Briefing on CAISO / PacifiCorp Energy Imbalance Market

1. Briefing on CAISO / PacifiCorpEnergy Imbalance Market Presentation to WECC Unscheduled Flow Administrative Subcommittee January 8, 2014 Jim Price, Senior Advisor, Market Development & Analysis, CAISO

2. What is the Energy Imbalance Market? • Leverages existing CAISO market • Starting from BAs’ forecasted load and balanced generation, 15-minute security constrained unit commitment and 5-minute security constrained economic dispatch manage deviations: • Automatically dispatch least cost resources to solve imbalances, • Avoid congestion. • Enhances reliability with improved situational awareness • Captures geographical diversity of load and resources • Potentially reduces flexible reserve requirements • Provides easy entry/exit for EIM participation • No critical mass – each participant enters when they are ready • New participants pay their way through a front end charge based on size, and ongoing charges based on participation.

3. EIM preserves participants’ autonomy and current practices • Balancing authorities balance and provide their own ancillary services • Balancing authorities can trade bilaterally • Participants retain all physical scheduling rights BAA 1 BAA 2 BAA 3

4. EIM concept has evolved in the West • WECC studied benefits; active through 2011 • In late 2011, Western Governors’ Association formed PUC-EIM group. • NREL studies of benefits • SPP & CAISO submitted cost estimates (March 2012) • PacifiCorp committed Feb. 2013 – implementation agreement approved by FERC June 2013 • NV Energy announced intent in Nov. 2013 to seek approval from PUCN to join EIM • CAISO is working with other interested parties.

5. Scale of EIM in the West is growing PacifiCorp 1.7 million customers 9,500 MW peak demand 10,600 MW generating capacity NV Energy 1.2 million customers 8,148 MW peak demand 5,815 MW generating capacity CAISO 11.4 million customers 50,280 MW peak demand 58,246 MW generating capacity CAISO is working with other interested parties

6. EIM yields significant annual benefits for PacifiCorp and CAISO Transfer capability Low(100 MW) High (800 MW) Medium (400 MW) Low $14.1 $2.3 $4.0 $1.1 $21.4 High $11.0 $23.0 $20.8 $10.8 $65.6 Low $22.3 $2.3 $11.0 $1.1 $36.7 High $17.7 $23.0 $51.3 $10.8 $102.8 Low $22.4 $2.3 $13.4 $1.1 $39.2 High $17.8 $23.0 $77.1 $10.8 $128.7 Interregional dispatch Intraregional dispatch Flexibility reserves Renewable curtailment Total benefits $10.5 million to PacifiCorp customers $10.9 million to CAISO customers

7. EIM implementation and stakeholder processes are in progress Implementation agreement 2013 2014 FERC review Implementation work System testing market simulation Board authorization 3/20/2013 Filing 4/30/2013 FERC acceptance 6/28/2013 Process Merger Go live 10/1/2014 tariff language FERC review CAISO EIM stakeholder process Board authorization 11/8/2013 Filing FERC acceptance Stakeholder meetings: 4/11/2013 – Folsom 6/6/2013 – Folsom 7/9/2013 – Phoenix 8/20/2013 – Portland 9/30/2013 – Folsom

8. Energy Imbalance Market has key definitions EIM Entityis a balancing authority, representing one or more EIM Transmission Service Providers that make transmission available to EIM, that enables the EIM to occur in its balancing authority area (BAA). By enabling the EIM, real-time load and generation imbalances within its BAA will be settled through the EIM. • EIM Entity determines eligibility of resource types, and required transmission service, within its BAA. (15-minute economic bids on its interties? Dynamic transfers?) EIM Participating Resource is a resource located within the EIM Entity BAA that is eligible and elects to participate in the EIM. • In the 5-minute market, eligible resources may include generators, participating loads & demand response, non-generator resources, and dynamic transfers. • In the 15-minute market, imports and exports may also be eligible.

9. EIM builds on FERC Order 764 for financially binding 15-minute functions in real-time market CAISO EIM Day Ahead Schedule Base Schedule (basis of financial settlement) 15-Minute Unit Commitment & Energy Schedule, and Incremental AS Awards 15-Minute Unit Commitment & Energy Schedule Real-Time Dispatch Real-Time Dispatch

10. EIM design includes functionality to submit base schedules and review/approve resource plans EIM Entity Scheduling Coordinator has full visibility of all base schedules at all times.

11. Resource sufficiency evaluation addresses real-time leaning prior to start of EIM for the trade hour • Under-scheduling incentivizes balanced base schedules and compensates other LAPs for leaning • BAA real-time congestion balancing account isolates the cost of infeasible base schedules to the BAA • Flexibility requirement ensures EIM Entity can meet their requirements, based on diversity benefit, independently before start of market optimization across EIM footprint • Benefits of reduced flexibility requirements realized • Information provided to facilitate opportunity for EIM entity to resolve infeasible base schedules

12. T - 75: Base schedules and energy bids due (Resources) 55: Updated base schedules are submitted if necessary (Resources) T- T - 20: E-tagging deadline (Entity SC) T Market 1 Market 4 Market 2 Market 3 (T = start of the hour) Timeline: Submission of hourly base schedules and resource plans is interactive 40: Updated base schedules are submitted if necessary (Entity SC) T- EIM Market Participants X:30 X:45 X:15 Y:00 X:00 T- 22.5: 15-minute scheduled awards published T- 37.5: Start of Market 1 optimization Market Operator T- 45: Results of sufficiency test published T- 60: Results of sufficiency test published (Balanced? Feasible transmission? Sufficient flexible ramping?)

13. Timeline: Dispatch for 5-minute interval and beyond works together with 15-minute market • Look-ahead horizons: • 15-minute market optimization looks ahead up to 4.5 hours • 5-minute market optimization looks ahead up to 65 minutes X:00 T X:05 X:10 X:15 Interval 1 Interval 3 Interval 2 5 minutes 5 minutes 5 minutes 5 minutes 5 minutes Dispatch for Interval 3 Dispatch for Interval 2 Optimize for Interval 3 and beyond Dispatch for Interval 1 (T-2.5) Optimize for Interval 2 and beyond Optimize for Interval 1 and beyond (T-7.5)

14. Transmission service follows simple principles • Transmission capacity is made available through EIM Entities, and communicated through dynamic e-Tag and transmission registry: • EIM Participating Resources can offer their contracted capacity • Network service within EIM Entities allows redispatch up to available network capacity • TSPs make uncommitted capacity available • Reciprocity: Since transfer capability will be limited, as made available through EIM Entities, initial design proposes no charge for transmission for EIM transfers between EIM Entities • EIM stakeholder process will continue discussion of transmission rate design for EIM transfers

15. EIM’s congestion management is a parallel process to the Unscheduled Flow Mitigation Plan • EIM will manage congestion on transmission made available through EIM Entities, and notify them if available bids cannot resolve congestion. • EIM Entities then determine further steps, as done now (also applies to CAISO management of COI). • EIM Entities may act before EIM exhausts bids. • EIM will adjust its schedules for UFMP or other manual dispatch. • EIM will not manage constraints outside its market area (e.g., Path 36 - TOT3, from Wyoming to Colorado). • Existing processes remain available to path operators. • Provisions are in EIM tariff (29.7(i)), and agreements with EIM participants’ transmission providers as needed.

16. Design considers California greenhouse gas regulations • Optimization process efficiently schedules resources at least cost, recognizing Calif. Air Resources Board obligations for energy transferred to California. • Market dispatch enables compliance, compensates resources, and does not assign costs to non-CA load. • EIM Participating Resources may submit a separate bid for the GHG compliance obligation costs. • Energy generated outside California that is not imported is not subject to GHG obligation. • GHG costs for transfers into California incorporated into price paid by CA demand.

17. Guiding objectives for governance drive toward a long-term independent EIM Prompt & direct input Adaptable structure Promote successful implementation Independent EIM structure STEP 1 STEP 2 Stakeholder Transition Committee • Roles: advise on EIM matters, propose independent EIM structure • Sectors: investor owned utilities, publicly owned utilities, generators and marketers, alternative energy providers, EIM participants, government agencies, public interest entities • Open meetings, CAISO staff support, no compensation

18. EIM Administrative Fee is cost-based(with illustrative example) EIM volumetric charge is based on CAISO Grid Management Charge (GMC), for services used by EIM Note: Estimate does not include bid segment fee @ $0.005/bid segment or monthly SCID fee of $1,000/Month

19. CAISO remainscommitted to a stable GMC revenue requirement

20. Summary • EIM provides reliability and financial benefits to California, EIM participants, and the West • CAISO implementation is based on its existing platform to provide a flexible and scalable approach, at low cost, to other balancing authorities • EIM implementation helps facilitate renewable integration

21. More information is available • Computer based training:“Introduction to the Energy Imbalance Market” • http://www.caiso.com/Documents/Markets%20training/Energy%20imbalance%20market • CAISO EIM stakeholder process • http://www.caiso.com/informed/Pages/StakeholderProcesses/EnergyImbalanceMarket.aspx • Includes proposals, benefit assessments, tariff development, etc. • PacifiCorp EIM information • http://www.pacificorp.com/about/eim.html • Includes fact sheets, memorandum of understanding, link to OASIS for stakeholder process, etc.