WSPP Inc. wspp

1. WSPP Inc. wspp.org 20 years of enabling competitive power markets … Federal Energy Regulatory Commission December 18, 2006

2. Mission Statement To provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk

3. Who are we? The most widely used wholesale electric power sales contract in the country … • An organization made up members from all walks of the power industry • An organization with a diverse membership • Buyers and sellers • Private, public and governmental entities • Financial institutions and aggregators • Regional, national and international • Wholesale and retail Just to name a few …

4. What are we? A 20 year old organization that has facilitated market evolution … • Established by FERC in 1987 as a multi-state bulk power marketing experiment. The experiment was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency, competition, and closer coordination of economy sales • Accepted by FERC on a non-experimental basis in 1991 • Governed by a board of directors of all members comprising the Executive Committee (EC)

5. Membership composition Over 300 members from diverse market sectors …

6. Membership changes with the market Over 300 members and growing … • 16 New Members in 2006 (so far…) • Mirant Energy Trading, LLC • Clark County Public Utilities (Clark County PUD #1) • Cinergy Marketing & Trading, LLP • Old Lane Commodities, LP • Alcoa Power Marketing, Inc. • Safeway, Inc. • Midwest Energy, Inc. • Credit Suisse Energy, LLC • City of Alma, KS • City of Iola, KS • City of Scranton, KS • City of Wathena, KS • Klickitat PUD (Klickitat County PUD #1) • Central Arizona Water Conservation District • City of Moreno Valley, CA • Power and Water Resources

7. Geographical reach changes with membership We cut across almost all NERC Regions … MD=2 WA > 15 OR > 10 9 5 CT = 6 NJ = 1 9 DE = 1 14 DC = 2 MA = 6 9 CA > 45 7 10 > 35 6

8. WSPP promotes open membership Membership requirements create ease of market entry … • All market participants are eligible • Designate a member to the Executive and Operating committees • Be a signatory to the WSPP Power Sales Agreement • Obtain FERC approval if jurisdictional • Maintain or contract for 24 hour scheduling coverage • Minimal membership fee Organizational requirements are minimal … • The organization conducts at least three meetings annually of all members and more frequently to address contractual matters • One member equals one vote regardless of size • A 90% approval vote of the Executive Committee is required to amend the contract

9. WSPP adds value … A proven industry standard …. To the member: • Access to over 300 contractual parties and growing • Reduced transactional costs and improved risk management • Standardized and widely accepted throughout the western markets • Used in all active mediums – brokers, bilateral, electronic exchanges • Not entity or geographically limited • Body of case law supporting the contract • Comfort – developed by members for members

10. WSPP adds value … A proven industry standard …. To the market: • Facilitates market liquidity • Price discovery • Multiple buyers and sellers • Daily published indices • Contributes to market efficiencies • Increases system reliability through greater availability of generation • Reduces end-user costs • Can be used by centralized market participants to transact in the forward markets which enables greater risk management

11. Elements of the agreement The product descriptions and contract provisions have already been agreed to... Major components of the agreement: • Products • Schedule A – Economy Energy Service • Schedule B – Unit Commitment Service • Schedule C – Firm Sales or Exchange Service • Pricing • Market based • Cost based • Credit worthiness and assurances • Forced majeure • Non performance/damages • Dispute resolution process • Default/termination

12. Agreement usage Transacting with simplicity … Executing a transaction is streamlined down to agreement on: • Number of megawatts • Point of delivery • Delivery hours (on-peak or off-peak) • Delivery timeframe (e.g. “July – September 2007”) • Schedule (e.g. “WSPP Schedule C”) • Price Used to transact in various delivery periods: • Real-time • Pre-schedule • Balance of month • Prompt month • Term

13. Strategic efforts Meeting the needs of its members … Improving communications with members: • Website redevelopment • www.wspp.org Positioning the organization for broader membership: • Changing the organizational name from: Western System Power Pool, Inc., to WSPP Inc. to reflect national market presence and increase the appeal to eastern markets • Holding committee meetings in non-western locations Maintaining the usability of the contract for its members: • Continue to evolve the contract to keep pace with changes in the energy marketplace

14. Risk Management WSPP Power Sales Agreement Price Discovery Market Liquidity Standard Terms WSPP looking forward to the next 20 years of enabling wholesale power markets …

15. Attendees Jeff Atkinson (incoming Chairman) Public Utility District of Grant County(509) 754-5059 jatkins@gcpud.org William Gaines (Vice Chairman) Superintendent / COOTacoma Power(253) 502-8203Bgaines@cityoftacoma.org Duane Farmer (current Chairman) Director of Fuels and Wholesale Market Policy Public Service Company of New Mexico (505) 855-6200 dfarmer@pnm.com Jim Lobdell (Secretary/Treasurer) VP Power Operations & Resource Strategy Portland General Electric (503) 464-2723 jim.lobdell@pgn.com Bobby Campo (Operating Committee Chairman) Operating Agent WSPP (707) 643-7346 b.campo@sbcglobal.netl Arnie Podgorsky WSPP Counsel Wright & Talisman, P.C. (202) 393-1200 podgorsky@wrightlaw.com