1. 1 October 30, 2008 WECC Meetings Marina Del Rey, California ACE Diversity Interchange: Overview and Update

2. 2 ADI stands for Area Control Error (ACE) Diversity Interchange. ADI is the pooling of individual Area Control Errors (ACE) to take advantage of control error diversity (sign differences associated with the momentary generation/load imbalances of each control or balancing area). What is ADI?

3. 3 By pooling ACE, participants are able to: Reduce control burden on individual control areas through the ADI equal share allocation method; Reduce generator movement; Reduce sensitivity to intermittent resource output; and, Improve Control Performance and reduce CPS2 violations. Benefits of ADI

4. 4 What ADI is Not… An ancillary service; A process that will impact the terms and conditions of transmission or energy service; An energy sale nor does it necessitate the purchase of transmission; A commercial activity; A tool for making economic dispatch decisions; or, A burden on other areas. ADI is a reliability tool

5. 5 The ADI tool has value if the Participants are either held harmless or made better off. The ADI tool is designed to be safe for Participants and safe to the system. Transparent to all Participants. KISS – Keep it Simple S..... ADI Project Philosophy

6. 6 Current Scope of ADI The initial Participating Control Areas are: Idaho Power Company NorthWestern Energy PacifiCorp – East PacifiCorp – West British Columbia Transmission Corporation is the host. Any control or balancing area operator located in the WECC and adjacent to and interconnected with one or more Participating Control Areas may join as a new ADI participant.

7. 7 ACE Diversity Interchange Agreement (including the Technical Design) was executed November, 2006. Operating Groups goal to GO LIVE March 31, 2007 was achieved; due to EMS commitments, Idaho Power Companys GO LIVE date was June, 2007. On-going discussions regarding ADI (British Columbia stakeholders, CAISO, ColumbiaGrid, FERC, NWPP entities, Northwest Wind Integration Workgroup, PNW Regional Council, Pacific NW Security Coordinator, WECC, WestConnect members, Western Governors Association, Utility Wind Integration Group, CAISO, etc.). ADI Project Implementation

8. 8 Participating Control Areas include : Arizona Power Bonneville Power Administration British Columbia Transmission Corporation (and the Host) Idaho Power Company NaturEner PS New Mexico Nevada Power NorthWestern Energy PacifiCorp – East PacifiCorp – West Puget Sound Energy Salt River Project Seattle City Light Sierra Pacific Tucson Electric PS Colorado (Xcel) Expanded evaluation (real-time screen shot) and reporting tools. Second Phase of ADI

9. 9 ADI Agreement was amended and restated June 15, 2007. ADI Operating Protocols were revised March 1, 2008 (relaxed the ADI Adjustment from 25 MW to 30 MW). ADI Operating Protocols revised August 29, 2008 (revised fn 13). Twelve new Participants have executed Exhibit E. Two RIGs purchased for the expanded effort. Phase 2 implementation is underway and is scheduled to GO LIVE in January 2009. ADI Project Implementation (contd)

10. 10 Minimum structure necessary to enable implementation. ADI is a reliability tool and a transmission function activity. ADI does not change or impact system operations or control area functions. ADI Host and Participating Control Area Operators together are Parties. Start-up Costs paid by Participating Control Area Operators. Criteria to allow for the addition of parties: Located in Western Interconnection Adjacent to one or more Participating Control Area Operators Execute Exhibit E to the ADI Agreement The ADI Agreement

11. 11 Termination with 30 days notice; 90 days for Host. New Parties pay incremental costs (own system and implementation) and share (per control area) of annual maintenance budget. Agreement Group – approves budget; interprets Agreement; establishes management procedures; resolves disputes; 2/3 vote required for decisions. Operating Group – establish, implement and modify Implementation Protocols, operating parameters, suspension protocols, etc.; majority rules among members. The ADI Agreement (contd)

12. 12 Reliable operations of ADI assured by suspension protocols, e.g., –Transmission overloads –Directed by Reliability Coordinator –Frequency deviation –Reserve sharing Participants can suspend or trigger a global suspension, e.g., Idaho Power triggered a global suspension on July 30, 2008 and a global resumption on August 28, 2008. Suspension defaults to normal (i.e., without ADI) operations; this provides a fail-safe back-up. Adjacency requirement between/among Participants ensures transmission connectivity. ADI Design

13. 13 Implementation Protocols (Exhibit A to the Agreement). ICCP Communication links are established between/among the Host and the Participating Control Areas. Time-stamped ACE values are sent to the Host every two seconds. The Host evaluates ACEs for diversity; if there is no diversity, there is no ADI adjustment. If there is diversity, time-stamped ADI adjustments are calculated and sent back to the Participating Control Area Operators. The Participating Control Areas control to their ADI-adjusted ACEs and apply the adjustments in their CPS reporting. If either the Host or a Participant suspends, then the affected party(s) revert to unadjusted ACEs for control and CPS reporting. ACE data and causes for suspension are broadcast to all participants ensuring transparency and supporting evaluation. ADI Design (contd)

14. 14 ADI Introduction to Existing Operations Total of about 8 sec delay: 2 sec. delay EMS/AGC combined 2 sec. delay

15. 15 Data Sent by Each Participant to Host Raw ACE. Consider interchange; ATEC; and, frequency terms Time-stamp of ACE calculation (seconds from midnight Universal Time Clock). Participant reference. Participant is on (Status 2) or is not on (Status 1). Does/Does Not Request Global Suspension. Participant Suspension Number or Global Suspension number. Positive ACE Integrated Adjustments (previous hour). Negative ACE Integrated Adjustments (previous hour).

16. 16 Data Sent by Host to each Participant and Broadcast ADI Adjustment. Timestamp (seconds from midnight UTC). Host Confirmation – Participant is on (Status 2) or is not on (Status 1). Indication that Global Suspension is/is not in effect. Global Suspension number or Participant Suspension number. Integrated Adjustments (+/-).

17. 17 ADI Equal Share Allocation Method Design Objective: minimize generator movement. Methodology: –Determine ADI Limit. –Raw ACEs compared. –Net ACE calculated. –Majority and Minority Groups determined. –Majority Groups aggregated ACE zeros-out Minority Groups individuals ACEs. –Minority Groups aggregated ACE is applied in equal shares to the Majority Groups individual ACEs to the extent possible (no sign change allowed).

18. 18 PCARaw ACEADI AdjustmentAdj. ACE A-46 MW+46 MW0 MW B-40 MW+40 MW0 MW C+60 MW-46 MW14 MW D+40 MW-40 MW0 MW Net:14 MW14 MW No ADI Limit is imposed in this example. If there is no diversity, there is no adjustment to ACE. Summed values of Raw ACEs and ADI-adjusted ACEs are equal. In this example, the Majority Group areas have positive ACE values (C and D, consistent with the Net Error); the Minority Group areas have negative ACE values (A and B). ADI Adjustments will not force a change in sign (+/-) for a participant. ADI Equal Share Example

19. 19 ADI Equal Share Example w/ 15 MW Limit PCARaw ACEMaj.ADI AdjMin.ADI Adj A 20 15 -8.75 B - 5- 5 5 C 10 10 -8.75 D -25-15 15 E 20 15 -8.75 F 10 10 -8.75 G -20-15 15 Net ACE: 10 ACE (residual) : 15 50 -35 Net Adj: -35 35 Net ACE: 10 25-15

20. 20 ADI Limitations 30 MW Limit (originally, the limit was 25 MW) ADI adjustment limits ensure fail-safe implementation Diversity must exist An ADI adjustment will be calculated only if there is ACE diversity (positive and negative values) among participants. No participant will be worse off An ADI adjustment will never make ACE worse, i.e., it will always move ACE toward zero or will have no impact. Right to suspend Participants have the right to ignore (suspend) ADI adjustments; suspension means that participants control to original ACE (status quo operations) and that participants ACE is excluded from the ADI calculation.

21. 21 ADI Suspension Protocols Host Will Suspend: If ADI system fails. If participant exceed time skew limits (10 seconds). If fewer than 3 control areas are participating. Participants Will Suspend (manually or automatically): If NWPP Reserve Sharing invoked. If a frequency deviation (+/- 0.3 hertz) If directed by Reliability Coordinator -- OTC violation is in progress or expected. Trigger two ADI systems if concerns about the COI. If there are two, consecutive CPS 2 violations. If AGC is paused or not in tie-line bias control. If other concern(s) arise. Suspension Protocols posted on Participants OASIS.

22. 22 Revised ACE Equation ACE = ({NI A +ADI}-NI S ) – 10B(F A -F S ) – I ME + ATEC NI A Net actual interchange in megawatts NI S Scheduled net interchange in megawatts Includes dynamic schedules Does not include bilateral schedules to correct inadvertent interchange accumulation B Frequency Bias Setting (MW/0.1 Hz) for the balancing authority The constant factor 10 converts the frequency setting to MW/Hz F A Actual system frequency in Hertz F S Scheduled system frequency in Hz The WECC Time Monitor can establish a different value of scheduled system frequency during the manual time error correction periods I ME Value (in MW) to compensate for known equipment error Attempt should be made to keep this term at zero by correcting known errors ATEC The WECC automatic time error correction Only for AGC control Not included for NERC performance reporting Based on accumulated inadvertent separately tracked for on- and off-peak time periods, WECC time error, a control areas bias setting relative to the rest of the WECC bias settings, a constant for return initially set at 2 hours and limited to no less than 20% of the control areas frequency bias setting and L 10 This is the mechanism for returning inadvertent interchange within WECC ADI ACE diversity interchange term which adjusts ACE values when enabled

23. 23 NERC/WECC Standards Verified NERC: BAL-001-0 (Real Power Balancing Authority) Defines the term L 10 in terms of the each Balancing Authoritys obligation to operate its average ACE for at least 90% of clock ten-minute periods (six non-overlapping periods per hour) during a calendar month within L 10 limits NERC: BAL-004-0 Time Error Correction NERC: BAL-006-0 (Inadvertent Interchange) Performance Standards Reference Document Inadvertent Interchange Accounting Document WECC: INT-BPS-008-1 Bilateral Payback Policy Procedure for Time Error Control Description of Control Error Calculation

24. 24 ADI Evaluation: Net Adjustments Net ADI Adjustment (Positive + Negative) Idaho 1,733 MWh(0.14 aMW) NorthWestern -1,207 MWh(0.09 aMW) Pac-East -4,488 MWh(0.37 aMW) Pac-West 2,205 MWh(0.18 aMW) Aggregate -1,757 MWh(0.14 aMW) BCTC Analysis. Data period: June 21, 2007 – October 19, 2008.

25. 25 ADI Evaluation: Absolute Adjustment Applied ADI Adjustments (Sum of Absolute Value) Idaho1,180 MW-days( 2.3 aMW) NorthWestern 865 MW-days( 1.7 aMW) Pac-East1,075 MW-days( 2.1 aMW) Pac-West2,300 MW-days ( 4.5 aMW) Aggregate5,420 MW-days (10.6 aMW) BCTC Analysis. Data period: June 21, 2007 – October 19, 2008.

26. 26 ADI Evaluation: Standard Deviation of ACEs 20062007 January16.715.8 February16.314.5 March14.915.6 April21.213.1 May18.612.5 June21.315.5 July25.913.8 August15.613.1 September14.613.2 October14.816.0 November15.715.0 December14.616.6 NorthWestern Energy Analysis. Data period: Comparing 2006 and 2007.

27. 27 ADI Evaluation: Generator Wear-and-Tear Reduced Generator Movement Accumulated Affect on Generator Controls Sum of pulse widths (ms) of control pulses issued by AGC reduced by half with ADI: Criteria: oSuspension was at least one hour; and, oControl action not influenced by planned hourly change in Net Scheduled Interchange. sum of pulse widths –60 minutes prior to ADI Suspension 342,664 ms –60 minutes of ADI Suspension 620,447 ms –60 minutes after ADI Resumes 342,211 ms Idaho Power Company Analysis. Data period: September 3, 2007 – January 21, 2008.

28. 28 ADI Evaluation: CPS-1 & CPS-2; Violations CPS-1 A statistical measure of Area Control Error (ACE) variability and its relationship to frequency error oProvides a frequency-sensitive evaluation of how well the respective area has met its demand requirements oMeasure based on a 12-month rolling average CPS-2 A statistical measure designed to limit unacceptably large net unscheduled power flows oProvides an oversight function to limit excessive unscheduled power flows that could result from large ACE values oDetermined monthly based on the percentage of time the 10- minute average ACE did not exceed L 10

29. 29 ADI Evaluation: CPS2

30. 30 ADI Evaluation: CPS2 Violations

31. 31 ADI Evaluation: CPS2

32. 32 ADI Evaluation: CPS2 Violations

33. 33 ADI Evaluation: Magnitude of ADI Adjustment IPC Analysis: Four Participants Data Period: 8/11 – 9/30/2008

34. 34 ADI Evaluation: Magnitude of ADI Adjustment IPC Analysis: Four ADI Participants Data Period: 8/11 – 9/30/2008

35. 35 ADI Impact on Reporting ADI implemented The system adjusted ACE value is used for real power balancing control performance reporting. ADI not implemented The system unadjusted ACE value is used. Keep in mind performance reporting does not take into account the WECC ATEC term when determining compliance.

36. 36 ADI Impact on Inadvertent NI I = NI A – NI S Each Balancing Authority measures primary inadvertent interchange in megawatt-hours and returns it to or receives it from the transmission system as a whole through the ATEC term in the ACE equation. Represents the degree of leaning on the tie The objective is to keep this term relatively small Overtime, this quantity should move toward zero WECC does not allow bilateral return of inadvertent accumulation since the adoption of ATEC (Feb. 2003). The inadvertent impact of ADI should be more canceling than cumulative in nature.

37. 37 Suspension History Total Time Suspended: 0.84% (over seven months) 65% Minimum Participants Requirement Not Met 35% NWPP Reserve Sharing Event No Suspensions: Manually by Host Manually by Participant For frequency deviation Directed by Reliability Coordinator BCTC Analysis. Data period: June 21, 2007 – January 22, 2008.

38. 38 ADI Expanded Evaluation/Reporting Web-based ADI Screen Shot (based upon MISOs ADI program) RAW ACE Majority Group; Minority Group ADI Adjustments (Minority Group) Suspensions ADI Monthly Reporting Net ADI Adjustments Applied Adjustments Suspensions Individual Participants Evaluation CPS with and without ADI

39. 39 Presentation Conclusion Questions/Suggestions/Input