1. 1 Open Stakeholder Meeting May 23, 2007 Salt Lake City, Utah “To ensure efficient, effective, coordinated use & expansion of the member’s transmission systems in the Western Interconnection to best meet the needs of customers & stakeholders. “

2. 2 Agenda TimeTopicPresenter 9:00 – 9:05Agenda Overview and SOC Announcements Sharon Helms 9:05 – 9:15Opening StatementsMarsha Smith, NTTG Co-Chair 9:15 – 10:30NTTG Straw ProposalRich Bayless, PacifiCorp 10:30 – 11:45Cost AllocationLou Anne Westerfield, Idaho PUC 11:45 – 12:45Fast Track Planning UpdateKip Sikes, Idaho Power 12:45 – 2:30Fast Track Project Candidates PacifiCorp – Darrell Gerrard Idaho Power – Kip Sikes Northwestern – John Leland 2:30 – 2:45ATC UpdateBrian Weber. PacifiCorp 2:45 – 3:00Wrap UpMarsha Smith, NTTG Co-Chair

3. 3 Standards of Conduct It is the policy of the Northern Tier Transmission Group (“Northern Tier”) not to facilitate the improper distribution of non-public transmission information. In furtherance of this policy, no participant in any Northern Tier meeting shall discuss non-public transmission information unless Northern Tier’s Standards of Conduct Safeguards are satisfied."

4. 4 NTTG Standards of Conduct 1.Advance notice of a public meeting at which transmission information will be disclosed must be posted on the transmission provider’s OASIS at least 10 business days prior to the meeting. 2.All “Eligible Customers,” as that term is defined in the pro forma OATT, must be invited to attend the public meeting. 3.Telephone participation must be provided. 4.If handouts are going to be provided during the meeting, the handouts must be posted on OASIS prior to the start of the meeting, and a contact person must be identified to assist with problems downloading the materials.

5. 5 NTTG Standards of Conduct 5.Meeting notes must be taken during the meeting by an individual approved as the note-taker by the transmission provider’s Chief Compliance Officer (“CCO”). 6.Meeting notes must be promptly posted on OASIS following the conclusion of the meeting. 7.If the meeting is attended by employees of the transmission provider’s Marketing Affiliate or Energy Affiliate, then a representative of at least one additional Eligible Customer must be in attendance at the meeting during the entire period that the Marketing Affiliate or Energy Affiliate employees are in attendance.

6. 6 NTTG Standards of Conduct 8.Without prior approval by the transmission provider’s CCO, meetings may not occur more than twice per month. 9.Even if all the above standards are satisfied, the transmission provider’s CCO retains the discretion to (a) prohibit the transmission provider’s Transmission Function employees from distributing transmission information at the meeting, (b) prohibit the transmission provider’s Transmission Function employees from presenting transmission information during the meeting, and (c) place any other conditions on its transmission function employees as the CCO believes are necessary.

7. 7 NTTG Anti-Trust Policy It is the policy of the Northern Tier Transmission Group to fully comply with federal and state antitrust laws. Participants shall be mindful that an essential objective of NTTG is promoting or enhancing competition. Discussions in the following areas in particular can be very problematic and in some cases prohibited, and require careful attention for antitrust compliance: your company’s prices for products or services; prices charged by your competitors; allocating markets, customers, or products; limiting production; and excluding dealings with other companies.

8. 8 Planning Straw Proposal “To ensure efficient, effective, coordinated use & expansion of the member’s transmission systems in the Western Interconnection to best meet the needs of customers & stakeholders. “

9. 9 Major Western Transmission Black: ColumbiaGrid: BPA, Tacoma, Seattle, Grant, Chelan, Douglas, PSE, AVA Red: Northern Tier: NWC, PAC, IPC, DSGT, UAMPS Blue:Other Western US and Canada EHV Grid Transmission Northern Tier Transmission Group Member Transmission System NTTG - Similarly situated, like minded members & stakeholders (geography, demographics, characteristics, institutions) combining systems to provide commercial benefits of larger single integrated system: Virtual Control Area Consolidation Transmission Use & Uniform Products Combined Planning Multi-State Cost Allocation Committee

10. 10 Planning: Order 890 Requires Each TP must: –Perform coordinated, open, transparent transmission planning on both Local & Regional level –Draft, Post & File Straw Planning Proposal: To be filed May 29, 2007 Facilitates FERC Technical Conference in Park City June 13 Assist the participants in developing the appropriate regional planning groups to the extend they do not already exist –Prepare an Attachment K for Pro Forma OATT describing planning process that complies with the nine principles, concepts, & requirements in Order 890 –Planning process must be developed with customers, neighboring TPs, state authorities, & stakeholders such that processes and resulting plans are not unduly discriminatory.

11. 11 NTTG Straw Proposal Development Process & Status –890 Order issued Feb. 16, 2007 (Posted in Federal register March 14) –NTTG Planning Committee assigns Straw Proposal Work Group to draft straw: Short Straws: Rich Bayless, Chuck Durick, Ray Brush –March 14 Stakeholder Meeting (PDX) NTTG open Straw Proposal development process initiated –March 22 initial coordination meeting of planning groups in the “Northwest” NWPP’s NTAC, ColumbiaGrid, NTTG, Subsequent conference calls, Open summit meeting April 6 –CREPC meeting review April 10 –WECC TEPPC Workshop April 12, Subsequent conference calls, Last meeting May 18 –NTTG draft 1 Straw Proposal posted for comment April 16 on www.nttg.biz –Comments received and new drafts posted –Present draft is Draft 5 version 2 –Final Comments received today will be incorporated into Straw to be filed on Tuesday 5-29

12. 12 FERC Order 890 Principles & NTTG Straw Concepts 1.Coordination: Three level Local, Sub-regional & Regional Coordination 2.Openness: Open architecture and stakeholder/customer process, unfettered Board 3.Transparency: Data, criteria, ATC methods, etc. disclosure to all customers/stakeholders 4.Information Exchange: Planning information coordinated and open; exchanged with WECC, IRPs, Stakeholder/customers, other Planning groups; native load, NT & PTP data exchanged on comparable basis 5.Comparability: All similarly situated customers/stakeholders equal in processes 6.Dispute Resolution: NTTG ADR to use WECC ADR with member agreement to use for planning related disputes 7.Regional Participation: Participation in WECC TEPPC, NWPP’s NTAC, coordination with neighboring sub-regional planning groups 8.Economic Studies: Economic and re-dispatch/congestion studies in planning cycle that influence plan; incorporates direction and analysis from Transmission Use committee 9.Cost Allocation: Multi-state Cost Allocation Committee to develop and apply cost allocation principles

13. 13 Related: Re-Dispatch & Conditional Firm N on-Rate Terms & Conditions (PR 901-1164) –TP is obligated to offer Planning Re-Dispatch and/or Conditional Firm If Long term Firm ATC is not available –“Planning” Re-Dispatch: Can be requested by PTP customer if less expensive than expansion –“Reliability” Re-Dispatch: Re-dispatch of network resources to avoid curtailment of network load –TP to provide “estimates” for re-dispatch, conditional firm, & expansion costs Ex-Ante (Latin for “beforehand”) estimates required for: –Planning Re-Dispatch costs (non-binding) –Hours & conditions for firm service for Conditional Firm –TP required to provide Planning Re-Dispatch with own generation. However, if Re-dispatch is insufficient from owned generation: Must identify re-dispatch options on “others” generation within & outside Control Area Must Coordinate between TP, third party generator & customer –TP also obligated to offer Conditional Firm If Planning Re-Dispatch is insufficient (or doesn’t meet customer requirements) from TP owned resources –TP is required to post: Re-dispatch costs & offers of re-dispatch from other’s generation –Issues with Planning Planning studies required to include economic studies to ID congestion & re-dispatch $ Identification of Re-Dispatch options on other’s systems Consistency with Economic and Congestion Planning studies, especially in Base Case Need to align products (i.e. conditional firm) across multiple control areas Reconciliation of posted actual costs with congestion studies

14. 14 NTTG Planning Straw Proposal - Key Features - Two step planning & implementation process to inform stakeholders and facilitate implementation of individual or joint projects Open architecture structure with Planning Committee open to all interested parties. Provides stakeholder/customer input and review process to evaluate transmission service and upgrade alternatives without formal OATT service request process. Informs stakeholders on technical performance, benefits, costs, and potential cost allocation of individual and joint plans Provides stakeholders/customers analysis of economic benefits (as well as reliability) of projects to inform their decisions on formal service requests and participation Within present OATT responsibilities & framework, gives practical level of up-front cost certainty Provides method to batch or cluster requests for economic studies Provides estimates of benefits of aggregated requests in common areas, re-dispatch costs, and congestion

15. 15 NTTG Planning Process Key Features, continued Three level integrated process produces synchronized, coordinated single system plan with local, sub- regional, and regional stakeholders; and neighboring systems. Augments member Transmission Provider’s OATT service request study processes. Utilizes WECC & WECC TEPPC for congestion and economic studies, base cases, other Coordinates with neighboring planning groups via –direct coordination, –joint study teams, –and through WECC Stakeholder and member triage process to determine study priority. Process similar to NRTA voting class org. Utilizes NWPP TPC’s NTAC to –identify overlapping projects effecting parties outside NTTG but within NWPP footprint, –Identify & establish joint study teams; –Help triage NWPP footprint study requests to WECC TEPPC.

16. 16 NTTG Planning Process Key Features, continued Informed customers can individually or jointly on aggregated basis submit OATT service requests –Via aligned and open season service request process on NTTG member systems –Multiple party and multiple system requests that would be individually uneconomic Balanced Steering Committee –Composed of member transmission provider execs & footprint State regulatory and consumer agency representatives. –CREPC type decision process with NTTG dispute resolution utilizing WECC ADR Cost Allocation Committee in Planning Step (Following) –Comprised of State regulatory & consumer staff, member representatives –Develops and applies cost allocation principles, determines cost allocation for projects included in the Plan approved by the Steering Committee Planning Process meets 9 principles and philosophy of FERC Order 890

17. 17 NTTG Planning Process Key Features, continued Transmission Planning & Use Committee coordination –Consistent definitions of products Service types, margins, POD & PORs, ATC definitions Among NTTG Companies Between NTTG Planning & Use analysis –ATC Coordination analysis generated study requests & study request aggregation Frequency of ATC determination and coordination with planning cycles –Website posting of re-dispatch costs & generation re-dispatch availability Compilation & validation of re-dispatch costs for NTTG resources & modeling for TEPPC/SRPG database –Coordination and Development of: Data submittal processes and standards for use with WECC and TPs Subregional TP Re-dispatch & Conditional Firm system impact studies with Regional congestion studies –Pooling of re-dispatch & CF studies

18. 18 5. NTTG Steering Committee Plan Approval 2. Expansion Plan & Projects With Benefits Parsed 3. Cost Allocation: Applies Principles & Recommends Likely Cost Allocation 1.Annual NTTG Planning Process: Identify Needs, Least Cost Expansion Project Alternatives, Technical Benefits, Project Costs 4. Draft Annual Expansion Plan 6. Final Annual Plan: Includes Likely Cost & Benefit Allocation Estimates for Given Planning Assumptions Step 1: Northern Tier Transmission Group Planning Process 8. Customer Decision Process Informed Customers, Stakeholders Other Interested Parties 7. Plan with Estimates for Congestion & Re-Dispatch, Expansion Projects, ATC Added, Cost, & Cost Allocation 9. Formal OATT Transmission Service Process: NT Need & PTP Requests, Firm Need & Reliability Planning Approved Two Step Planning and Implementation Process Step 2

19. 19 Step 2: Individual Transmission Provider Project Implementation Process 10. Service Request Aggregation Process Via NTTG Open Season or Coordination 12. Transmission Provider OATT Process 11. Coordinated Queue & Refined Requests 13. Construction Plan, Permitting, Build 14. TP Regulatory Approval and Rate Process Two Step Planning and Implementation Process - continued Process - continued

20. 20 Three Level Planning Process in the West Individual TP Local Planning Process IRP, NT L&R, OATT Requests, Reliability Plan NTTG Sub-Regional Planning Process Aggregated Planning Requests, Cost Allocation Estimates, Coordination with other Subs and Regional WECC TEPPC PCC, CREPC, WGA Coordination, Reliability & Economic Data, Base Cases, Annual Study Plan Economic and Congestion Studies, Policies, Standards Other Sub-Regional Planning Processes Aggregated Planning Requests, Cost Allocation Estimates, Coordination with other Subs and Regional Level 1 Local Level 2 Sub-Regional Level 3 Regional Individual TP Local Planning Process IRP, NT L&R, OATT Requests, Reliability Plan Individual TP Local Planning Process IRP, NT L&R, OATT Requests, Reliability Plan Individual TP Local Planning Process IRP, NT L&R, OATT Requests, Reliability Plan Individual TP Local Planning Process IRP, NT L&R, OATT Requests, Reliability Plan NWPP NTAC Overlapping Project Coordination in NWPP footprint

21. 21 Blue:Level 1 - Local Yellow:Level 2 - Sub-Regional Violet:Level 3 - Regional 1 2 1 2 Synched Up State IRP Processes 3 3 4 4 5 5 6 6 8 8 9 Ann TP OATT & Planning Process 10 11 Native Load, Wholesale Customers Stakeholders 12 13 7 Ann TP OATT & Planning Process Use Committee ATC Analysis 7 Northern Tier Planning, Use Committees & Biennial Planning Cycle 14 A AB c D 15 10 11 WECC Wide Region Biennial Study, Planning & Coordination Cycle 11 C C 16 Other Sub-Reg Planning Groups Relationship Diagram Synchronized Planning Cycles, Data and Product Flow Western Interconnection B

22. 22 NTTG L&R Need Planning WECC L&R Compilation Network Stakeholder Input Indiv State IRP TP Ann L&R, SR Inputs Other Xmssn Customers Input NTTG wide Stakeholder Meeting NTTG Study Plan Development TP OATT SIS FS CREPC/WECC Res Adeq WECC/PCC TEPPC Ann Comb Study Plan Triage WECC Wide Stakeholders Joint Study Teams NTTG Studies WECC/TEPPC System Data Bank Coord TEPPC Ann Economic & Congestion Studies WECC PCC Ann Studies & Reg Plan Proc NTTG Plan Report & Steering Committee Approval TP Staff does studies TEPPC Ann Report PCC Ann Reports Month 121110987654321 TP PRD & Cond Firm L&R Adeq Report NTTG wide Stakeholder Meeting NTTG wide Stakeholder Meeting CREPC IRP Coord NTTG Cost Alloc Committee Cost Alloc Recommends TP Ann Plan Update Stakeholders Regional Western WECC CREPC Sub-Regional Northern Tier Transmission Group Transmission Provider - Local Annual Combined Synchronized Planning Cycle

23. 23 Western TEPPC Synchronized Study Cycle

24. 24 Compliance Tasks Required by Oct. 11, 2007 1.Attachment K tariff detail and filing 2.Develop mechanism to address confidentiality of planning related information 3.Put transmission planning methodology in writing and disclose data (criteria, assumptions, planning standards, etc.) 4.Implement mechanism to make upgrade status available 5.Develop guidelines for planning submittals 6.Develop ADR for planning disputes 7.Coordinate planning with interconnected systems 8.Develop method for requesting economic upgrade studies 9.Develop a planning method that considers reliability and economics 10.Develop a means to allow for clustering of economic studies and posting of such studies 11.Define the information sharing requirements for planning 12.Identify the type of projects to be covered by cost allocation principles that are to be developed 13.Coordinate planning with state regulators 14.Develop cost recovery proposal for costs of participation in the planning process.

25. 25 NTTG & Member 890 Attachment K Implementation Plan FERC input from Technical Conference on Straw Proposals Charters, protocols, and agreements for NTTG Committees Agreement with TEPPC and TEPPC/WECC –Data and product flow agreements –Stakeholder triage process and meeting schedules –Seams and coordination with adjacent sub-regional planning groups Integration of member local planning process and OATT procedures with NTTG Sub-Regional planning process –Development of Open Season and Aggregation Process –Alignment of States on IRP processes Agreements with NWPP TPC - NTAC on triage and joint study selection process for NWPP footprint projects that overlap or effect other outside of NTTG within NWPP Finalization of NTTG process detail for member’s to reference or incorporate into their OATT Attachment K for filing

26. 26 ORDER 890 STRAW PROPOSAL: PRINCIPLE 9 - COST ALLOCATION “To ensure efficient, effective, coordinated use & expansion of the member’s transmission systems in the Western Interconnection to best meet the needs of customers & stakeholders. “

27. 27 Agenda Review Cost Allocation Straw Proposal Proposal Development Cost Types & Principles Proposed Process Issues/Comments? Next Step – Finalize for Order 890 Compliance Filing

28. 28 Proposal Development Cost Allocation Principles Work Group –Created by Steering Committee Response to Order 890 Planning Principle 9 NTTG Planning Framework – Starting Point: CREPC White Paper Transmission Regulatory Principles Work Group –Work Group Products Steering Committee discussion draft 4/13 Revised draft 5/15

29. 29 Cost Types Type 1:Provision of retail service to transmission owner’s native load –1-A Single LSE/Single State –1-B Single LSE/Multi-State –1-C Multi LSE/Single State –1-D Multi LSE/Multi-State –1-E Specific Retail Customer or Customer Group Provide Service Lower Costs Increase Quality of Service

30. 30 Type 1 Purposes – Provide capacity to serve load – Fulfill reliability or technical operating requirements – Lower costs to consumers – Fulfill Federal or State policy requirements Cost Types

31. 31 Type 2: Provision of Wholesale Services (FERC Jurisdictional) – Sales & purchases – Generator request – Transmission service request Mixed purposes – Types 1 & 2 – Potentially mixed jurisdiction Cost Types

32. 32 Type 3: Alternatives to/Deferrals of Transmission Line Costs – Usually Type 1 Costs – Distributed Resources Important Distinction between Projects & Cost Types – Any given project may have multiple cost types! Cost Types

33. 33 Principle 1: Equity – Cost causers = cost bearers – Beneficiaries pay Principle 2: Efficiency – Supports federal and/or state resource choice policies – Efficient & stable resource planning processes Principles

34. 34 Principles Principle 3: Fair & Full Cost Allocation – Reasonable opportunity for full cost recovery, but no more – Order 890 deems this principle critical – Multi-jurisdictional allocations – Not an automatic reallocation mechanism in the event of less than full cost recovery

35. 35 Principle 3A: Cost Assignment Follows Benefits – Elaborates on Principle 1 – Direct cost assignment costs to single or multiple transmission customers based on benefits distribution Principle 3B: Customer Specific Allocation – Type 1-E Costs Principles

36. 36 Principle 4: Allocation for Wholesale & Merchant Project Costs – Type 2 Costs – Outside Scope of NTTG Cost Allocation – FERC Jurisdictional Principles

37. 37 Process Cost Allocation Committee – Appointed by state agency and publicly- and consumer-owned NTTG members – Process dovetails with Planning process – Input from NTTG members & stakeholders through public process – Steering Committee: Final say & dispute resolution

38. 38 Interface with Planning Process – Study Plan Development & Study Phases: Preliminary & Iterative Analysis – Plan Report: Recommendations Responsibility for Providing Sufficient Information – Project developers, requestors, other interested stakeholders – NOT THE COMMITTEE! Process

39. 39 Step 1: Application Step 2: Review & Response Step 3: Analysis during Planning Process Step 4: Recommendations for Plan Report Steps 5 - 7: Steering Committee Determination Letter – Plan & Cost Allocation Project Updates/Additional Review Dispute Resolution Process

40. 40 Cost allocation v. cost recovery Risk analysis Reliability benefits Interface with future State & Federal regulatory proceedings Negotiated cost allocations Others??? Issues/Comments?

41. 41 Summary Next Steps: 1. Finalize Cost Allocation Portion of Order 890 Filing 2. Formation of Cost Allocation Committee 3. Get to Work! (Implementation of Planning Process)