B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 1 City of Port Angeles Above High Water Mark Load and Demand Bonneville Power Administration NWPPA Power Supply Planning Workshop City of Port Angeles June 7, 2011

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 2 Discussion Points  Customers have options for serving Above-RHWM Load  City of Port Angeles ~ Projected Load  Tier 2 Rate Elections  Port Angeles’ Non-Federal Resources  Annexing Load  Demand Charges

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 3 Customers have options for serving Above-RHWM Load 1)Load Shaping Rate if Above-RHWM load is less than 1 aMW. 2)Non-Federal Resource (Specified or Unspecified) if Above-RHWM load is less than or greater than 1 aMW. 3)BPA Flat Block Purchase at a Tier 2 Rate if Above-RHWM load is greater than 1 aMW. 4)Combination of a non-Federal Resource and Tier 2 if Above-RHWM load is greater than 1 aMW. Avoid Above-RHWM load > 1 aMW with conservation projects!

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 4 City of Port Angeles ~ Projected Load Based on April 2011 forecast Port Angeles may not see an Above-RHWM Load greater than 1 aMW until FY 23

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 5Predecisional. For Discussion Purposes OnlySlide 5 Tier 2 Rate Elections  November 2009, Port Angeles elected to serve its Above-RHWM Load (FY ) with the Short-Term Rate:  FY Above-RHWM Load amounts were < 1 aMW, therefore, the City did not take any Short-Term energy.  FY 2014 amounts will be developed in summer of 2012 in the RHWM Process.  The next election deadline is Sept 30, Above-RHWM Load amounts will be set during the corresponding rate cases.  Per a request from NRU, BPA is considering an optional extension in the notice deadline to June 30, 2012.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 6Predecisional. For Discussion Purposes OnlySlide 6 Tier 2 Rate Alternatives Tier 2 Rates will be established in 7(i) processes.  Tier 2 Rate alternatives will be based on the cost of providing a flat annual block of power.  Pricing of power provided at a Tier 2 Rate is based on the cost of BPA purchases and resource acquisitions to serve this load.  Other cost components that may be included in Tier 2 Rates: – BPA Overhead Costs – associated Tier 2 Rates service – Resource Support Services (RSS) – for the cost of converting a resource/purchase into a flat block of energy. – Additional costs including risk, transmission, within-hour balancing, fuel adjustment adders, etc.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 7Predecisional. For Discussion Purposes OnlySlide 7 Tier 2 Rate Alternatives ~ Load Growth Rate  BPA commits to meet Load Following customers’ load growth for the term of the commitment/contract period.  Customers may fix amounts of Above-RHWM load to be served by non-Federal resources or other Tier 2 Rate alternatives for the contract term in conjunction with the Load Growth Rate.  Upcoming Election Opportunity: Sept. 30, 2011 for the period FY 2015 through FY This is the last opportunity to elect this rate.  Customers can limit the amount of power they purchase at the Load Growth Rate by providing notice October 31of rate case year (11 months before the rate period). Liquidated damages may apply.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 8Predecisional. For Discussion Purposes OnlySlide 8 Tier 2 Rate Alternatives ~ Short-Term Rate  Shorter commitment with terms of 3 ( ), 5 ( ), 5 ( ), & 4 ( ) years.  Pricing based on market opportunities.  BPA will determine amounts charged at the Short-Term Rate in each rate case for the subsequent rate period.  Within a purchase period, service at this rate may be converted to service at a Vintage Rate.  Customer may reduce purchase amounts with notice by October 31 of a rate case year. Liquidated damages may apply.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 9Predecisional. For Discussion Purposes OnlySlide 9 Tier 2 Rate Alternatives ~ Vintage Rate  Term of commitment depends on term of intended BPA resource acquisition or power purchase.  A Vintage Rate Statement of Intent (SOI) may be available any time based on customers’ need and interest and BPA’s need to acquire a resource(s).  Customers must give BPA a binding commitment (with SOI) to take Vintage Rate service that recovers costs before BPA will finalize commitment for a resource purchase.  BPA will work with customers to understand their needs and interests for Vintage Rate alternatives.  A market purchase-sourced Vintage Rate SOI is currently under negotiation with customers.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 10April 13, BPA Rate Case WorkshopPredecisional. For Discussion Purposes OnlySlide 10 Summary of Tier 2 Alternatives Tier 2 Alternative (Customer commitment) Potential Resources Allocated to Tier 2 Rate Pool ( Will evolve over time as we get more information about available resources and customer needs and interests ) RECs Provided? Load Growth (14 or 17 yrs) A mix of short & long term purchases (in no particular order, examples could include, Renewables, CCCT, Waste Energy Gen, Market Purchases). Resource selection primarily driven by lowest life cycle cost Potential that some level of RECs could be provided over the course of the contract. Short-Term (3-5 yrs) Short-Term market purchases (5 years or less in duration). Purchases driven by lowest cost market opportunities Unlikely Vintage (up to 17 yrs) Based on customer interest. (In no particular order: Wind, Geothermal, Solar, Waste Energy Generation, CCCT, market purchase) Resource selection driven by targeted resource & lowest life cycle cost Yes, for most renewable-based Vintage rate Alternatives.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 11 Non-Federal Resources  Morse Creek is in the City’s contract as a non-dispatchable, small resource. It is the only non-Federal resource currently listed and has not affected the City’s CHWM or Tier 2 purchases.  Currently, the City has not elected to use a non-Federal resource to serve Above-RHWM Loads.  Port Angeles can elect to serve Above-RHWM Loads with a non- Federal resource during the next purchase period.  Specified Resource: generating resource or contract resource with max hourly purchase > 200 kW  Unspecified Resource: not attributed to a Specified Resource  Port Angeles can avoid Above-RHWM Loads with aggressive conservation.  Estimated total FY12&13 Energy Efficiency Incentive ~$1.5M

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 12 Annexing Load  CHWM have been established and will remain the same throughout the term of the contract.  Port Angeles CHWM = aMW  Port Angeles may add to its CHWM if it annexes a load that has a CHWM.  Contract defines how additions are derived.  Port Angeles may add to its monthly CDQs if it annexes a load that has monthly CDQs.  Contract defines how additions are derived.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Predecisional. For Discussion Purposes OnlySlide 13 Demand Response  Port Angeles is involved in 3 demand response efforts with BPA  Residential Pilot  Commercial/Industrial Pilot  Nippon Paper to help balance wind generation  Port Angeles Demand Response Pilot Projects  Professionally and technically well-received within the Region.  Innovative and accommodating partner.  Demand Response complements Port Angeles’ AMI project and enhances the regional Smart Grid effort.