1. 9/22/00 1 Jerry W. Smith

2. 9/22/00 2 Jerry W. Smith

3. 9/22/00 3 Jerry W. Smith Total Transmission Capability (TTC) Principles Az ISA will: participates in the determination of TTC becomes an affiliate member of WSCC participates in SWRTA transmission planning Attend WSCC Operational Transfer Capability Study Group Meetings Participate in Arizona joint utility operating and planning study efforts for TTC Participate in coordination of transmission maintenance schedules TP will Determine TTC beginning in Phase II this will be in consultation with the Operating Committee of the Az ISA Notify Az ISA of changes to TTC

4. 9/22/00 4 Jerry W. Smith Transmission Reservations & OASIS Management Defines the role of the Az ISA with respect to Retail Network Integration Transmission Service (RNITS) reservation practices and OASIS management Phase I Pre State-Wide OASIS –Same-time view into each TP’s OASIS –Upon request copied simultaneously on RNITS Schedules –Monitor release of ATC –Begin developing systems to allow Az ISA to calculate and update ATC Phase II Implementation of State-Wide OASIS –ATC posted on state-wide OASIS –State-wide OASIS receive and forward transmission reservation request –Trades of transmission access and ancillary services posted on state- wide OASIS

5. 9/22/00 5 Jerry W. Smith Allocated Retail Network Transmission Protocol Governs the allocation of Retail Network Integration Transmission Service (RNITS) in Arizona’s competitive retail electricity market. Phase I –Transmission requirements for Retail Network Load determined monthly –Each TP’s Standard Offer SC shall trade part of its ARNT allocation to Competitive SCs Arizona Public Service Company (APS): Up to 200 MW from Palo Verde Tucson Electric Power Company (TEP): Up to 80 MW from Four Corners. For Arizona Electric Power Cooperative, Inc. (AEPCo):l 4 MW from Westwing to Vail and 5 MW at Westwing for deliveries to the Western Area Power Administration For Citizens Utilities Company (Citizens Utilities): Does not apply to Citizens Utilities because there is only one ARNT path. Phase II –Monthly auctions of ARNT –Trading of ARNT allowed –Exchange of ARNT for ATC

6. 9/22/00 6 Jerry W. Smith Defines the processes and requirements for scheduling for Retail Network Load, including losses, Must Run Generation and Ancillary Services. Scheduling Protocol

7. 9/22/00 7 Jerry W. Smith Specifies the obligations of the SCs, TPs and CAOs concerning the provision of Ancillary Services to support retail transactions. Six Ancillary Services are: –Scheduling, System Control and Dispatch Service –Reactive Supply and Voltage Control from Generation Sources Service –Regulation and Frequency Response Service –Energy Imbalance Service –Operating Reserve – Spinning Reserve Service –Operating Reserve – Supplemental Reserve Service Ancillary Services Protocol

8. 9/22/00 8 Jerry W. Smith Provides a framework and process governing the access to energy from Must-Run Generation to support retail transactions in a competitive market. Local Generation is generation required when there is insufficient ARNT to serve 100 percent of the Retail Network Load in a Load Zone through imports.. Implemented in two phases –Phase I No trading of ARNT –Phase II SCs manage obligations by scheduling discretionary local generation, purchasing must-offer generation, acquiring additional ARNT or dispatching direct retail load-tripping Must-Run Generation Protocol

9. 9/22/00 9 Jerry W. Smith Establishes procedures for the accounting, after-the-fact trading and settlement for Energy Imbalance Service and to create incentives for reasonable scheduling and operational behavior by SCs. Procedures are for a two phase process –Phase I Settlement is with each individual SC Energy Imbalance dead band equal to the greater of 2 MW or +/- 10%. –Phase II Trading entity established for the trading of Energy Imbalance Trading entity settled on entire system load band is 1.5% SC’s penalty allocation factor shall equal the absolute value of the amount by which the SC’s Energy Imbalance (in MWh) exceeds the greater of 2 MW or 1.5% of the SC’s scheduled Retail Network Load in the TP’s system Energy Imbalance Protocol

10. 9/22/00 10 Jerry W. Smith Describes the process for mitigating congestion on transmission paths where capacity has been reserved for serving Retail Network Load within the TP’s system. Uses rules established in the ARNT Protocol, Must-Run Generation Protocol and the TP’s OATT to manage congestion. Congestion Management Principles

11. 9/22/00 11 Jerry W. Smith Describes system conditions that warrant Emergency operations and procedures used to mitigate or eliminate those system conditions and return the electric system to a normal operating condition. TP will take those actions, automatic or manual, that are necessary to: –Maintain system reliability. –Fulfill WSCC reliability obligations. –Comply with the Emergency Operations Policies of NERC, WSCC, SRSG and their successors. Emergency Operations Protocol

12. 9/22/00 12 Jerry W. Smith Establishes procedures for determining each SC’s Final Schedule. This information is required for settlement of transmission and Ancillary Services, as well as to ensure that all involved CAOs can meet the requirements of NERC Policy 1F, Inadvertent Interchange Standard. After-The-Fact Checkout may either be done through electronic posting or via direct telephone. After-The-Fact Checkout Protocol