Dynamic Signal Workshop January 14, 2016 APA Office Phoenix, Arizona 1

What is a Dynamic Signal? 2

Dynamic Signal Unilateral Signal This form of dynamic scheduling is used to replace static or manual scheduling for load and generating resources, typically base loaded generation such as Four Corners, Navajo, and Palo Verde. Bi-lateral Signal Dynamic Scheduling (Bi-directional) occurs when two Control Areas’ AGC are electronically linked, allowing them to request and acknowledge desired schedule changes and the ability to cause or change the level of energy flow between them, when 1)The AGC calls for a change in the level of its remote generation or a portion of the receiving Control Area's Area Control Error (ACE) is allocated to its remote generation. ACE is defined as the instantaneous difference between actual and scheduled interchange, taking into account the effects of frequency bias. Examples are the mid-Columbia hydro plants and Hoover Dam. 2)A Control Area is providing regulation service to another Control Area or non-Control Area entity. Car Cruise Control 3

Western Area Power Administration Hoover Dynamic Signal Mead 230kV bus SRP AEPCOAPS TEP APA Customer Loads Zero to Maximum WAPA 4

SVERI Resources and Loads (Southwest Variable Energy Resource Initiative) ( 5

Option 1 (Agree to Value-Extend 10 years) Pending an agreed upon price for the dynamic signal, renew the current SRP contract (the agreement would automatically extend for 10 years). This may require an RFP to establish a current market value for the dynamic signal. Assume that the CAWCD arrangement would be renewed for ten years. 6

Option 2 (Issue RFP to Establish Value-SRP Renewal) Put out an RFP to establish a potential value for the dynamic signal at various levels (suggest 25%, 50%, 75%, 100% of the maximum available capacity). Use these values to discuss with SRP the renewal of the Scheduling Entity/Dynamic Signal agreement. 7

Option 3 (Issue RFP-Dynamic Signal to Highest Bid) Put out an RFP to establish a potential value for the dynamic signal at various levels (suggest 25%, 50%, 75%, 100% of the maximum available capacity). Select the entity or entities offering the highest value for the dynamic signal and providing Scheduling Entity services. 8

Option 4 (Extend SRP/CAWCD for 2 Years) Due to vast and extensive changes forecast for the electric industry, delay a long term commitment and simply extend the contract with SRP for two years subject to successful renegotiation of the SRP payment to APA for the dynamic signal ($5.4M today). This may require an RFP to establish a current market value for the dynamic signal. Assume that the CAWCD arrangement would be extended for two years. 9

Option 5 (Allocate Signal to APA Customers) Allocate the dynamic signal to APA customers and those entities able to establish a dynamic signal with WAPA. This could involve one or more customers and the dynamic signal between entities may be limited to Balancing Authorities (APS, SRP, TEP, AEPCO, and WAPA). 10

Working Examples of Option 5 11

Salt River Project Scheduling Entity Balancing Authority 64,248kw Total 59,234kw A 4,014kw D1 1,000kw D2 Town of Gilbert 1,000kw D2 San Tan ID 520kw A City of Chandler 676kw D1 Fort McDowell 338kw D1 SRPMIC 3,000kw D1 SRP 38,782kw A Customer Point of Delivery Queen Creek ID 1,770kw A Chandler Heights 930kw A ED6 Pinal 8,358kw A Ocotillo WCD 2,115kw A Roosevelt WCD 6,759kw A Mead 230kV Hoover Dam Post-2017 WAPA Dynamic Signal 0 to 64MW Point of Delivery Transmission Reservation

AEPCO/CAWCD Sub-metered under WAPA Scheduling Entity 174,973kw Total 161,600kw CAWCD 3,024kw A 3,161kw B 7,188kw D kw D2 Graham County Elec 312kw D1 1000kw D2 Sulfur Springs VEC 2731kw D1 1000kw D2 Mohave Electric Co. 1145kw D1 1000kw D2 TRICO Elec Coop 3000kw D1 1000kw D2 Avra Water Co-op 100kw D2 Duncan Valley Elect 700kw D2 City of Safford 2101kw B City of Sierra Vista 204kw D2 Town of Thatcher 1060kw B Mead 230kV Hoover Dam CAWCD 161,600kw B Avra I&DD 630kw A St David ID Sulfur Spr 81kw A Silverbell I&DD 710kw A Franklin Irr District Duncan Vly 303kw A Gila Vly ID Graham Cy 910kw A Mohave Valley I&DD 390kw A Post-2017 Customer Point of Delivery WAPA Dynamic Signal 0 to 175MW Point of Delivery Transmission Reservation

Arizona Public Service Balancing Authority 82,971kw Total 49,509kw A 22,450kw B 7,405kw D1 3,607kw D2 Hyder Valley Irrig District 100kw A Maricopa Co. Mun. WCD 8838kw A Roosevelt ID 3219kw A McMullen Valley 3,800kw A 5342kw B Tonopah Irrigation District 1549kw A Aguila Irrig District 2449kw A 3878kw B Customer Point of Delivery Harquahala Valley Power 2490kw A Buckeye Water Cons District 2979kw A ED7 Maricopa 10498kw A ED-8 Maricopa 13,387kw A 10917kw B Markham Irrig and WCD 100kw A Mead 230kV Hoover Dam Silvercreek Irrig Dist 100kw A City of Avondale 547kw D2 City of Buckeye 670kw D2 City of Flagstaff 201kw D1 172kw D2 City of Glendale 426kw D1 City of Globe 115kw D1 113kw D2 City of Payson 119kw D1 173kw D2 City of Peoria 691kw D1 City of Phoenix 3000kw D1 City of Sedona 111kw D2 City of Scottsdale 2366kw D1 City of Tempe 241kw D1 Town of Wickenburg 2313kw B City of Williams 825kw D2 Northern AZ IDPP 246kw D1 Post-2017 ED-3 Pinal (ED-1) 15896kw A Point of Delivery WAPA Dynamic Signal 0 to 83MW Transmission Reservation

Tucson Electric Power Balancing Authority 8,069kw Total 6,439kw A 1,427kw D1 203kw D2 Cortaro Marana ID 6439kw A Customer Point of Delivery Town of Oro Valley 203kw D2 City of Tucson Water Dep. 1248kw D1 Metro Domestic Water ID 179kw D1 Mead 230kV Hoover Dam Post-2017 WAPA Dynamic Signal 0 to 8MW Point of Delivery Transmission Reservation

Western Area Power Administration Balancing Authority 69,952kw Total 56,667kw A 2,649kw B 9,901kw D1 735kw D2 Town of Oro Valley 203kw D2 Hohokam Irrigation & Drainage 100kw A Town of Fredonia 100kw D2 Ak-Chin Indian Comm 102kw B City of Mesa 1497kw B ED kw A Customer Point of Delivery Wellton Mohawk 2910kw A ED4 Pinal 19445kw A ED-5 Pinal 14767kw A Page Utility 1050kw B Mead 230kV Hoover Dam Kaibab Band of Paiute 124kw D1 Hualapai Indian Tri 381kw D1 100kw D2 Gila River Indian Com 3,000kw D1 Aha Macav Indian Comm 332kw D2 Tohono O’odham 2,709kw D1 Pascua Yaqui Tribe 437kw D1 Navajo Tribal Util. 3000kw D1 Tonto Apache Tribe 250kw D1 Post-2017 Point of Delivery WAPA Dynamic Signal 0 to 70MW Transmission Reservation

Need to Establish Criteria to Assign the Scheduling Entity Role to One or More Parties (Should this tie to the dynamic signal allocation?) 17

Pricing Example Reflecting the Value of Hoover Dam’s Dynamic Signal 18

APA 400,000kw x 12 months= $4,800,000 SRP 64MW AEPCO 175MW APS 83MW TEP 8MW APA Customers (Pro-rata $4,800,000) Value of Dynamic Signal Pay $1.00/kW/Month Credit $1.00/kW/Month 19 WAPA 70MW