APPA Joint Action Workshop Tucson, AZ January 9, 2006 JOINT ACTION STILL RELEVANT, AFTER ALL THESE YEARS JOINT ACTION STILL RELEVANT, AFTER ALL THESE YEARS Bill D. Carnahan Executive Director

What Do We Want to Accomplish Today? Review What External Factors Influence Success Review What Internal Factors Influence Success Determine What We Have in Common Review What External Factors Influence Success Review What Internal Factors Influence Success Determine What We Have in Common

Why Were Joint Action Agencies Created? To provide “collective” projects, activities and services that are more economical and efficient than the members can do individually

SCPPA PROFILE

VITAL STATISTICS DIVERSITY SIZE Banning to LADWP (10,000 Customers) (1.4 Million Customers) Average - 50,000 to 100,000 Customers (Burbank, Glendale, Pasadena, Anaheim, Riverside, Imperial Irrigation District) LOCATION Metropolitan – Coastal – Inland – Desert LOAD CONTROL AREAS CAL ISO – Anaheim, Riverside, Pasadena, Azusa, Banning, Colton, Vernon, Cerritos LADWP – Burbank and Glendale IMPERIAL IRRIGATION DISTRICT DIVERSITY SIZE Banning to LADWP (10,000 Customers) (1.4 Million Customers) Average - 50,000 to 100,000 Customers (Burbank, Glendale, Pasadena, Anaheim, Riverside, Imperial Irrigation District) LOCATION Metropolitan – Coastal – Inland – Desert LOAD CONTROL AREAS CAL ISO – Anaheim, Riverside, Pasadena, Azusa, Banning, Colton, Vernon, Cerritos LADWP – Burbank and Glendale IMPERIAL IRRIGATION DISTRICT

VITAL STATISTICS DIVERSITY RESOURCES Local Generation – LADWP, Burbank, Glendale, Pasadena, Imperial Irrigation District Local Peaking Generation – LADWP, Burbank, Glendale, Pasadena, Riverside, Anaheim, Vernon, Colton, Imperial Irrigation District SCPPA-Financed Generation = 2,000 MW SCPPA Aggregate Peak Member Load = 9,000 MW SCPPA Aggregate Member Population = approx. 5 Million DIVERSITY RESOURCES Local Generation – LADWP, Burbank, Glendale, Pasadena, Imperial Irrigation District Local Peaking Generation – LADWP, Burbank, Glendale, Pasadena, Riverside, Anaheim, Vernon, Colton, Imperial Irrigation District SCPPA-Financed Generation = 2,000 MW SCPPA Aggregate Peak Member Load = 9,000 MW SCPPA Aggregate Member Population = approx. 5 Million

VITAL STATISTICS GOVERNANCE – SCPPA Board composed of Member Utility General Managers (no elected officials on Board) CAFETERIA-STYLE PROJECTS – Members pick projects to participate in SMALL STAFF – Reliance on member’s-staff to supplement SCPPA staff REVENUE BOND FINANCING – Power Supply Contracts providing security for bonds (to date have issued in excess of $6 Billion) GOVERNANCE – SCPPA Board composed of Member Utility General Managers (no elected officials on Board) CAFETERIA-STYLE PROJECTS – Members pick projects to participate in SMALL STAFF – Reliance on member’s-staff to supplement SCPPA staff REVENUE BOND FINANCING – Power Supply Contracts providing security for bonds (to date have issued in excess of $6 Billion)

RESULTS: (early years) Financing participation in large central station generating plants (coal, nuclear and hydro), and, Financing and constructing interstate high voltage transmission lines to bring the power home, and, Provided some services RESULTS: (early years) Financing participation in large central station generating plants (coal, nuclear and hydro), and, Financing and constructing interstate high voltage transmission lines to bring the power home, and, Provided some services Why Joint Action Agencies Were Created

Palo Verde (Nuclear) Mead/Phoenix Mead/Adelanto (Transmission) Hoover Upgrade (Hydro) Southern Trans. System San Juan (Coal) TIMELINE OF SCPPA PROJECTS YEARS

TIMELINE OF SCPPA SERVICES LOBBYING PROJECT REPRESENTATION YEARS

RESULTS: (restructuring years) After passage of Restructuring Legislation (AB 1890) and direct access, members felt like they could become competitors. Played cards close to vest, not willing to share resource plans. Joint action projects and services suffered. Why Joint Action Agencies Were Created

Palo Verde (Nuclear) Mead/Phoenix Mead/Adelanto (Transmission) Hoover Upgrade (Hydro) Southern Trans. System San Juan (Coal) TIMELINE OF SCPPA PROJECTS AB 1890 Years YEARS

TIMELINE OF SCPPA SERVICES LOBBYING PROJECT REPRESENTATION YEARS Public Benefit Programs AB 1890 Implementation

RESULTS: (after restructuring years) Why Joint Action Agencies Were Created MEMBERS REALIZED DIRECT ACCESS WAS NOT COMING RALLIED AROUND “LOCAL CONTROL” AND VERTICAL INTEGRATION RECOGNIZED WORKING TOGETHER WAS A GOOD THING BEGAN PLANNING NEW GENERATION EMBRACED RENEWABLES INCREASED COOPERATION IN DELIVERY OF SERVICES REINVIGORATED SCPPA AND JOINT ACTION CONCEPT

Board of Directors Executive Director Finance Resource Planning Public Benefits Customer Service T&D E&O Project Development SCPPA STAFF SCPPA ORGANIZATION STRUCTURE LegalLADWP ACCTG

PROJECT DEVELOPMENT Project Development Agreement | Steering Committee Project Development Agreement | Steering Committee Member City Council Approval SCPPA Board Approval SCPPA Board Approval PROJECT

Palo Verde (Nuclear) Mead/Phoenix Mead/Adelanto (Transmission) Hoover Upgrade (Hydro) Southern Trans. System San Juan (Coal) TIMELINE OF SCPPA PROJECTS Magnolia (Gas) Gas Reserves Renewables YEARS

NATURAL GAS RESERVE ACQUISITION PURPOSE: Purchase natural gas reserves, in place, and transport gas to California border and then to the burner-tip Fuel Portfolio Diversity (Approx % of Total) Less Price Volatility Secure Supply More Economical Economies of Scale (SCPPA)

FIRST NATURAL GAS ACQUISITION July 2005 – Anschutz Pinedale Corp. Pinedale Wyoming – Pinedale Anticline $300 Million 146 Bcfe of proved reserves – 1,250 operated gross acres with a 42.5% Working Interest Ultra Petroleum – Operator Largest acquisition of natural gas reserves by a U.S. governmental history 40,000 MDF per day delivery (60,000 Goal) 32 Operating Wells Transition Agreement

CURRENT RENEWABLES Goal: 20% Renewables by Target ? What Counts as a Renewable? What if the Utility doesn’t need Resources? Impact on Rates Production Tax Credit Equivalent ISSUES: SCPPA MEMBERS – RENEWABLE PROGRAMS = $70 MILLION (5 YEARS) 69 PROJECTS MEGAWATTS (1 MW = 750 HOMES) WIND = 201 MW GEOTHERMAL = 190 MW LANDFILL GAS = 32 MWSMALL HYDRO = 97 MW BIO CONVERSION = 60 MW

TIMELINE OF SCPPA SERVICES LOBBYING PROJECT REPRESENTATION YEARS Ice Bear Benchmarking Joint Contracting Resource Planning Market Intelligence “Almost Anything”

FUTURE RENEWABLES WIND GEOTHERMAL Currently Negotiating for: 150 Megawatts of Geothermal 475 Megawatts of Wind in California, Oregon, Wyoming, and Utah 100 Megawatts of Solar 15 Megawatts of Landfill Gas Could be as high as 800 Megawatts Contract and Ownership Options ($600 Million – Ownership) Transmission Construction (Upgrades and New)

KEYS TO SUCCESS Look for Common Ground Give Members the Spotlight Don’t Compete With Member Staff Never Say, “We Can’t” Encourage Large Members to Help Small Ones Treat All Members Equally Look for Common Ground Give Members the Spotlight Don’t Compete With Member Staff Never Say, “We Can’t” Encourage Large Members to Help Small Ones Treat All Members Equally