1. Chelan County PUD PURPA Hearing Fuel diversity Fossil fuel efficiency Chelan County PUD November 19, 2007

2. Overview  Hearing process  What is PURPA?  Communication efforts  Staff testimony on the two standards being considered - Recommendation  Public comments  Next steps

3. Hearing Process  Presiding Officer  Meeting is recorded  Order of testimony  Formal determination  Presentation and exhibits will be made available

4. History and Purpose  Public Utility Regulatory Policies Act (PURPA) of 1978 – Reform aimed at: Conservation of energy supplied by electric utilities; Optimal efficiency of electric utility facilities and resources; and Equitable rates for electric consumers  Required utilities to buy back power from qualified customer-generators

5. 2005 EPAct PURPA Standards  Five new standards were added in 2005’s Energy Policy Act 1. Net metering 2. Interconnection 3. Time-based metering and communications 4. Fuel diversity 5. Fossil fuel generation efficiency  Today’s hearing is on the last two standards. The Board made a determination on the first three standards on November 13, 2006.

6. Board action required  PURPA requires electric utilities to “consider” each standard and then “make a determination” about whether or not it is appropriate to implement Consideration and determination is required, but the decision to implement is discretionary For public power utilities, the Board of Commissioners must “consider and determine” the standards

7. Energy Policy Act/PURPA Language  Fuel Sources – “Each electric utility shall develop a plan to minimize dependence on 1 fuel source and to ensure that the electric energy it sells to consumers is generated using a diverse range of fuels and technologies, including renewable technologies.”  Fossil Fuel Generation Efficiency – “Each electric utility shall develop and implement a 10-year plan to increase the efficiency of its fossil fuel generation.”

8. Communication efforts  Board presentation July 30 th 2007  Notice of proceedings and opportunity for public comment advertised with legal and display ads  PURPA section on our website Staff recommendation on fuel diversity is available  Hearing date and process advertised with a legal and display ads  Legal affidavits are submitted for the record

9. Fuel Source Diversity 111(d)(12)  “Reference Manual & Procedures for Implementation of the PURPA standards in the Energy Policy Act of 2005” The standard implies single fuel source may not be optimum Price stability and fuel availability is the goal No defined fuel diversity mix – depends upon assets

10. Fuel Source Diversity 111(d)(12)  District’s Hydropower Resources Load following Timely reserves Transmission avoidance Reliable Low cost Clean & renewable  Regulatory Environment Renewable Portfolio Standard/Energy Independence Act RCW 19.285 Integrated Resource Plan/Electric Utility Resource Plans RCW 19.280

11. Staff Recommendation  PURPA Standard 111(d)(12). Fuel Source Diversity Adopt a fuel source diversity plan, if appropriate, before 2011 Coordinate with integrated resource planning (IRP) process required by state law  IRP development process beginning in 2008  Public comment or questions?

12. Staff Recommendation  PURPA Standard 111(d)(13). Fossil Fuel Generation Efficiency. Do not adopt as not applicable to the District Public comment and questions?

13. Next Steps  This concludes the consideration and determination process for the EPAct 2005 PURPA standards  Board presentation to begin discussions on the Integrated Resource Planning process January 28, 2008  Questions?