portfolio Klamath Cogeneration/Peaking facilities will be utilized to provide a portion of the needed INC and DEC to keep Iberdrola’s portfolio balanced Iberdrola has entered into contractual relationships with dispatchable resources to provide additional INC and DEC capability 29

26 junio 2002 Self-Supply Diagram 30

Self-Supply Balancing Illustration 26 junio 2002 Self-Supply Balancing Illustration Portfolio Error (Schedule vs. Actual) Allocated Reserve Band from BPA Error that must be Balanced under Self-supply (i.e. the company must move resources to keep the Portfolio Error within the band) Legend 400 300 200 100 MWs - 100 - 200 - 300 - 400 11:00 a.m. 12:00 p.m. 1:00 p.m. 2:00 p.m. 3:00 p.m. 4:00 p.m. 5:00 p.m. 6:00 p.m. 7:00 p.m. 8:00 p.m. 9:00 p.m. 10:00 p.m. 31

Constellation Energy Control & Dispatch 26 junio 2002 Constellation Energy Control & Dispatch Iberdrola has engaged Constellation Energy Control & Dispatch (CECD) to provide consulting services and Automatic Generation Control (AGC) infrastructure CECD provides balancing services for 15 Balancing Authorities across the United States including the nation’s first wind-only Balancing Authority BPA’s willingness to move forward with the pilot program largely stemmed from their confidence in Constellation’s ability to leverage their experience and successfully balance our portfolio Constellation’s Responsibilities Respond on a 4-second basis to the Portfolio Error Execute dispatch of resources per resource stack Klamath Cogen & Peakers External contractual resources Wind resources Monitor and respond to applicable compliance parameters Report all aspects of self-supply portfolio Tracking of exercise of external resources Generation Imbalance accounts Compliance with performance parameters 32

Self-Supply Timeline May 2010: BPA Wind Portfolio Netting Target Implementation Will apply to DSO-216 Should lower curtailment/limit risk August 1, 2010: Self-Supply Pilot Implementation Wind Portfolio Netting Target Implementation New WIC Rate in Effect DSO-216 Implementation Self-Supply Pilot Period May 2010 October 2010 December 2009 August 2010 September 2011 BPA Launches Sub-hourly Scheduling Self-Supply Pilot Implementation Date