1. WORKSHOP 1 EXTENDED RESERVE (AUFLS) Afternoon session - design of the operational phase 2 & 3 September 2015

2. 2 OPERATIONAL PHASE Key to success: Efficiently maintain the extended reserve block percentages within given bounds at all times across the North Island (this includes during outages or load changes) This leads to a key question: How?

3. 3 HIGH LEVEL OPTIONS Option A – Central management by service providers o The provider (you) has the obligation to notify a central party of extended reserve outages or load changes o Central party to identify replacement load at demand unit level for extended reserve, provider to arm Option B – Devolved management by extended reserve providers o The provider has the obligation to maintain the required provision levels of extended reserve, within percentage min and max level o Provider to identify replacement load

4. 4 OPTIONS DESCRIBED Initial selection o How the initial selection is done? Obligation on providers o What are you required to do? Role of central parties

5. 5 INITIAL SELECTION The tables on following pages indicate the differences between the two high level options Option A – Central Management Option B – Devolved Management Same selection process for both: Providers provide data ERM produces draft procurement schedule Initial implementation same for both (different terms and conditions) Same selection process for both Providers provide data ERM produces draft procurement schedule Initial implementation same for both (different terms and conditions)

6. 6 OBLIGATION ON PROVIDERS Option A – Central ManagementOption B – Devolved Management Relates to individual demand unitsMaintain your provision within limits Provider to notify central party of change in demand units Central party to select replacement demand units and coordinate changes Central party to maintain a register Provider coordinate changes in demand units Provider to maintain a register Yearly compliance checks

7. 7 ROLE OF CENTRAL PARTIES Option A – Central ManagementOption B – Devolved Management Obligations managed through central party updating the ER Schedule and SERO No role for central parties - obligation on the providers Central party to receive outage notifications and assess against tolerances No role for central parties - internal assessment against tolerances by provider Central party to select replacement and instruct a provider to replace No role for central parties - provider to manage the mix of demand units Compliance checks

8. 8 GROUP EXERCISES

9. 9 Breakout into your companies (or if you are a sole representative of your company, please find a group) Complete each section of the worksheet o 1 worksheet per company Ask questions - project team members are keen to hear of any questions you may have Report back to the wider group at the end of each section o Nominate a spokesperson Hand in worksheets at the end Note: Your responses are sought as independent technical advice. Company names will not be recorded.