1 WSPP EC SLIDES FOR AGENDA ITEMS 3 AND 4 WSPP SERVICE SCHEDULE C WSPP Service Schedule C includes a provision allowing interruption “to meet Seller’s public utility or statutory obligations to its customers.” Intent of this provision was to allow interruption if the power is necessary to serve native load. Provision has been in Service Schedule C since it became effective in 1991.

2 ORDER 890 FERC first found that the damages provision in Service Schedule C does not disqualify the transaction from being eligible to be considered as a designated network resource. FERC, however, found that the language “to meet Seller’s public utility or statutory obligations” may allow interruptions for reasons other than reliability. FERC stated that the language would need to be revised “to explicitly prohibit interruptions for reasons other than reliability of service to native load” to allow Service Schedule C to be eligible for treatment as designated network resource. FERC held that sellers will be allowed to undesignate network resources for specified time periods in order to sell firm power from those resources to others. FERC, however, stated that the notice of undesignation must be submitted by 10 a.m. the day before the transaction. FERC stated that non-firm sales may be made from designated network resources without requiring undesignation.

3 EFFECT OF ORDER 890 With the exception of existing transactions, unless Service Schedule C is modified, effective 60 days after publication in the Federal Register, WSPP members will not be able to have Service Schedule C transactions designated as network resources. Designation as network resources allows firm transmission to be used to move power from the designated network resource to a network customer’s load without an increased payment for network transmission service (depending upon the tariff some other charges such as losses or congestion may be impacted). If the transaction is not a network resource, then the transmission to a network customer would be considered as non-firm (unless firm point to point transmission is purchased).

4 MEMBER CONCERNS Some members have indicated that the clarification proposed by FERC needs to be incorporated into Service Schedule C or there will be a disruption to the firm markets. Other members have raised a separate issue relating to FERC’s requirement that undesignations of network resources occur by 10 a.m. on the day before. These members have raised a concern that this requirement would disrupt the short term or real time firm market.

5 PROPOSAL FOR ADDRESSING BOTH CONCERNS Clarification 1.Agree to and file with FERC as soon as possible the minor (but important) clarification to Service Schedule C. 2.This clarification carries out the longstanding intent of the WSPP Agreement and addresses FERC’s concerns. 3.The added language is the language from FERC’s Order Intent is to keep this filing separate and simple so that we can obtain quick approval from FERC and to obtain approval around the time that Order 890 would take effect. Also would seek an effective date which would match the Order 890 effective date. 5.Once approved by FERC, then aside from the hourly market, this should allow WSPP members purchasing a Service Schedule C product to elect to designate it as a network resource.

6 Request for Rehearing and Further WSPP Process Relating To Real-Time Firm 1.The issue is principally a FERC issue. As a result, the EC could consider authorizing the WSPP to file a request for rehearing at FERC addressing the real-time firm issue. Attached is a brief outline. This rehearing request is due on March 19, Given the level of interest on this issue, the EC also can direct the Contract Committee or the Operating Committee to see what if any changes to the WSPP Agreement can be made which would help to alleviate the harm from Order 890 to real-time firm markets. The EC may if it chooses set a deadline for a proposal to come back to it. Unlike the clarification which is straightforward, how the WSPP addresses the real-time firm issue will require substantial thought and discussion. 3.This issue is separate from the clarification issue and can move forward on a separate track.

7 BENEFIT FROM PROPOSAL Addresses all member concerns. Fixes what can be fixed quickly to prevent a disruption to the non-hourly firm markets. Provides for a request for rehearing to be filed by the WSPP to address the hourly firm market disruption. Provides for a process with a specified time deadline to develop additional WSPP modifications.